The outbreak of foot-and-mouth disease in Argentina may have been one of the factors in the recent pulling of a beef receivables-backed privately placed ABS transaction for Swift Armour S.A. Argentina, which was launched early in the first quarter of 2001. (See ASR 2/12/01 p. 26).

The deal has been in the market since the third quarter of 2000, and some buysiders say that the key issue was the structure of the deal, not the epidemic.

The $50 million deal, which was backed by future export sales, was pulled in its final stages last week, leaving market sources spouting mixed reasons for its incompletion.

"The market rumors were that it was related to one or more of those issues," said an investment banker. "[The company] does beef receivables, and it's Argentina as well - take your pick."

Another market source that worked closely on the deal confirmed that it was indeed pulled because of complications caused by the epidemic.

Swift Armour recently suspended operations and sent 60% of its staff on vacation after a foot-and-mouth outbreak closed export markets.

However, one investor that is familiar with the deal mentioned that foot-and-mouth disease had little, if anything, to do with the swiping of the Swift Armour deal.

"There was an article in the Wall Street Journal about how they [Swift Armour] have been laying off some workers and that is the impact of the foot-and-mouth," said the investor. "When it was pulled, it was because some of the investors were demanding things that the company did not want to give."

The source added that the issuer and investors involved in the deal were not able to agree upon the terms of the transaction, and that market conditions in Argentina are considered unfavorable. Still, other investors indicated that the outbreak of the disease was indeed a factor. Either way, the problem is considered very sector-specific and is not expected to hinder any other deals.

"At the moment, I think that this is a sector concern, and not even a regional concern," said one market source. "With Irish issues for example, if you're in the agricultural segment, there can be a concern."

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