20-F/A: JBS S.A. Files Amendment No. 2 to 20-F Addressing SEC Comments, Restructuring Continues

JBS S.A. files an amendment to its annual report to address SEC comments, while also progressing with a corporate restructuring and dual listing.

Summary

• JBS S.A. filed Amendment No. 2 to its Form 20-F to address comments from the SEC regarding Amendment No. 1.
• The amendment includes revisions to sections regarding risk factors, company history, liquidity, major shareholders, financial information, and financial statements.
• The company is undergoing a corporate restructuring, including a proposed equity transaction to list JBS N.V. Class A Common Shares on the NYSE.
• The ultimate controlling shareholders' voting power is expected to increase from 48.48% to 84.85% upon completion of the equity transaction.
• The consummation of the Corporate Restructuring is subject to several conditions.
• A Debt Registration Statement relating to the JBS USA Exchange Offer has not yet become effective, resulting in a registration default and potential increase in interest on the notes.
• A civil complaint was filed against JBS USA Food Company and JBS USA Food Company Holdings by the Attorney General of New York, alleging misleading statements about greenhouse gas emission reduction goals.
• In April 2024, Joesley Mendona Batista and Wesley Mendona Batista were elected to JBS S.A.'s board of directors.
• JBS S.A. approved the distribution of interim dividends from profit reserves in the amount of R$4.44 billion (US$808.4 million) to be paid on October 7, 2024.
• An offering of agribusiness receivables certificates (CRAs) in the aggregate principal amount of up to R$1,502.6 million (US$276.1 million) was launched in Brazil.
• JBS S.A. exercised the early redemption provisions of the debentures underlying three series of outstanding CRAs due 2027, 2030 and 2031, respectively, which resulted in the total repayment of the related CRAs on September 30, 2024 in the aggregate amount of R$3,930.0 million (equivalent to US$722.3 million).
• JBS S.A.'s board of directors approved a new share buyback program, pursuant to which JBS S.A. may acquire up to 113,396,357 of its outstanding common shares, representing up to approximately 5% of JBS S.A. total issued and outstanding share capital, on the B3 at prevailing market prices, during a period of 18 months from September 23, 2024.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While there are positive aspects such as ongoing restructuring and dividend distribution, there are also negative aspects such as a net loss, a civil complaint, and a registration default. The overall sentiment is neutral.

Positives

• JBS S.A. is addressing SEC comments by filing Amendment No. 2 to its Form 20-F.
• The company is progressing with a corporate restructuring and dual listing.
• JBS S.A. approved the distribution of interim dividends from profit reserves in the amount of R$4.44 billion (US$808.4 million) to be paid on October 7, 2024.
• JBS S.A. exercised the early redemption provisions of the debentures underlying three series of outstanding CRAs due 2027, 2030 and 2031, respectively, which resulted in the total repayment of the related CRAs on September 30, 2024 in the aggregate amount of R$3,930.0 million (equivalent to US$722.3 million).
• JBS S.A.'s board of directors approved a new share buyback program, pursuant to which JBS S.A. may acquire up to 113,396,357 of its outstanding common shares, representing up to approximately 5% of JBS S.A. total issued and outstanding share capital, on the B3 at prevailing market prices, during a period of 18 months from September 23, 2024.

Negatives

• A Debt Registration Statement relating to the JBS USA Exchange Offer has not yet become effective, resulting in a registration default and potential increase in interest on the notes.
• A civil complaint was filed against JBS USA Food Company and JBS USA Food Company Holdings by the Attorney General of New York, alleging misleading statements about greenhouse gas emission reduction goals.

Risks

• The consummation of the Corporate Restructuring is subject to several conditions.
• The ultimate controlling shareholders' voting power is expected to increase from 48.48% to 84.85% upon completion of the equity transaction, potentially limiting other shareholders' influence.
• The civil complaint filed by the Attorney General of New York could increase the risk of related lawsuits by securityholders.

