Market roundup: Americanas case a sign of bigger problems

Photo: Aloisio Mauricio /Fotoarena/Folhapress

Americanas accounting error could turn into BRL 40 billion debt

A Rio de Janeiro business court on Friday granted retail giant Americanas an injunction that prevents the freezing of its assets and postpones debt payment obligations until the company assesses whether it will file for bankruptcy protection or not, newspaper O Globo reported. The company has 30 days to turn in that assessment.

State of play. The decision comes two days after Americanas reported “inconsistencies” in its books. The retailer told the court that the accounting error could lead to “the early and immediate maturity of debts that could reach BRL 40 billion” (USD 7.82 billion).

Investment bank BTG Pactual, for example, would have declared the early maturity of debts worth more than BRL 1.2 billion.

Why it matters. The new estimate of the problem is twice as big as the company previously told analysts and investors. Even before this development, Americanas had experienced the biggest single-day crash the Brazilian stock market had seen since 1994.

Distressing. What is worrisome about this case is that Americanas shares are listed on Brazil’s “Novo Mercado,” ironically the strictest governance segment of the country’s stock market.

Of the 382 companies listed on B3, 202 are part of Novo Mercado. Created in 2000, it comprises companies that voluntarily adopt corporate governance...

Fabiane Ziolla Menezes and Ana Ferraz

Former editor-in-chief of LABS (Latin America Business Stories), Fabiane has more than 15 years of experience reporting on business, finance, innovation, and cities in Brazil. The latter recently took her back to the classroom and made her a Master in Urban Management from PUCPR. At TBR, she keeps an eye on economic policy, game-changing businesses, and people driving innovation in Latin America.