The former president of Americanas Sérgio Rial was officially replaced this Monday (16) in the task of trying to calm the creditor banks and investors, which he had taken on informally, after the bombastic news that the balance sheet of the company he presided has stopped accounting for debts of R $ 20 billion.
The retailer’s board has hired Rothschild & Co as a partner in debt renegotiation, in Brazil and abroad. The investment bank, controlled by the Rothschild family, has offices in 57 countries and Luiz Muniz, who heads the Brazilian branch, is close to billionaire trio Jorge Paulo Lemann, Beto Sicupira and Marcel Telles — who together own 31% of the company .
Rial, who, according to sources familiar with the deal, participated in the selection of Rothschild for the role, could not officially take over this deal, since he chairs the board of directors of the bank Santander Brasil — one of the creditors of the retail chain. He continues as advisor to the trio of entrepreneurs to deal with the corporate restructuring that could become necessary in a possible capitalisation.
The banker was announced last year as president of Americanas with the task of “unlocking the value” of the company: in market jargon, a company needs to unlock its value when, despite having an enormous generation capacity of cash, is perceived by investors as unattractive.
He took over earlier in the year and, according to close executives, in less than 48 hours had to deal with a problem that escalated into a billion-dollar accounting scandal.
According to reports, two executives of the group came to him with a report showing what they thought was a procedural error in the releases. Initially Rial would not have realized the seriousness of the hole, confusing the orders of magnitude and asking if it was R$ 20 million.
Also reportedly, Rial believed it was a “minor” inconsistency, which would only require a balance sheet adjustment. For a company the size of Americanas, BRL 20 million would be “nothing”, in the words of those who witnessed the scene.
Upon hearing that it was BRL 20 billion, according to the retailer’s executives, he called the entire emergency team, including the then director of investor relations, André Covre. The two resigned ten days after Rial took office and, according to the executives interviewed by the Sheeteight days after taking stock of the situation.
Rial immediately contacted Lemann, Sicupira and Telles, told what was happening in Americanas, resigned and agreed to provide informal advice to shareholders in an attempt to save the company, according to people close to the executive.
Wanted, Rial declined to comment. Americanas did not respond until this text was published.
Shortly after the former banker decided to disclose the problems it had encountered, Americanas went to court to try to protect itself from lawsuits from its major creditors, mainly the largest banks in the market.
The Rio de Janeiro Court of Justice granted a sort of pardon, precluding any type of advance payment to creditors, so that the company could prepare for a possible judicial recovery request.
BTG Pactual was the first to appeal the decision. He lent R $ 2.3 billion to the company as a way to finance purchases of goods by suppliers.
Other banks, such as Bradesco and Safra, intend to follow suit.
In its request, BTG —controlled by André Esteves— raises the possibility of fraud and contests the judicial protection given to the network to avoid collection.
The revelation of accounting inconsistencies in the order of R$ 20 billion has triggered a contractual mechanism in which creditors can collect the debt in full in advance. It is speculated in the market to be around R$40 billion, but network executives say it should reach R$30 billion at most.
Did you know or didn’t you know?
The scandal caused consultants, competitors and market agents to debate whether or not Rial knew about the accounting problem when he agreed to chair Americanas.
According to people close to him, he claims he doesn’t know. Interlocutors of the company executive say that he has agreed to manage it with access to open data. They also say that, being a B3-listed company, the former banker could only carry out due diligence (prior inspection) with a signed contract. That’s what happened, according to reports.
The former banker wanted to use his experience accumulated in Santander – an institution he presided over and consolidated as a major retail chain – and in Marfrig to reposition Americanas.
Another question from the bankers refers to the fact that the executive has “changed sides” and would start working for billionaire shareholders.
One of Rial’s conditions for helping the three save the company was that the bankruptcies be widely publicized. The executive told Americanas internally that the disclosure was proof that he had no prior knowledge.
Rial’s argument for leaving the presidency of the network was that, with the flaws discovered, he would have to use his experience as a banker to renegotiate debts, for which he was not hired.
The deal is directly related to the now disclosed gap, which is due to Americanas’ prepayment of supplier receivables. Through them, banks advance payments to suppliers that the retailer would only make after a few months, and are then repaid by Americanas, charging interest.
These transactions, known as risk drawn, have been erroneously recorded on the balance sheet. Instead of expense account items with suppliers, payables to financial institutions should have been considered. Creditors still don’t know if the interest charged on these transactions has been calculated, which would make the debt even greater.
If Rial agrees to play this role in the negotiations with the banks, he would have to negotiate with Santander, which would constitute a conflict of interest, making his stay on the bank’s board impractical.
This is why Rial agreed to continue as an advisor to the group of shareholders, as long as he was protected. The way out was the hiring of Luiz Muniz, who runs the Rothschild bank in Brazil, the institution that will lead talks with creditors.
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