Yahoo Finance Americanas Crash Deepens as BTG Cites Fraud in Legal Battle
(Bloomberg) -- Americanas SA shares sank further after the Brazilian retailer, whose main backers include billionaire Jorge Paulo Lemann, obtained a decision that paves the way for a potential bankruptcy filing, sparking a legal reaction from creditors that accuse the company of fraud.
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The Rio de Janeiro-based firm said on Friday a local court granted it protection against early debt maturity and asset-seizure for a 30-day period, after which Americanas could file for bankruptcy protection. The decision follows the surprise departure of the firm’s chief executive and financial officers last week due to “accounting inconsistencies” estimated at around 20 billion reais ($3.9 billion) tied to supply finance operations.
These inconsistencies will require adjustments that could impact the company’s past balance sheets and possibly breach covenants that could lead to early debt maturity of nearly 40 billion reais, the court decision reads. Americanas also told the court that some creditors moved to request some of its assets be frozen, including over 1.2 billion reais by Banco BTG Pactual SA.
BTG went to court trying to revert the decision and accused the company of fraud, according to a document obtained by Bloomberg. The judge denied the request, citing no urgency for the matter. BTG is planning to go to court again, according to people familiar with the matter.
Lemann and other key shareholders offered a capital injection of 6 billion reais to rescue the firm, but bankers said the amount was too small and are pushing them to pour more than 10 billion reais, people familiar with the matter said last week. The talks with creditors are expected to continue this week.
Americanas hired Rothschild & Co. as its adviser in the debt renegotiation. The Paris-based financial group will work with the retailer at both national and international levels, according to a statement.
Americanas shares fell as much as 43% to 1.80 reais in Sao Paulo Monday, while BTG slumped as much as 5%. Americanas plunged 77% last Thursday, the sharpest decline in at least 20 years for any company that’s currently on the benchmark Ibovespa equity index, Bloomberg data show.
The amount of over 10 billion reais requested by creditor banks “should not be enough for a sustainable business even in the context of potential asset sales,” JPMorgan Chase & Co. analysts led by Joseph Giordano wrote in a note dated Jan. 15, reaffirming a sell-equivalent recommendation. “The ‘chapter 11’ scenario screens as the most likely at this moment.”
(Updates stock move and adds hiring of Rothschild starting in sixth paragraph.)
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