With restricted credit at the beginning of 2023, groups raised R$30bn from investment funds

05/02/2024

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Daniel Wainstein — Foto: Gabriel Reis/Valor

Companies that resorted to loans at higher rates during the credit crisis, especially from asset managers focused on stressed assets, known as “special sits,” are back at the table to refinance their debts. A survey by Seneca Evercore shows that these companies raised around R$30 billion in the first half of 2023—60% of the funds went to publicly-traded companies and another 40% to private companies.

With the credit tap turned off at the beginning of 2023 due to the Americanas accounting fraud, companies had to take on short-term debt to gain momentum at that time. “The problem is that most of these debts have started to fall due now, and new renegotiations are taking place,” said Daniel Wainstein, partner and CEO of Seneca, who has brokered for several clients in this situation.

Some of these companies have started taking out expensive credit again, but not at the same rate as in the first half of last year. Mr. Wainstein said that in the whole of 2023, the companies raised around R$40 billion in total with special sit managers. “The volume was higher in the first half of the year because the credit crisis was at its peak. The scenario began to change in August last year, with a certain return to normality.”

For the executive, the search for expensive credit this semester should be lower since the scenario for financing on the market is currently different compared to the same period last year. “If I had to make an estimate, I’d say that the volume of financing should end the semester at between R$15 billion and R$20 billion,” he said.

Companies such as the women’s fashion retailer Marisa, the textile industry Coteminas, the petrochemical company Unigel, the health group Elfa, and Pátria are among those that have had to resort to specialized funds to ensure they have enough resources to get through 2023. The Bodytech gym chain had part of its debentures bought by the Latache restructuring fund.

With the credit crunch, many retail companies had difficulties and turned to specialized funds for working capital. Marisa began a restructuring process, sold assets, and financed itself with the BTG Pactual bank’s restructuring company at the beginning of the year, according to sources familiar with the business.

Elfa, controlled by the Pátria fund, turned to Daniel Goldberg’s Lumina for an injection of R$620 million—part of which was converted into shares to give the company a boost. Sources linked to the company said that the healthcare company is refinancing its debts, but there are no significant maturities for this year. According to sources, the company should be the target of consolidation—Viveo was pointed out as a potential buyer, but there are no negotiations underway at the moment.

In the case of Bodytech, the company also had to restructure its debts due to the pandemic. Luiz Urquiza, one of the group’s partners, says the banks decided to sell part of the debentures they held—and Itaú’s share was traded to Latache last year. According to Mr. Urquiza, the company repurchased these debentures from Latache in March 2024, a decision made by the partners. The chain began to extend its debentures at the beginning of last year. The bonds total R$ 170 million, of which R$70 million are held by the controlling shareholders—in addition to Mr. Urquiza, businessman Alexandre Acioly is also a partner in the company. The bank debts total R$190 million. “In our case, our debate is not about survival. We are not at risk of out-of-court reorganization.”

In a prolonged negotiation process with creditors, Unigel’s controlling shareholders continue to roll over debt with special sits—and other suppliers—and are still seeking new capital for the group’s working capital, according to sources familiar with the matter. The petrochemical company, which signed an out-of-court reorganization agreement for debts of R$3.9 billion, has until May 20 to approve the plan, but negotiations with creditors remain challenging.

Also burdened with heavy debts, Coteminas is still negotiating with Farallon—the restructuring manager has invested in the company and is in discussions to negotiate debentures convertible into shares. Sources indicate that the textile company is seeking new resources with other managers specializing in stressed assets.

“Companies that turn to funds or investors focused on stressed assets are in a situation that won’t be resolved quickly,” noted Douglas Bassi, a partner at the restructuring firm Virtus. Mr. Bassi does not share Seneca Evercore’s optimism that the improved scenario could reduce the search for cheaper credit this year. “We’re not seeing much activity in the capital markets. I see a lot of agribusiness companies looking to restructure, and some of them are already in a more difficult phase,” he explained.

For Mr. Bassi, many companies are resorting to judicial recovery. “The macroeconomic scenario over the last year has not improved to the point where these companies are recovering.” Sérgio Machado, founding partner of ARC Capital, points out that for banks, high regulatory capital commitments make it nearly impossible to take on or keep credit assets on the balance sheet whose repayment scenario is based on conversion into equity. This capital ends up being provided by funds specializing in illiquid assets or bridging capital. According to Mr. Machado, given the high cost of capital in Brazil, successful restructuring processes involve monetizing assets, both operational and not, to generate liquidity for working capital and reduce liabilities.

Marisa, Unigel, and Elfa declined to comment on the matter. Coteminas did not respond to requests for an interview.

*Por Mônica Scaramuzzo — São Paulo

Source: Valor International

https://valorinternational.globo.com/