Americanas’ new debt restructuring proposal has paved the way towards a final agreement with banks, but the Brazilian retailer still needs to hold additional discussions with international and domestic bondholders, three sources close to the matter said.
On 10 October, Americanas announced a set of changes to its original reorganization plan after meeting with banks, improving conditions and increasing the odds of reaching the needed quorum to approve the plan, the first source said, noting that the banks are the largest creditors.
The proposed changes include a BRL 12bn (USD 2.3bn) short-term contribution from reference shareholders, including a BRL 2bn debtor-in-possession (DIP) financing. In the earlier proposal, this contribution amounted to BRL 10bn. The new proposal also provides for a BRL 12bn debt-to-equity swap, the issuance of BRL 1.875bn in bonds to refinance pre-petition claims, instead of BRL 5.87bn in the original plan, and an increase in the amount of debt allocated for repurchase through a reverse auction with a 70% minimum haircut, to BRL 8.7bn, from BRL 2bn.
The debt restructuring talks are “well advanced,” but Americanas still needs to reach an understanding with the debenture holders and bondholders, the second source said.
Conversations between Americanas and banks have been frequent, while in the case of holders of its debentures and bond debt, talks have been held only with advisors, the second source added.
“These proposals for the plan still need adjustments to be acceptable to domestic bondholders,” the third source said. “Exactly as it is, it doesn't fly,” the same source added.
A spokesperson at Americanas declined to comment on the matter.
Nevertheless, this week's proposal represented a change from the slower pace at which negotiations were moving previously, which concerned some creditors, a fourth source said. After the updated terms were published, legal advisors of domestic bondholders held two calls with the company to better understand the proposed changes, added the source.
“The company still needs to write the draft plan including these changes, which will then be taken to the debenture holders to evaluate,” the fourth source said.
In the next two weeks, Americanas might schedule meetings with bondholders and debenture holders, the second source said.
“With the audited balance sheet coming out at the end of the month, the company will want to hurry up,” the second source said.
Yet, banks involved in the negotiations are still involved in several legal disputes that are expected to continue, a fifth source said.
“It is easy to see, as the legal disputes are public, the fifth source said. "In this case, nothing has changed."
Bradesco entered an agreement to end a dispute with the Brazilian retailer, but another legal dispute regarding the search and seizure warrants authorized by the Supreme Federal Court of Justice (STF) following an injunction filed by Bradesco against Americanas to gather documents in a discovery process is still in progress.
Banco Safra also has other legal disputes, including a challenge of claims stemming from guarantees paid after the bankruptcy filing and an investigation into allegations that Americanas prepaid BRL 1bn (USD 206m) in debentures days before the proceedings started.
Americanas filed for bankruptcy protection on 19 January, after revealing accounting inconsistencies on 11 January, which led to an acceleration of domestic bonds and other financial obligations, as reported. The company has BRL 43bn in total debt.