BRAZIL-SADIA SCANDAL GOES TO COURT.
Sadia SA shareholders are suing the ex-chief financial officer of Brazil’s second-biggest food maker after a report said the board didn’t know the company’s derivatives positions exceeded internal limits.
Alerts by the Concordia, Brazil-based company’s risk- management department didn’t reach the board, according to an outside audit, Chairman Luiz Fernando Furlan said today in an interview after the report was presented at a shareholders meeting.
"The report says there’s no evidence that members of the board were informed about the transgressions," Furlan said.
Sadia shareholders voted to sue former CFO Adriano Lima Ferreira for derivative contract losses, Furlan said. Sadia fired Ferreira on Sept. 25 after the company posted a 760-million real ($341 million) hedging loss. Sadia reported a fourth-quarter net loss of 2.04 billion reais because of wrong-way bets on the Brazilian currency.
Sadia was accused last year of misleading investors about its financial "well-being and future business." The U.S. complaint accused the company of failing to disclose to holders of its American depositary receipts that it had entered into currency derivative contracts to hedge against U.S. dollar exposure that were "far larger" than necessary, and that such contracts violated company policy.
It was filed Nov. 5 in federal court in Manhattan.
Perdigao Negotiations
Sadia is in talks with bigger rival Perdigao SA on a possible merger, Furlan told reporters on March 30. The talks are expected to be concluded by June, he said.
Perdigao said March 17 it didn’t come to an agreement with Sadia on a possible "association" with the company during previous negotiations.
Sadia faces pressure to merge with Perdigao as debt payments loom, according to Credit Suisse Group AG. Sadia has 3.5 billion reais in short-term debt, with "most" due in the third quarter, analyst Marcel Moraes said in a note to clients March 17. The company may seek financing from Brazil’s national development bank, known as BNDES, which may ask it to combine with Perdigao, he said.
Sadia abandoned a 3.9 billion-reais bid to take over Perdigao in 2006. Perdigao overtook Sadia as Brazil’s biggest food company after buying 77.3 percent of Eleva Alimentos SA.
