Americanas rush to produce new balance sheets and seal an agreement with debenture holders – 06/22/2023 – Market

Americanas is racing to finalize its fourth-quarter balance sheet, while redoubling efforts to get creditors’ support for its judicial recovery plan, according to sources close to the matter.

Americanas, which filed for bankruptcy in January after discovering a BRL 20 billion accounting shortfall, is now negotiating changes to the plan to win over debenture holders who previously indicated they would reject it.

At the same time, the company is preparing audited financial statements, said a company source, who asked not to be named, as Americanas seeks to reassure creditors that the dimensions of the accounting scandal have been fully disclosed. Since the initial announcement, in January, Americanas has uncovered over R$4 billion in accounting fraud.

These steps are considered essential for the company to meet the deadlines and avoid postponing the approval of the company’s judicial recovery plan, added the source.

Although the presentation of an audited financial statement is not mandatory for holding a general meeting, it is essential to “convince” creditors to approve the recovery plan, said the source, as they will have a larger stake in the company as part of a proposal to convert R$10 billion of debt into equity.

Americanas said in a statement to the market that it expects to release its past financial statements by Aug. 31, adding that this is the company’s “best estimate”.

This month, Americanas’ top management criticized former executives, banks and auditors after a report by the company’s legal advisors alleges their involvement in “fraud” in the financial statements.

The current president of Americanas, Leonardo Coelho, said in a hearing of the Parliamentary Commission of Inquiry (CPI) of the Chamber that investigates the case that the members of the board of Americanas are not among the at least 30 employees who, according to him, collaborated to hide the problems in the company’s balance sheet, adding that those involved are being dismissed.

The internal restructuring of the finance team could delay the processing of income statements, the source said, adding that “with a few layoffs, rediscovering the past becomes even more complicated”.

With almost BRL 11 billion in Americanas debt in hand, the bondholders are considering demanding smaller cuts than the approximately 70% foreseen in the recovery plan, in addition to additional compensation for their losses, according to two sources close to the matter.

The company’s original proposal to convert debt into equity also goes against the mandates of many bondholders who are barred from owning equity, and talks are underway to find an alternative, according to the two sources.

Most of the debt cannot be converted into shares — for pension or credit funds, as there are legal restrictions, said Adriano Casarotto, credit manager at Western Asset, which holds BRL 300 million in Americanas debt.

The plan must be discussed in court by the end of July, and a general meeting could be called to vote. However, if there is no agreement, the process for approving the judicial recovery plan may be restarted.

In a statement, Americanas said it remains “committed to its creditors” to build consensus on its judicial recovery plan and that it is still subject to revisions and adjustments.