SAO PAULO, January 19 (Reuters) – A court in Rio de Janeiro on Thursday accepted Brazilian retailer Americanas SA (AMER3.SA) filed for bankruptcy protection, days after the company disclosed nearly $4 billion in accounting inconsistencies that sparked a legal feud 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 that it would restructure debts of about 43 billion reais ($8.2 billion).
Shares in the company fell about 42.5% to 1.00 real after news of the filing, extending the decline to about 90% so far.
The company, backed by the billionaire trio that founded 3G Capital, said the move came “despite the efforts and measures taken by management over the past few days along with its financial and legal advisers to protect the company from the fallout.” of the accounting scandal.
Investors expected the decision, and some saw it as inevitable, especially after lender BTG Pactual (BPAC3.SA) received on Wednesday a court decision that removes part of the company’s protection from creditors.
Americanas is also facing seven different investigations launched by securities regulator CVM, as well as one arbitration process request a compensation of 500 million reais from the company and the trio that founded 3G Capital.
In a document filed with the court, law firms Basilio Advogados and Salomao Kaiuca Abrahao attributed the urgency of the bankruptcy to the creditors’ decision to seize the companies’ assets.
The retailer also reported a debt reduction by rating agencies, which prevented new loans from being issued. S&P, Moody’s and Fitch have all downgraded Americanas’ credit rating over the accounting scandal.
Earlier, Americanas had said its current cash position was only 800 million reais, up from a previously reported 7.8 billion.
Lucas Pogetti, a partner at M&A advisors RGS Partners, said much of Americanas’ previously disclosed cash position was related to prepayment of receivables or deposited with creditors.
“Obviously, when the banks became aware of the real situation of the company, they started taking a more aggressive stance to protect themselves, limiting access to funds,” Pogetti said.
In the filing, Americanas is asking for its fintech, Ame, to be excluded from bankruptcy protection as it is regulated by the central bank, and for permission to raise its capital.
Americanas stores are ubiquitous in Brazilian malls. The e-commerce arm, which traded as a separate company before a recent restructuring, is one of the largest online retailers in the country.
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 the Brazilian branch of Banco Santander (SANB3.SA)attributed the inconsistencies to differences in the accounting of the financial costs of bank loans and debts with suppliers.
CFO Andre Covre, who had also just joined Americanas, also left the company, which has Brazilian billionaires Jorge Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles as reference shareholders.
Americanas said its reference shareholders intended to maintain the company’s liquidity at a level that allowed “proper functioning” 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 Carolina Pulice in Mexico City; Edited by Rosalba O’Brien and Bradley Perrett
Our standards: The Thomson Reuters Principles of Trust.