In a note to the market signed by its chief financial and investor relations officer, Camille Loyo Faria, Brazil’s embattled retail giant Americanas disclosed that its most recent recovery proposal includes a short-term capital increase of BRL 10 billion (USD 1.98 billion) by its reference shareholders — plus two possible additional increases of up to BRL 1 billion each.
The new proposal, advised by Rothschild & Co., means that the company is trying to meet the banks halfway and raise its capital increase efforts to BRL 12 billion.
Back in February, in the first round of meetings, financial creditors pushed for a BRL 15 billion injection from Jorge Paulo Lemann, Marcel Telles, and Carlos Alberto Sicupira. Besides being Americanas’s main shareholders, they also are among the wealthiest people in Latin America.
The two potential additional capital increases would be triggered if Americanas reaches certain maximum leverage limits or stays below a minimum liquidity level; both triggers will be detailed in due course.
The company filed for bankruptcy in mid-January after reporting “accounting inconsistencies.” A few days later, it updated its total debt to BRL 47.9 billion, making its court-supervised recovery the fourth-largest in Brazilian history. Before the scandal came to light, the company had reported gross debt of only BRL 19.3 billion in January, referring to Q3 2022.
Last week, Americanas presented its first recovery plan. In addition to a BRL 10 billion capital injection, it also imposed losses of between 60 and 80 percent on unsecured creditors. They all have until April 19 to analyze the plan.
While it tries to negotiate with thousands of creditors on the primary conditions to stay afloat and continue to operate, Americanas also faces several fronts of investigation.
Brazil’s Securities Commission (CVM) opened 12 inquiries against the company and other agents involved in the scandal, looking into irregularities in the provision of accounting information, negligence by auditors, and the possibility of insider trading.
Federal prosecutors in São Paulo are also investigating the latter possibility, as company directors sold off more than BRL 210 million in shares in the second half of 2022, shortly after the announcement of the company’s new chief executive, Sergio Rial — an event that apparently toppled the company’s house of cards.
Mr. Rial’s tenure lasted for just nine days, as he resigned after revealing the scandal. More than 200 House members have signed a request to create a parliamentary inquiry to investigate the accounting scandal. Last week, the head of the CVM, João Pedro Nascimento, admitted to the Senate Economic Affairs Committee that “oversight relations failed” in the case of Americanas.
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