Billionaire-backed Americanas files for bankruptcy protection, shares tank

By Gabriel Araujo

SAO PAULO (Reuters) -Brazilian retailer Americanas SA on Thursday filed for bankruptcy protection, days after uncovering nearly $4 billion in accounting inconsistencies and amid a legal feud with creditors.

Americanas, backed by the billionaire trio that founded 3G Capital, said in a securities filing that it will restructure debts of about 43 billion reais ($8.23 billion).

Shares in the company plunged more than 25% to 1.30 real following news of the filing, extending its year-to-date drop to roughly 87%. Brazil’s stock exchange B3 said it will exclude Americanas shares from its indexes, including benchmark Bovespa.

The move came “despite the efforts and measures that the management has been taking in the past few days alongside its financial and legal advisers to protect the company from the effects” of the accounting scandal, the company said.

Investors had expected the decision, with some deeming it unavoidable especially after lender BTG Pactual obtained on Wednesday a court decision overturning part of the firm’s protection from creditors.

In the document filed with the court, law firms Basilio Advogados and Salomao Kaiuca Abrahao attributed the urgency to file for bankruptcy to the creditors’ decision to seize the companies’ assets.

The retailer also mentioned the downgrade by ratings agencies, which prevented any new loans from being extended. S&P, Moody’s and Fitch all downgraded Americanas’ credit ratings following the accounting scandal.

Americanas had said earlier on Thursday that it was considering filing for bankruptcy on an emergency basis, noting its current cash position stood at only 800 million reais, down from a previously reported 7.8 billion.

Lucas Pogetti, a partner at RGS Partners, said a large part of Americanas’ previously disclosed cash position was linked to the prepayment of receivables or deposited with creditors.

“Naturally, when the banks became aware of the company’s real situation they began to adopt a more aggressive posture to protect themselves, consequently restricting access to resources,” Pogetti said.

In the filing, Americanas asks to exclude fintech Ame from the bankruptcy protection, as it is regulated by the central bank, and for authorization to increase its capital.

Americanas’ stores are ubiquitous at Brazilian shopping malls. It e-commerce unit, which traded as a separate company before a recent restructuring, is one of the country’s top online retailers.

Chief Executive Sergio Rial resigned last week, less than two weeks after taking the job, citing the discovery of “accounting inconsistencies” totaling 20 billion reais.

Rial, the former head of Banco Santander’s Brazilian arm, attributed the inconsistencies to differences in accounting for the financial cost of bank loans and debt with suppliers.

Chief Financial Officer Andre Covre, who had just joined Americanas as well, also left the firm, which has Brazilian billionaires Jorge Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles as reference shareholders.

Americanas said the reference shareholders intend to maintain the company’s liquidity at levels that allow for a “good operation” of its stores, digital channel and other entities.

Andre Luzbel, head of variable income at SVN Investimentos, said the bankruptcy protection was unavoidable, noting it would be one of the largest ever in Brazil, “as complex as Oi’s one.”

Oi SA, a telecom firm, filed in June 2016 for Brazil’s then-biggest ever bankruptcy protection and only exited it in December 2022.

Fernando Ferrer, an analyst at Empiricus Research, said the bankruptcy filing was “imminent and necessary,” noting there could have been a “cascade effect” of banks requesting to withhold money from the company.

($1 = 5.2226 reais)

(Reporting by Gabriel Araujo, Tatiana Bautzer and Peter Frontini; Editing by Toby Chopra, Chizu Nomiyama and Bill Berkrot)