Mar 21, 2023
Americanas Proposes Steep Losses for Creditors in Debt Plan
(Bloomberg) -- Americanas SA, the embattled Brazilian retailer, proposed a plan to restructure its 42.3 billion real ($8.1 billion) debt load some two months after obtaining bankruptcy protection that includes losses for unsecured creditors, a capital injection and asset sales.
The plan, released late Monday in a securities filing, foresees a capital injection of 10 billion reais and potential asset sales including its Hortifruti Natural da Terra food markets, stake in Uni.Co and corporate jet. Americanas plans to impose losses of between 60% and 80% on unsecured financial creditors depending on a series of options to be chosen including a reverse auction.
“With this the company intends to reduce its market debt, post-restructuring, to 4.9 reais billion,” Americanas said.
While the retailer has held talks with banks to discuss solutions, the 10 billion real capital injection proposed by the top shareholders — billionaires Jorge Paulo Lemann, Marcel Telles and Carlos Sicupira — has remained below expectations. A capital injection of 12 billion reais could be accepted by banks, according to people with direct knowledge of the matter.
Americanas was plunged into crisis at the turn of the year after its new Chief Executive Officer Sergio Rial said he discovered “accounting inconsistencies” estimated at some 20 billion reais — roughly doubling the debt of the firm. The trio of billionaires, worth a collective $38.9 billion, has so far remained quiet on the issue beyond a statement that said they had no prior knowledge of the accounting problem.
The company’s shares gained as much as 12% on Tuesday before paring to trade around 1.15 reais a piece for a market value of 1 billion reais. That’s compared with a share price of 12 reais at the start of the year. Its defaulted dollar bonds were little changed, trading close to 20 cents on the dollar, showing a steep haircut was already priced in.
More than an economic hit for the billionaire trio shareholders, it’s caused reputational damage for the founders of buyout firm 3G Capital Inc. who throughout their careers have engineered massive global mergers including Anheuser-Busch InBev SA and Kraft Heinz Co. while partnering with Warren Buffett on multiple deals.
Sicupira, who was CEO of Americanas in the 1980s, remains on the board along with Paulo Alberto Lemann, Jorge Paulo’s son.
In a 551-page document, Americanas listed an Embraer business jet built in 2014 among assets to be put on sale along with its 70% stake in Uni.Co, which owns retail brands including Imaginarium, Puket and LoveBrands!. Hortifruti Natural da Terra, which it bought for 2.1 billion reais in 2021, will also be offered to prospective buyers.
The company will use 2 billion reais from the asset sales to “maximize the reduction of its remaining debt.”
The securities regulator has been interrogating former executives of the firm and opened several new probes last week after speaking with longtime CEO Miguel Gutierrez, who preceded Rial.
In the document, a firm called Apsis concluded that Americanas’ business is viable going forward assuming the restructuring plan works out.
“We believe that, if the operating assumptions projected by management are achieved, the investments foreseen in the plan carried out, the existing financing proposals, the performance of Grupo Americanas’ operations and the resulting cash generation will support its economic-financial viability,” Apsis said in its report.
--With assistance from Leonardo Lara and Rachel Gamarski.
(Adds share price, more details of the plan starting in sixth paragraph)
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