By Gabriel Araujo
SAO PAULO (Reuters) -Brazil’s Americanas SA said on Thursday it is considering filing for bankruptcy, a move market participants see as imminent after the retailer uncovered nearly $4 billion in accounting inconsistencies last week.
Shares in the company plunged more than 27% in morning trading to 1.46 real after the news, extending its year-to-date drop to roughly 87%.
Americanas’ acknowledgement of a potential bankruptcy filing came as lender BTG Pactual obtained on Wednesday a court decision overturning part of the firm’s protection from creditors, a measure the retailer said would “harm its viability”.
“Although it has not yet been decided, the management is working with the possibility of in the next few days or potentially in the next few hours approving filing, on an emergency basis, a request for bankruptcy protection,” Americanas said in a securities filing.
Americanas said its current cash position stands at 800 million reais ($154.25 million).
“The news are getting worse and worse,” said Andre Luzbel, head of variable income at SVN Investimentos. “The bankruptcy protection is unavoidable and might 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.
Americanas’ stores are ubiquitous at Brazilian shopping malls. The company’s e-commerce unit, which traded as a separate company before a recent restructuring, is one of the country’s top online retailers.
Last week, chief executive Sergio Rial resigned 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 three Brazilian billionaires who founded 3G Capital – Jorge Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles – as reference shareholders.
S&P, Moody’s and Fitch all downgraded Americanas’ credit ratings following the accounting scandal.
“Filing for bankruptcy protection is imminent and necessary,” said Fernando Ferrer, an analyst at Empiricus Research, noting there could be a “cascade effect” of banks requesting to withhold money from the firm.
Americanas said it was unable to access part of its cash position on Wednesday “without explanation by the bank where the proceeds are deposited,” adding it would appeal the court decision.
It said the decision “harms its efforts to find a short-term solution with its creditors”.
Lender Banco Bradesco SA also said it had asked a Rio de Janeiro court to only allow Americanas to withdraw funds from the bank with prior approval.
“The current cash position is materially below 7.8 billion reais previously stated by the company on Jan. 12,” analysts at Credit Suisse said, adding that “should likely trigger Americanas’ request for judicial recovery”.
($1 = 5.1863 reais)
(Reporting by Gabriel Araujo; Editing by Toby Chopra and Chizu Nomiyama)
