Relevant Fact – Swift & Co. Update

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Relevant Fact – Swift & Co. Update

  1. 1. Agenda Página Update on Swift Acquisition Process June 28, 2007
  2. 2. Disclaimer The forward-looking statements presented herein are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management, and on information currently available to us. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Our future operating results, financial condition, strategies, market share and values may differ materially from those expressed in or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control or predict. Forward-looking statements also include information concerning our possible or assumed future operating results, as well as statements preceded by, followed by, or including the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'‘ ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or similar expressions 1
  3. 3. Agenda 1 Strategic Rationale 2 Acquisition Process Timeline 3 Capital Increase 4 New Acquisition Structure 5 JBS + Swift (Pro-forma) 6 Final Considerations 2
  4. 4. Unquestionable strategic rationale + Leading global beef producer. Production and distribution capacity in the world’s 4 main beef-consuming countries. Association of world-class brands, plants and expertise. Pork diversification platform – 3rd largest in the US. Opportunity to add value through turnaround. 3
  5. 5. Acquisition Process Timeline Signing of Agreement and Plan of Merger by J&F in order to acquire stockholding 05/29/07 control of Swift Foods Company (“Swift”). Contract allows for Assignment of rights and obligations of J&F to JBS in the same terms and conditions, until the deal is finalized. Board of Directors Meeting – Approval of the investment recommendation at Swift 06/01/07 Foods Company by JBS. Board of Directors Meeting – Understanding that the best alternative for financing the acquisition of Swift is through a capital increase of JBS. 06/08/07 Authorization for launch of Consent Solicitation. Extraordinary Shareholders Meeting convened to decide on capital increase proposal of JBS of 200,000,000 shares each worth R$8.1523. Launching of Consent Solicitation – non-application of covenants of JBS’ Bonds to 06/11/07 Swift. 06/13/07 Publication of Extraordinary Shareholders Meeting Call Announcement. Board of Directors Meeting – recommendation for the capital increase to be greater 06/27/07 than that indicated in the Announcement, from 200 million shares to 227.4 million shares, totaling a capital increase of US$950 million. 06/27/07 Relevant Fact – Announcement of approval by BNDESPAR Board of the subscription of up to US$750 million of the total capital increase. 06/29/07 Extraordinary Shareholders Meeting. 4
  6. 6. Capital Increase Capital increase of 227,400,000 shares to be subscribed at R$8.1523 per share, totaling R$ 1,853,833,020.00 (approximately US$950 million). Relevant fact of June 27, 2007, announcing approval by BNDESPAR board (decision #067/2007) of subscription by BNDESPAR of UP TO 179,526,311 shares out of the total number of shares to be subscribed in the capital increase, totaling R$ 1,463,552,345.17 (approximately US$750 million). The portion of J&F and/or ZMF in the capital increase will be UP TO 47,873,689 shares out of the total number of shares to be subscribed in the capital increase, totaling R$ 390,280,674.83 (approximately US$200 million). J&F and ZMF hold 76.2% of preference rights in subscription of the new shares of JBS, while the market holds the remaining rights. J&F and ZMF will assign part of their subscription rights to BNDESPAR. The aforementioned total amounts of BNDESPAR and J&F will only be fully subscribed if other shareholders of JBS DO NOT exercise their subscription rights. 5
  7. 7. New acquisition structure Current Structure – Acquisition by J&F1 Current Structure – Acquisition by J&F1 Proposed Structure – Acquisition by JBS1 Proposed Structure – Acquisition by JBS1 Market J&F BNDESPAR (Free Float) J&F Up to US$750 MM US$ ? MM Up to US$200 MM US$400 MM US$950 MM 77% 100% US$225 NewCo HM Capital MM 100% US$950 MM US$175 MM 100% US$225 Payment of NewCo HM Capital MM 8 old debt 98 S$ M U M US$988 100% US$725 MM New debt MM Payment of 8 43 old debt US$438 S$ M U M New debt MM 1. Simplified chart of the transaction for illustrative purposes only 2. Simplification for subordination structure composed by 3 holdings 3. Do not include fees, tender offer and other expenses 6
  8. 8. JBS + Swift (Pro-forma) COMBINED PRO-FORMA Slaughtering Capacity¹ 24,100 heads/day 23,000 heads/day 47,100 heads/day (global ranking) (# 3) (# 4) (# 1) Heads slaughtered (2006)¹ 3.4MM 6.2MM 9.6MM Plants 28 12 40 Net revenue US$1.9BN2 US$9.6BN3 US$11.5BN Net debt US$0.7BN 4 US$0.5BN5 US$1.2BN Net debt/EBITDA 2.5x 6.5x 3.3x Notes 1. Considering beef only 2. JBS 2006 net revenue converted into US$ at FX rate of R$2.1771 3. Swift net revenues for LTM ended February 2007 4. JBS net debt as per financial statements of 03/31/2007 5. Swift Net Debt in May/2007 considering proceeds from capital increase, tender offer expenses, fees and other expenses 7
  9. 9. Final Considerations This acquisition doesn't imply a change in our strategy. Mercosur consolidation plan remains in place and ongoing. Turnaround needed at Swift is in the segment where we are specialists. Swift acquisition proposal: reinforces JBS’ growth strategy in the international market. consolidates its leadership position in the global beef industry, uniting brands, accessing new regions and solidifying a platform for diversifying into the pork industry. reinforces a successful track record, conquered in the last 5 years, in acquisitions and integrations of companies. positions JBS as one of the main players in the consolidation of the global beef industry. 8
  10. 10. Final Considerations JBS believes the integration of the two companies preserves the interests of its investors and enhances the company's value, which is precisely why the investment in Swift by JBS was approved at a Board of Directors meeting held on June 8, 2007. JBS understands that the best alternative for financing the investment is through a capital increase at JBS since: It will enable the acquisition of Swift by JBS without affecting the covenants of JBS’ bonds. It will reduce Swift's leverage and, as a result, the operation’s risk. Therefore, JBS’ management recommends that the Company's shareholders vote in favor of the capital increase proposal to be discussed at the Extraordinary Shareholders Meeting of June 29, 2007. 9
  11. 11. Final Considerations Although the proposed capital structure does not affect the compliance with the covenants of JBS’ bonds in case Swift debt is consolidated for these purposes, JBS has decided to extend of the consent solicitation until July 3, 2007, so that bondholders may revaluate the request in light of the new proposed capital structure. 10
  12. 12. Questions & Answers 11

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