Minerva Announces Capital Increase Backed by Sponsors

R$2 billion capital increase plus R$1 billion in subscription bonuses offer some balance sheet relief

On April 7th, 2025, Minerva announced that its Board of Directors approved a proposed capital increase of up to R$2 billion through the private subscription (limited to the current shareholder base) of up to 386.8 million new ordinary shares at R$5.17 per share. This price reflects the average of the last 60 trading sessions and represents a 19.7% discount from the April 7th closing price of R$6.44 per share. The proceeds are expected to be allocated entirely to debt repayments.

The proposal is subject to approval at the April 29th extraordinary shareholders’ meeting. Shareholders Salic International (31% stake) and VDQ Holdings (23%) have committed to ensuring that the minimum subscription of R$1 billion is reached. In addition to the capital increase, subscribers of the new shares will be granted a Subscription Bonus issued by Minerva at a ratio of 1 for every 2 shares subscribed. If fully exercised, this could raise an additional R$1 billion, with a strike price of R$5.17 per share to be exercised over the next 3 years.

EM Spreads comment: We see the capital increase as a positive development that strengthens the company’s highly leveraged position while significantly easing pressure on cash generation by lowering elevated interest expenses as it manages integration costs from the recently acquired Marfrig assets. This additional liquidity provides greater confidence in Minerva’s deleveraging path forward, particularly in the current high-interest rate environment, which has remained a concern for investors since the acquisition was announced.

We calculate that the R$2 billion capital increase would reduce net leverage by 0.5x, bringing it down to around 4.4x as of December 2024, or 3.2x pro forma when including 12 months of EBITDA from the recently acquired Marfrig assets. Including the potential exercise of the warrants, the total R$3 billion capital increase could bring pro forma net leverage down further to 3.0x. According to Minerva, the debt reduction should result in around R$300 million in savings in financial expenses, translating into a meaningful improvement in free cash flow and supporting faster deleveraging.

We also view the level of sponsor support as positive. Commitments from controlling shareholders cover at least half of the base R$2 billion capital raise, with VDQ Holdings (23% stake) pledging R$700 million and SALIC (31% stake) committing R$300 million. Depending on the final subscription outcome, the founding family may increase its stake.

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