Americanas petitions for judicial reorganization in Brazil

By Sarah Lizee

Olympia, Wash., Jan. 20 – Americanas SA petitioned for judicial reorganization in Brazil on Thursday after finding itself at a “dead end” with nearly R$43 billion in debt, the company said in a statement.

On Jan. 11, the company had announced substantial inconsistencies in its financial statements. The inconsistencies are estimated around R$20 billion as of Sept. 30.

Some of Americanas’ creditors immediately took action against the company, and the parties were not able to negotiate.

Americanas said that even though it took measures to “reduce the impact” of its announcement, in less than a week, it lost almost 80% of its market value, with its shares dropping to R$1.80 from R$12.00 before the announcement went out.

On Jan. 13, the company received injunctive relief from the Rio de Janeiro court, which allowed the company to not pay off its debt through the 30 following days.

Americanas received downgrades from rating agencies S&P, Moody’s Investors Service and Fitch Ratings, which made its situation “even worse” coupled with the fall in value of its shares, the company said.

After the downgrades, banks refused to advance credit card receivables, which Americanas has historically used for working capital. The company said this drained over R$3 billion of its cash.

The company said it trusts the judicial reorganization will allow it to restructure its debt and allow it to continue to carry out its activities.

Americanas is a retail chain based in Rio de Janeiro.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.