General Shopping 4Q18 Credit Report – Bondholders have failed to stop asset dividend and they know what is coming
12 April 2019 | 20:38 BST
General Shopping e Outlets do Brasil (GSB) bondholders Moneda Latinoamerica and Inversiones Odisea have not been successful in recent attempts requesting the suspension and postponement of the planned transfer of 11 malls to Top Center Real Estate Investment Fund (FII). A Sao Paulo commercial court and the Comissao de Valores Mobiliarios (CVM) did not find any illegalities with the asset distribution and the 26 March shareholders’ meeting approving the transaction.
The company faces an estimated annual cash flow deficit of BRL 44.4m (USD 11.5m) subsequent to the transfer of assets. Estimated LTM EBITDA would decline to BRL 40.8m for remaining assets, from BRL 143.5m for all assets, and would not be sufficient to cover interest expense of BRL 56.8m including the 10% coupon on the senior perpetual bonds. GSB would need to continue to defer interest payments on the subordinated perpetual bonds.
Assuming a uniform valuation across assets, the audited earnings’ total fair value of BRL 2.13bn applied to 69% of owned Gross Leasable Area (GLA) included in the asset portion of the dividend results in value of BRL 1.47bn, substantially exceeding the market value of BRL 622m assigned by the company to the asset dividend.
CLICK HERE to access the previous January 2019 Credit Report
CLICK HERE to access the 3Q18 Credit Report
CLICK HERE to access the February 2019 Shareholder Profile on the Veronezi family
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