Liability Management plan
April 2024
Transformation Plan on track
Already Executed Initiatives
Back to Basics
- Positioning as an omnichannel specialist player (focus on profitability)
- Change of corporate name to Grupo Casas Bahia
Operational | Revenue | Cost | Inventory | |
Levers | • | Inventory reduction of R$ 1.2 Bi y/y | store assortment optimization |
- 23 categories fully migrated to 3P
- 8.6 k positions reduced in 2023
- 55 brick-and-mortarstores closed in 2023 and plan for profitability reversal
- 4 DCs re-sized and +10 under review
- Greater service penetration in the stores | Retail Media (Casas Bahia Ads)
Short-Term Outlook
Results
- GMV reflecting the goal of being a profitable specialist player
- Maintaining market share leadership in core categories
- Greater service penetration
- Adjusted product mix
- Review of unprofitable online paid channels
- Gradual improvement in margins
- Full capture of the Transformation Plan initiatives
- Lean and efficient structure (run rate)
Liquidity
- Free Cash Flow of R$ 648 million in 2023 (after 3 years cash consumption)
Capital
Structure
Leverage
- Liability management contemplates average duration extension and interest rate reductions
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Cash Flow
- Improvement in cash flow over the next years
- Change in the installment plan funding model
- Capital allocation discipline (working capital and capex)
- Net positive results of tax impacts
- Labor liabilities under control
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R$4.1 billion agreement with creditors, increasing the average term from 22 to 72 months and reducing the average cost by 1.5 p.p.
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Successful progress of the Transformation Plan operational levers made possible the anticipation of this liability
management initiative with full support of the main creditors.
Agreement with main financial creditors, with an improvement of R$4.3 billion in cash flow over the next 4
years, due to a grace period of principal and interest payments for more than 2 years and interest cost reduction.
Limited scope, pre-approved by the main creditors, includes only the unsecured debt: Bank Credit Notes and Debentures.
No impact on suppliers, customers, sellers and employees.
Agreement preserves the principal value for the creditors (no "haircut"), with interest rates at market levels
and collateral.
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New Maturity Schedule
R$4.3 billion reductionin debt disbursements over the next 4 years, of which R$1.5 billion in 2024
Q1'24 Scenario
R$ mm
R$ mm
CASH DISBURSEMENT UNTIL 2027: R$4.8 bi
1.384
1.237 | |||
721 | |||
536 | |||
313 | 292 | 207 | |
139 | |||
21 | 4 | 21 | 16 | 0 | 0 |
After liability management
R$ mm
CASH DISBURSEMENT UNTIL 2027: R$0.5 bi | 2.579 |
1.886 |
900 | |||||||||
300 | 200 | ||||||||
150 | 103 | 150 | 95 | 113 | |||||
0 | 0 | 0 | |||||||
0 |
2024 2025
Debts Covered
6th, 7th, 8th and 9th debentures and
Bank Credit Notes (CCBs)
2026 2027 2028
Amortization | Interest | ||||
Cost
CDI + 2.70%
2029 2030
Average Term
22 months
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | |||
Amortization | Interest | ||||||||
Debts Covered | Cost | Average Term | |||||||
CDI + 1.20% | 72 months | ||||||||
New debenture instrument | |||||||||
Savings of R$60mm p.a. in debt interest
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Pre-packaged Perimeter | Table of Creditors
The pre-packaged perimeter amounts to R$4.1 billion, with an approval of 55%, from partner banks
Instruments (R$ mm) | Outstanding | Other | Assets from | Partner Banks | Approvers Quorum |
balance | Creditors | Partner Banks | |||
6th Debenture Issue | 1.064 | 804 | 250 | 10 | 0,30% |
7th Debenture Issue | 1.014 | 125 | 248 | 641 | 15,70% |
8th Debenture Issue | 428 | 428 | - | - | - |
(CRI) | |||||
9th Debenture Issue | 1.166 | - | - | 1166 | 28,60% |
Bank Credit Notes | 407 | - | - | 407 | 10,00% |
(=) Total | 4.079 | 1.357 | 498 | 2.225 | 54,50% |
Quorum Partner Banks + Assets | Quorum Partner Banks |
R$2.723mm (66,8%) | R$2.225mm (54,5%) |
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Details of the Proposal
The proposal under the scope of the pre-pack introduces a definitive restructure of the Company liabilities and provides the possibility of deleveraging through the conversion of part of the credit into equity
• All creditors will receive the series in proportion to their credit
Payment conditions
Series 1
R$1.5 bi
37%
Debenture
R$4.1 bi
R$2.6 bi
63%
Series 2
Partner
Series 3
Non-partner
- Interest grace period: 24 months - interest capitalization during the grace period
- Principal grace period: 30 months
- Rate: CDI + 1.50%, semester payments after grace period (1st in May/26)
- Amortization: nov/26 10%; nov/27 - 10%; nov/28 - 20%; nov/29 - 60%
Creditors who (i) maintain the current conditions of any credit lines not subject to the pre-packaged and/or (ii) offer new resources (new money) available, under conditions to be defined
- Option of (i) conversion into Equity between 18 and 36 months (80% VWAP 90d) or (ii) bullet payment (principal and interest) in Nov/30
- Rate: CDI + 1.0% p.a.
- Bullet payment (principal and interest) in Nov/30
- Rate: CDI + 1.0% p.a.
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Estimated Schedule and Main Aspects of the Process
Up to 1 week | 30 days | ||
Objections are exhaustive and limited by law | |||
Request Court to | Request | Approval of | Plan |
approve | |||
Review | the Plan | Implementation | |
Pre-packaged Plan | |||
The Court analyzes the | The Court analyzes the | Plan is implemented, previous debt | |
Pre-packaged Plan, agreed | request and defines a | Proposal (and objections) | is restructured into new debt |
with creditors holding 54,5% | deadline for possible | and decides on its | instruments |
of the restructured debt, | objections. | approval. |
presented to the Court. | . |
Maintain commitments with all suppliers and insurers
Restructure of only the Company's financial debt, keeping payment conditions unchanged for all suppliers.
Bonds together all dispersed unsecured financial creditors
Pre-packaged allows for the restructuring terms set out in the plan to be binding on all unsecured financial creditors.
Operational continuity assured
(1) Reestructuring does not affect the rights of the Company's suppliers and employees, (2) it does not require monitoring of the Company's activities by the Court or a judicial administrator, (3) does not impose risk or possibility of converting the pre-packaged plan into bankruptcy, and (4 ) preserves the future possibility of bilateral or collective renegotiations.
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Benefits of the Debt Reprofiling
- Improvement of R$4.3 billion in cash flow over the next 4 years.
- Average debt term from 22 to 72 months, with a reduction of 1.5 p.p. in the average cost of debt.
- New capital structure improves the credit perspective and brings flexibility in the relationships with suppliers, insurers and future creditors.
- New cash flow improves protection against market volatility, further increasing confidence in the execution of the Transformation Plan.
- Greater management focus on the operational levers of the Transformation Plan.
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Disclaimer
Grupo Casas Bahia SA published this content on 28 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2024 00:36:08 UTC.