Founders commit up to US$4 billions to ailing Brazilian companies
Facing high interest rates and mounting debts, struggling Brazilian companies receive a lifeline from their founders and major shareholders.
According to Bloomberg News, these stakeholders have pledged to inject up to R$19.3 billion (US$4 billion) in capital to support companies in need, with more bailouts expected in the coming months.
The capital injections, facilitated through stock offerings and real estate transactions, are often driven by the necessity imposed by creditors rather than a voluntary decision by the founders.
Interest rates in Brazil have reached a six-year high, and the credit crunch following the collapse of retailer Americanas, along with global monetary tightening, has made borrowing both domestically and internationally more challenging.
The value of the country’s dollar-denominated corporate bonds trading at stressed levels has risen to US$12 billion, a 26% increase since the start of the year.
In response, key shareholders have stepped in to assist struggling companies.
For example, Guilherme Paulus, founder of travel agency chain CVC, subscribed to the company’s public offering of shares as part of a debt restructuring deal with local bondholders.
The equity offering is expected to enhance CVC’s working capital and address principal payments on its notes.
Another notable example involves the billionaires like Jorge Paulo Lemann behind Americanas, who are negotiating to inject up to R$12 billion into the company following suspicions of major accounting fraud.
Similarly, the founding families of Hapvida and Dasa, two healthcare operators, intervened to address concerns about their financial situations by participating in stock offerings and engaging in real estate transactions.
These financial operations, aimed at generating liquidity, have contributed to a more balanced capital structure and reduced financial leverage for the companies involved.
As a result, Hapvida’s shares rebounded, local bond spreads against the basic interest rate narrowed, and positive outcomes are expected for Hapvida’s credit spreads.
Additionally, Tok&Stok, a furniture and decoration retailer, secured a R$100 million injection led by its controlling shareholder, Carlyle Group, amidst a debt restructuring.
Marfrig, which owns a stake in chicken breeding and processing giant BRF, announced a partnership with Saudi state fund Salic to acquire up to R$4.5 billion in shares through a public offering, pending shareholder approval.
These commitments from founders and major shareholders demonstrate their determination to support struggling companies in Brazil and help them overcome their financial challenges.
With information from Bloomberg
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