Investment Agreement Minerva and SALIC UK December 2015

Transcription

1 Investment Agreement Minerva and SALIC UK December 2015

2 1. THE TRANSACTION DETAILS Announcement on December 22, 2015 of the private capital increase at the price of R$15.60 per share, in order to enable SALIC UK s investment in Minerva VDQ and BRF will assign preemptive rights to SALIC UK (fully owned subsidiary of Saudi Agricultural and Livestock Investment Company (SALIC)) regarding the subscription in the scope of the transaction SALIC UK will subscribe to approximately 48 million shares and then hold 19.95% of the Company's capital stock Subject to approval by the Extraordinary Shareholders Meeting (ESM) VDQ and SALIC UK enter into a shareholders agreement VDQ and BRF amend the shareholders agreement

3 1. THE TRANSACTION SHAREHOLDING STRUCTURE Structure before the signature of the agreement between VDQ and SALIC UK Shareholders Agreement VDQ BRF Other 32.9% 15.1% 52.0% SALIC Structure after the signature of the agreement between VDQ and SALIC UK 100% Shareholders Agreement 19.95% SALIC UK Shareholders Agreement VDQ BRF Other 26.31% 12.09% 41.65%

4 1. THE TRANSACTION SHAREHOLDERS AGREEMENT (VDQ and SALIC UK) Term: 10 years Management: BD: 10 members VDQ: 5 members SALIC UK: 3 members 2 independent members Fiscal: FC: 3 members VDQ: 2 members SALIC UK: 1 member Qualified Matters: Any act to raise leverage to the maximum leverage ratio (3.5x EBITDA from 2016 onwards) (requiring approval of each) Change of the corporate purpose (requiring approval of each) Delisting from the Novo Mercado segment (requiring approval of each) Corporate reorganizations (requiring approval of each) Cancellation, split, redemption or reverse-split of the Company's shares Any acquisition exceeding US$50 million Any derivative transaction that is not included in the Company's hedging policy Liquidity: 2-year lock-up period for the sale of shares by VDQ and SALIC UK Right of First Refusal: If the seller is SALIC UK, VDQ has the right to acquire all the shares for sale. If the seller is VDQ, SALIC UK and BRF will have the right to acquire shares proportionally to their interests considered jointly.

5 1. THE TRANSACTION AMENDMENT TO THE SHAREHOLDERS AGREEMENT (VDQ and BRF) BRF will no longer appoint a member of the Board of Directors VDQ's right of first refusal on the block sale of shares from BRF representing more than 3% will be preserved BRF will maintain the vetoes in Shareholders Meetings

6 1. THE TRANSACTION TRANSACTION S EXPECTED AGENDA Disclosure of the Material Fact about the transaction. ESM to resolve on the Company's capital increase. Disclosure of the Notice to Shareholders about the end of the period for exercising preemptive rights. Beginning of the period to subscribe to the shares unsubscribed in the capital increase. Publication of the call notice to the ESM to ratify the capital increase and consolidate the Company's Bylaws. 12/22/15 12/23/15 01/22/16 02/23/16 02/24/16 03/06/16 04/05/16 Publication of the call notice to the ESM. Beginning of the period to subscribe to unsubscribed shares. ESM which will resolve on the ratification of the capital increase and the consolidation of the Company's Bylaws.

7 2. RATIONALE REASONS Strategic partner in a region with a potential for high demand Strengthening of the capital structure Support to the Company's growth plan WHO IS SALIC UK SALIC UK (fully owned subsidiary of Saudi Agricultural and Livestock Investment Company (SALIC)) will be Minerva s shareholder SALIC was established in 2011 as a joint stock company wholly-owned by the Public Investment Fund of Kingdom of Saudi Arabia (PIF) SALIC is mandated to invest profitably in agriculture and livestock value chains worldwide

8 2. RATIONALE - THE MIDDLE EAST AND NORTH AFRICA HIGHLIGHTS MINERVA MARKET SHARE IN THE REGION Saudi Arabia recently reopened its market to Brazilian meat (history of a +/- 3.5% share of Brazil's exports until 2012) Agreement with SALIC UK opens distribution and meat processing opportunities in the Middle East region Minerva is the region s largest exporter of chilled beef and the second largest exporter of frozen meat Despite economic conditions, demand for beef has remained strong 34% 29% 27% 23% 23% 23% 18% M15 THREE OFFICES COVERING THE REGIONS Source: Minerva

9 3. FINANCIAL ESTIMATES PROFORMA DATA (IN R$ MILLION BASED ON 09/30/2015 DATA) SCENARIOS PRE-OPERATION POST-OPERATION GROSS DEBT 7, ,888.1 CASH -3, ,388.6 NET DEBT 4, ,473.8 NET DEBT/LTM EBITDA 4.8X 3.9X NET DEBT/ANNUALIZED EBITDA 3.8X 3.0X