Americanas SA may be required to repay the debt of about 8 billion
2023.01.14 02:16
Americanas SA may be required to repay the debt of about 8 billion
By Kristina Sobol
Budrigannews.com – If Americanas SA is found to be in violation of a covenant after reporting “accounting inconsistencies,” a Brazilian court said on Friday that the retailer may be required to repay up to 40 billion reais ($7.9 billion) in debt sooner than anticipated.
After Americanas disclosed inconsistencies amounting to 20 billion reais, a group representing minority shareholders filed a complaint with Brazil’s securities regulator earlier on Friday alleging a “multi-billion fraud.”
In a document that was seen by Reuters, Abradin stated, “Calling it ‘inconsistencies’ is nothing more than an attempt to use a euphemism for a multi-billion fraud that not only destroyed the assets of shareholders but also undermined the credibility of Brazil’s capital markets.”
The Abradin association also demanded an investigation into the company’s auditor, PwC. PwC didn’t say anything.
On the condition that Americanas file for bankruptcy protection or reach a settlement with creditors, the court granted an injunction preventing creditors from claiming debt faster or securing the company’s assets and contracts.
The injunction will be null and void if Americanas does not file within thirty days, according to the court document.
The court stated that the alleged inconsistencies could have an impact on the company’s debt and minimum working capital levels, leading to a breach of a covenant requiring the early repayment of up to $8 billion in debt.
In light of its impending debts, the company had stated that it and its creditors were working together to find a “viable alternative.”
After falling over 75% the day before, Americanas shares rose 15% on Friday, erasing 8.4 billion reais from the company’s market value when Chief Executive Sergio Rial, nine days into his job, resigned over the discovery of the irregularities.
While the business has established an independent investigation committee, the regulator, CVM, has announced three investigations into the retailer.
Americanas stated that it believed the cash impact was not significant when it disclosed the irregularities on Wednesday, despite the need for additional inquiries.
According to James Gulbrandsen, chief investment officer for Latin America at NCH Capital, who spoke with Reuters, “I think this is the biggest scandal I’ve ever seen on the Brazilian stock exchange.”
According to FAMA Investimentos manager Fabio Alperowitch, the “opacity” of Americanas’ financial statements led him to sell his position in the company in 2019. He tweeted, “All the evidence of misconduct was there.”
According to regulatory filings, directors of Americanas sold approximately 42 million dollars’ worth of shares between July and September. Members of the board or shareholders controlling the business did not report sales.
“The size of the issue is what draws a lot of attention. “It’s not easy to hide 20 billion reais,” said Insper professor Eric Barreto. It was a matter of presentation if the operations were included on the balance sheet. However, I’m not sure if they were all on the sheet.
In a Thursday investor meeting, Rial said that the discrepancies were caused by different ways of accounting for the financial costs of bank loans and supplier debt. However, accountants are still attempting to determine specifics.
After nearly 30 years at the company, Rial was appointed as the new CEO in August to replace Miguel Gutierrez.
Americanas is a chain of stores that can be found in all of the country’s shopping malls. It was once owned by three Brazilian billionaires who founded 3G Capital. One of the leading online retailers in the nation is the e-commerce division of the company.
Analysts at JPMorgan (NYSE:) claim that “the market, including us, still does not fully comprehend what the full implications are for Americanas.” said in a research note, citing the company’s inconsistent communication.
The company’s long-term foreign and local currency issuer default ratings were downgraded from “BB” to “CC” by rating agency Fitch. Global S&P (NYSE:) Americanas’ credit rating was downgraded to “BB” and it was added to its CreditWatch list, which had negative effects.