Future Outlook

The document outlines the company's ongoing corporate restructuring and proposed equity transaction, which aims to improve access to funding sources and enhance the ability to raise financing to support operations and fund growth, as well as lower the cost of capital.

Industry Context

The announcement provides insights into JBS S.A.'s strategic moves within the global protein industry, including efforts to address sustainability concerns and navigate regulatory landscapes. The company's focus on operational efficiency, strategic acquisitions, and brand development reflects broader industry trends.

Comparison to Industry Standards

• The document does not contain enough information to make a detailed comparison to industry standards.
• A detailed comparison would require a deeper dive into the financial metrics of JBS S.A. and its competitors, such as Tyson Foods, Inc., Sanderson Farms, Inc. in North America, BRF, S.A. in Brazil and 2 Sisters Food Group in Europe.
• A detailed comparison would require a deeper dive into the financial metrics of JBS S.A. and its competitors, such as Marfrig and Minerva in Brazil, Tyson Foods, Inc., National Beef Packing Company, LLC and Cargill Inc. in the United States and Teys Bros Pty Ltd. and Nippon Meat Packers Ltd. in Australia.
• A detailed comparison would require a deeper dive into the financial metrics of JBS S.A. and its competitors, such as Smithfield Foods, Inc., Tyson Foods, Inc., Seaboard Foods and Hormel Foods Corporation in the United States and Cooperativa Aurora Cooperativa Central Oeste Catarinense Ltda. in Brazil.

Management Changes

Legal Proceedings

• A civil complaint was filed against JBS USA Food Company and JBS USA Food Company Holdings by the Attorney General of New York, alleging misleading statements about greenhouse gas emission reduction goals.

Related Party Transactions

• JBS S.A. has entered into an assignment agreement with Banco Original S.A., pursuant to which Banco Original S.A. acquires trade accounts receivables of certain or our customers in Brazil and outside Brazil.
• JBS S.A. sponsors Instituto J&F (formerly Instituto Germinare ), a youth -directed business school, whose goal is to educate future leaders by offering free, high -quality education.
• JBJ Agropecuria Ltda. (JBJ), is controlled by a family member of one of our ultimate controlling shareholders, who does not own any equity interests in J&F. It supplies cattle to JBS S.A.'s slaughterhouses.
• Flora Produtos de Higiene e Limpeza S.A. (Flora), is controlled by J&F. Flora purchases products (beef tallow, palm oil, babassu oil and cans) from JBS S.A. and manufactures soaps.

Stakeholder Impact

• Shareholders: Potential for increased value through corporate restructuring, but also risk of diluted influence for non-controlling shareholders.
• Employees: Potential impact from restructuring activities and changes in operational strategies.
• Customers: No immediate impact, but potential long-term effects from changes in product offerings and supply chain management.
• Suppliers: Potential impact from changes in sourcing policies and supply chain monitoring.
• Creditors: Potential impact from changes in debt structure and financial performance.

Next Steps

• Complete the proposed equity transaction and list JBS N.V. Class A Common Shares on the NYSE.
• Obtain effectiveness of the Debt Registration Statement and complete the JBS USA Exchange Offer.
• Vigorously defend against the civil complaint filed by the Attorney General of New York.
• Monitor and address the economic effects of the Newcastle disease outbreak on poultry exports from Rio Grande do Sul.
• Close the offering of agribusiness receivables certificates (CRAs) on October 3, 2024.
• Execute the new share buyback program over the next 18 months.

Key Dates

Keywords

JBS S.A., Amendment No. 2, Form 20-F, SEC comments, corporate restructuring, dual listing, JBS N.V., NYSE, B3, Debt Registration Statement, JBS USA Exchange Offer, Attorney General of New York, greenhouse gas emissions, Joesley Mendona Batista, Wesley Mendona Batista, board of directors, interim dividends, agribusiness receivables certificates, share buyback program, financial statements, risk factors, legal proceedings, financial metrics