SAO PAULO (Reuters) - Brazil's JBS SA
In a statement released on Friday, JBS said its leasing of Doux's Frangosul assets in Brazil in May 2012 does not violate any claims OppenheimerFunds might have on Doux's assets as collateral for unpaid debts. JBS, which did not specify where it would file a lawsuit, denied having bought the Doux assets.
Art Steinmetz, president and chief investment officer of OppenheimerFunds, told Bloomberg News on Thursday that JBS's lease of the Frangosul plant violates the fund's rights over the unit, which was put up as collateral on a $100 million defaulted loan. He said the fact that JBS is 30-percent owned by Brazilian federal government entities could spell a potential risk for the fund's rights as a creditor.
JBS said in its statement that no state entity actively participates in the company's management and strategy.
OppenheimerFunds Inc, a unit of Massachusetts Mutual Life Insurance Co, said it will respond later to a request for comment on the JBS statement.
The issue underscores mounting worries among bond investors in Brazil who are grappling with the impact of a slowing economy, rising state intervention in the economy and rising legal uncertainty in the country.
"As was widely conveyed to the market, JBS did not acquire Frangosul from Doux. The company (JBS) leased the installations that by other means may be seized by creditors in a long legal battle," the statement said. "With the leasing ... JBS avoided thousands of people being fired and an unprecedented economic impact hurting the region."
The plant is in the southernmost state of Rio Grande do Sul.
JBS can renew the 10-year lease, which also gives it the option to buy the local unit of the French poultry company.
Brazil's BNDES state development bank holds a 19.85 percent equity stake in JBS, similar to stakes it holds in most of Brazil's big meat producers such as BRF Brasil Foods SA
The New York-based fund is free to take any action under the law to recover its debts from Doux, JBS said, adding that the leasing of Frangosul by JBS "does not circumvent or jeopardize in any way Oppenheimer's options to exercise its rights."
"Therefore, any attempt on Oppenheimer's part to make JBS responsible for debts assumed by Doux Frangosul shows a profound lack of understanding in the basic principles of law and characterizes a gross distortion of the facts, which JBS will vigorously contest," the company said.
(Reporting by Reese Ewing; Editing by Guillermo Parra-Bernal and Phil Berlowitz)