China JBS Red Meat Ban, page-25

My post merely highlighted the fact that RFF Group have an exposure of $100m under the Guarantee to the Financiers as well as ownership of the 5 feedlots. It is not a spouted scare story. Further, I am not concerned about your pompous bleat at being fed up, your one line barb or your misreading of the “proper research”.

Grant Thornton’s excellent assessment of fairness of the RFF Group financial arrangements states:

“We have concluded that the terms of the Guarantee are FAIR after considering the following: Should J&F default, the Financiers will have first access to any sale proceeds from the sale of assets to extinguish its working capital facility loan8plus any associated costs. The Financiers would also require RFF to provide the A$100 million under the Guarantee. RFF would then be able to exercise its rights under the Guarantee. Given RFF will need to provide funding to the Financiers on default and await the clearance of the Financiers claims on any sale proceeds, the Guarantee’s security position is similar to alternative financing arrangements such as convertible notes or an equity arrangement. Accordingly, we have compared the terms of the Guarantee to similar riskier financing arrangements including the cost of equity.”

The JBS (“Guarantors”) only guarantee the obligations of JBS as feetlot lessee to pay their lease payments and not to Guarantee $100m to the Financiers. That is the RFF financing obligation.

Grant Thornton’s go on to state:

"JBS will continue to be the lessee of the Feedlots and operate and manage the feedlots as usual. JBS is Australia’s largest lot feeder and cattle processor with lease payments guaranteed by JBS’ parent company, Baybrick Pty Ltd (“Baybrick”), which is a wholly-owned subsidiary of JBS S.A., the world’s largest beef producer, leather processor, chicken producer and second largest pork and lamb producer(refer to Section 6.1). We note that Baybrick, Baybrick Landco Pty Ltd (“Landco”)—a wholly-owned subsidiary of Baybrick—and JBS (“Guarantors”) guarantee the obligations of JBS under the agreements, including the lease payments to RFF under the sale and leaseback arrangements for the Feedlots. While the Proposed Transaction will increase RFF’s exposure to Baybrick, in FY18 Baybrick had net assets of A$3.5 billion and generated a net profit of A$26.6 million. Accordingly, the financial performance and financial position of Baybrick appears robust."