JBS, the world’s largest beef processor based in Brazil, is proposing to offload some of its largest assets including Northern Ireland poultry processor Moy Park in a bid to pay down the group’s spiralling debt costs.

The announcement to sell Moy Park comes less than two years after JBS first acquired the Northern Ireland poultry processor in a deal worth €1.3bn. A similar valuation up to €1.3bn is likely to be placed on Moy Park once more.

In a statement this week, JBS said it will sell non-core and less strategic assets including Moy Park, its 19% stake in the Brazilian dairy company Vigor Alimentos, as well as the Five Rivers cattle feedlot in the US, which has the capacity to finish close to 1m cattle per year.

The Brazilian processor plans to raise €1.6bn ($1.8bn) from these sales in what is undoubtedly a fire sale to shore up the company’s highly leveraged balance sheet with net debts of €12.5bn ($14bn) at present.

The cost of carrying this debt has skyrocketed after JBS’s parent company J&F Investimentos was fined €3bn by Brazilian prosecutors. This was a result of a lengthy corruption and bribery investigation.

What lies in store for Moy Park?

JBS’s decision to sell Moy Park just two years after it first acquired the business is solely down to the domestic issues JBS is having right now and does not reflect the strong financial performance of Moy Park.

It is also not a move to offload Moy Park because of Brexit.

After all, 75% of Moy Park’s business is in the UK where the market has a preference for local and Red Tractor quality-assured product.

Instead, the proposed sale highlights how Moy Park is not a core part of JBS’s business despite generating sales of £1.4bn last year and profits (EBITDA) of £132m.

While Moy Park has a very healthy earnings margin of 9.2%, its contribution in terms of the overall JBS group was always quite small, accounting for just 5% of earnings.

Farmers will hope the future buyer of Moy Park will see it as a core part of its overall business rather than an offshoot business. Farmers who have invested and borrowed heavily to support Moy Park’s business will also want to see some stability around the long-term ownership of the business. Marfrig, which was the previous owner of Moy Park and also from Brazil, held the company for just seven years before selling to JBS, which is planning to sell after less than two years. Banks would no doubt also welcome that stability.