SAO PAULO, Jan 19 (Portal) – A court in Rio de Janeiro on Thursday accepted the filing for bankruptcy protection of Brazilian retailer Americanas SA (AMER3.SA), days after the company disclosed nearly $4 billion in accounting inconsistencies had, which sparked a legal battle with creditors and investors.
Americanas, a 93-year-old company with branches across Brazil and a large e-commerce unit, said in a securities filing that it would restructure about 43 billion reais ($8.2 billion) in debt.
Shares of the company plunged about 42.5% to R$1.00 after news of the filing, extending its year-to-date decline to about 90%.
The firm, which is backed by the trio of billionaires who founded 3G Capital, said the move “came despite the efforts and actions taken by management, along with its financial and legal advisers, over the past few days to advance the company protect against the effects”. the accounting scandal.
Investors had been anticipating the decision, with some believing it was inevitable, particularly after lender BTG Pactual (BPAC3.SA) obtained a court order on Wednesday removing some of the company’s bankruptcy protections.
Americanas also faces seven separate investigations launched by securities regulator CVM, as well as an arbitration proceeding seeking 500 million reais in damages to the firm and the trio that founded 3G Capital.
In a document filed with the court, law firms Basilio Advogados and Salomao Kaiuca Abrahao attributed the urgency of filing for bankruptcy to creditors’ decisions to seize the companies’ assets.
The retailer also mentioned a debt downgrade by rating agencies that prevented it from issuing new loans. S&P, Moody’s and Fitch all downgraded Americanas after the accounting scandal.
Previously, Americanas said its current cash position was just 800 million reais compared to a previously reported 7.8 billion.
Lucas Pogetti, a partner at M&A advisor RGS Partners, said a large portion of Americanas’ previously disclosed cash position was associated with prepayments of receivables or on deposit with creditors.
“Of course, as the banks became aware of the real situation of the company, they began to take a more aggressive stance to protect themselves and consequently restricted access to resources,” Pogetti said.
In the filing, Americanas seeks to exempt its fintech Ame from bankruptcy protection as regulated by the central bank and capital raise approval.
Americanas stores are ubiquitous in Brazilian malls. The e-commerce unit, which traded as a separate company before a recent reorganization, is one of the country’s leading online retailers.
Chief Executive Sergio Rial resigned last week, less than two weeks after taking office, citing the discovery of “accounting inconsistencies” totaling 20 billion reais.
Rial, the former head of Banco Santander’s Brazilian branch (SANB3.SA), attributed the discrepancies to differences in accounting for the financial cost of bank loans and supplier debt.
CFO Andre Covre, who had just joined Americanas, also left the company, which has Brazilian billionaires Jorge Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles as reference shareholders.
Americanas said reference shareholders intended to maintain the company’s liquidity at a level that would allow its businesses, digital channel and other entities to “operate well”.
($1 = 5.2226 reais)
Reporting by Gabriel Araujo, Tatiana Bautzer and Peter Frontini in Sao Paulo and Carolina Pulice in Mexico City; Edited by Rosalba O’Brien and Bradley Perrett
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