Americanas’ Financial Triumph: $4.9 Billion Capital Increase in Debt Pact

The Brazilian retailer Americanas SA has achieved a debt restructuring agreement with bank creditors, a major step toward its bankruptcy exit.

The business entered crisis 11 months ago when an accounting fraud quadrupled its debt to $8.7 billion and inked a binding arrangement with creditors holding more than 35% of its debt on Monday. Additional creditors wanted to join the non-binding accord. 

After long talks with creditors who control over 50% of Americanas’ debt, the settlement authorizes the business to propose a fresh plan in court. These parties will endorse the initiative at a meeting on December 19.

Although the creditors were not named in the filing, banks are believed to hold the majority of the debt. 

Their involvement is crucial to avoid any risk of liquidation for Americanas, as the company has witnessed a decline in digital sales, loss of clients, and the closure of numerous stores in the past year. After the announcement, Americanas’ shares fell by 6.4% in Sao Paulo trading.

Under the debt restructuring proposal, the top shareholders will inject 12 billion reais ($2.5 billion) through a cash injection and DIP financing. 

Creditors will engage in a debt-to-equity swap amounting to 12 billion reais. This could boost the company’s capital by 24 billion reais ($4.9 billion). 

All shareholders will have the opportunity to participate in the capital increase. Americanas plans to seek approval from its board of directors to issue one subscription bonus for every three shares issued as an additional benefit.

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Americanas Restructuring Plan

The Brazilian retailer Americanas SA has achieved a debt restructuring agreement with bank creditors, a major step toward its bankruptcy exit.

As part of the agreement, the company has secured a 1.5 billion-real bank or judicial insurance guarantee, which will be available for two years following the completion of the restructuring stages or the end of the judicial reorganization, whichever comes first. 

The plan also designates up to 8.7 billion reais for the payment of financial creditors through a reverse auction or an early amount of credits at a discount. After implementing the measures outlined in the plan, Americanas expects to have a gross debt of 1.875 billion reais.

The retailer’s crisis began on January 11 when a new CEO hired from outside the company took over. The incoming CEO, Sergio Rial, resigned nine days into the job, citing “accounting inconsistencies” estimated at 20 billion reais. 

The board swiftly hired new leaders and sidelined the previous management team while dealing with creditors and maintaining operational stability. 

The new leadership has accused the last management team, led by Miguel Gutierrez, of concealing debts and inflating profits through falsified advertising contracts and obscured supply-chain financing transactions.

Americanas, founded in 1929, is a well-known retailer in Brazil known for offering affordable prices on a wide range of products. 

The company aims to reduce its debt to as low as 1 billion by 2025 and expects to generate positive earnings before interest, taxes, depreciation, and amortization of nearly 2 billion reais.

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