Distressed Brazilian retailer Americanas SA got court approval for a debtor-in-possession financing plan of up to 2 billion reais ($379 million) through the sale of local bonds, with its biggest shareholders willing to fund up to half of it.
(Bloomberg) — Distressed Brazilian retailer Americanas SA got court approval for a debtor-in-possession financing plan of up to 2 billion reais ($379 million) through the sale of local bonds, with its biggest shareholders willing to fund up to half of it.
The Rio de Janeiro-based company will sell 1 billion reais of local notes in a first tranche which could be fully subscribed by billionaires Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira, according to a filing. The financing will be non-secured and non-convertible for shares, mature in 24 months and pay 128% of the benchmark CDI rate.
The so-called DIP loan will “help Americanas maintain the normal course of its operations, its cash flow and bolster liquidity,” the company said. It will also allow for working-capital investments including payments to suppliers and employees, the statement signed by Chief Financial Officer Camille Loyo Faria said. The issue was discussed and approved by the board on Feb. 7.
Americanas filed for bankruptcy protection last month, a few weeks after a shocking revelation that it had 20 billion reais of “accounting inconsistencies” linked to supply chain financing. The company later reported over 41 billion reais in liabilities with almost 8,000 creditors led by the nation’s largest banks.
Americanas shares have cratered 90% this year while its dollar bonds trade at just 15 cents on the dollar.
While it would be the first fresh financing for Americanas since the bankruptcy filing, it will likely be seen as insufficient by creditors who have been calling for at least 15 billion reais of capital to be injected, according to people familiar with the talks. Sicupira, who was the company’s chairman until 2020 and remains on the board, led some face-to-face talks with banks earlier this week. On the sidelines, some legal disputes with banks over frozen funds continue in court.
The trio, which founded buyout firm 3G Capital Inc, began investing in Americanas in 1982. While they remain the largest shareholders with a stake of about 30%, they ceded control in 2021 as part of a merger.
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