Brazil's J&F and JBS Shut Out From BNDES Loans, Source Says

Brazil state lender BNDES will not extend any new loans to meatpacker JBS SA, holding company J&F Investimentos or other companies involved in a corruption investigation, a source with knowledge of the matter said on Monday.

"We have to follow compliance rules related to companies under investigation for corruption and money laundering," the source said, asking for anonymity due to the sensitivity of the matter.

The source added that the companies will be barred from receiving any loans or investments from BNDES at least until they sign a leniency agreement with Brazilian prosecutors. Negotiations for a leniency agreement, which missed a Friday deadline because of differences over the value of a potential settlement, resumed on Monday.

JBS shares and bonds tanked on Monday, as Brazilian lawmakers considered a probe into stock and currency trades by its controlling shareholders and investors realized the company would not be able to list their international operations in the United States.

J&F, a sprawling conglomerate led by brothers Joesley and Wesley Batista, has admitted to paying the bribes in a case that has sparked calls for the resignation of Brazilian President Michel Temer.

"All of the group is affected," the source added. J&F controls the world's largest meatpacker, pulp and paper company Eldorado Brasil Celulose SA, dairy company Fabrica de Produtos Alimenticios Vigor SA, shoemaker Alpargatas SA and Banco Original SA, a mid-sized bank.

The investment arm of the development bank, BNDESPar, which is the No. 2 shareholder in JBS, said on Friday that it had asked the company for additional information about insider trading probes opened by securities industry regulator CVM and a plea deal entered by controlling shareholders Joesley and Wesley Batista.