Brazil’s Infracommerce Executes Massive 87% Capital Cut to Survive Financial Crisis

Infracommerce (IFCM3) shareholders approved a dramatic capital reduction during Wednesday’s assembly, according to company documents released May 21.

The e-commerce solutions provider cut its share capital by R$1.856 billion ($331 million), reducing it from R$2.127 billion ($380 million) to just R$271.9 million ($48.5 million).

This 87% decrease aims to offset accumulated losses that have severely impacted the company’s financial health. The drastic measure comes after Infracommerce raised its capital to R$2.127 billion in May.

Despite the capital reduction, the company will maintain its 1.48 billion outstanding shares without any characteristic changes. Shareholders also approved using R$150 million ($26.8 million) from capital reserves to further absorb losses.

The assembly restructured the board of directors, reducing membership requirements to between three and five members. Ivan Luiz Murias dos Santos now chairs the board, joined by independent directors Carlos Luis Brito Claissac and Roberto Rittes de Oliveira Silva.

João de Saint Brisson Paes de Carvalho serves as an alternate member. These changes form part of Infracommerce’s broader financial restructuring efforts.

Last October, the company signed an agreement with major creditors to restructure R$641 million ($114.5 million) in debt, representing 85% of its total debt burden. Key financial institutions involved include Itaú Unibanco, Banco Santander, Banco do Brasil, and Banco ABC Brasil.

Infracommerce Advances Recovery with Debt Restructuring

The debt restructuring plan created a new entity called Newco as the sole creditor. Infracommerce agreed to transfer 83.6% of shares in its Cayman Islands subsidiary, New Retail Limited, to pay off R$420 million ($75 million) of debt.

The remaining R$221 million ($39.5 million) converted to private debentures, potentially exchangeable for ordinary shares within five years. Recent financial results show mixed signals.

First quarter 2025 brought a positive adjusted EBITDA of R$1.3 million ($232,000), marking a 102.6% improvement from 2024. Total GMV reached R$3.3 billion ($589 million), increasing 4.4% year-over-year. Organic gross profit grew 53.7% to R$52 million ($9.3 million).

Cost-cutting measures reduced expenses by 30.5% compared to Q1 2024. However, full-year 2024 results revealed a staggering R$1.76 billion ($314 million) net loss, largely due to R$1.39 billion ($248 million) in impairment expenses from asset revaluation.

The company ended 2024 with R$128.4 million ($22.9 million) cash and R$640.9 million ($114.4 million) net debt, 129.6% higher than 2023. Latin American operations outside Brazil showed 10.3% revenue growth, partially offsetting Brazilian market challenges.

Infracommerce shares have experienced volatile trading, including a 66.67% single-day surge in March 2025. The market continues to watch closely as the company implements its recovery strategy amid significant financial restructuring.

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