SAO PAULO, Jan 19 (Reuters) – A Rio de Janeiro court on Thursday accepted Brazilian retailer Americanas SA (AMER3.SA)’s application for bankruptcy protection, days after the company disclosed nearly $4 billion accounting inconsistencies that sparked a legal dispute with creditors and investors.
Americanas, a 93-year-old company with stores across Brazil and a major e-commerce unit, said in a securities filing it would restructure debts of about 43 billion reais ($8.2 billion) .
The company’s shares plunged around 42.5% to BRL 1.00 after the filing announcement, extending its year-to-date decline to around 90%.
The company, backed by the billionaire trio who founded 3G Capital, said the move came “despite the efforts and actions that management has taken in recent days alongside its financial and legal advisers to protect the business. effects” of the accounting scandal.
Investors had been expecting the move, with some saying it was inevitable, especially after lender BTG Pactual (BPAC3.SA) won a court ruling on Wednesday voiding part of the company’s protection from creditors.
Americanas is also facing seven different investigations launched by securities regulator CVM, as well as an arbitration process seeking compensation of 500 million reais from the company and the trio that founded 3G Capital.
In a court filing, law firms Basilio Advogados and Salomao Kaiuca Abrahao attributed the urgency of the bankruptcy filing to creditors’ decision to seize the companies’ assets.
The distributor also mentioned a deterioration of the debt by the rating agencies, which prevented the granting of new loans. S&P, Moody’s and Fitch all downgraded Americanas’ credit ratings following the accounting scandal.
Earlier, Americanas said its current cash position stood at only 800 million reais, compared to 7.8 billion previously announced.
Lucas Pogetti, a partner at mergers and acquisitions adviser RGS Partners, said much of Americanas’ previously disclosed cash position was tied up in prepayment of debt or deposited with creditors.
“Naturally, when banks became aware of the true situation of the business, they began to adopt a more aggressive posture to protect themselves, consequently limiting access to resources,” Pogetti said.
In the filing, Americanas is asking to exclude its fintech, Ame, from bankruptcy protection because it is regulated by the central bank, and for permission to raise its capital.
Americanas stores are ubiquitous in Brazilian malls. Its e-commerce unit, which operated as a separate company before a recent restructuring, 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 the Brazilian branch of Banco Santander (SANB3.SA), attributed the inconsistencies to differences in accounting for the financial cost of bank loans and debt to suppliers.
Financial director André Covre, who had also just joined Americanas, also left the company, which counts Brazilian billionaires Jorge Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles as reference shareholders.
Americanas said the anchor shareholders intend to keep the company’s liquidity at levels that allow for the “smooth operation” of its stores, digital channel and other entities.
($1 = 5.2226 reais)
Reporting by Gabriel Araujo, Tatiana Bautzer and Peter Frontini in Sao Paulo and the Carolina Police in Mexico City; Editing by Rosalba O’Brien and Bradley Perrett
Our standards: The Thomson Reuters Trust Principles.