(Broadcast Column - Estadão) Deadlines Expire Mid-Year for Many Companies, Requiring New Solutions By Cynthia Decloedt e Altamiro Silva Junior With banks tightening credit and the capital markets essentially closed following the shock and stress caused by the disclosure of Americanas' financial losses, many companies turned to “special situations” (or "special sits") funds to navigate the crisis. These funds, which specialize in investing in distressed businesses, injected R$ 30 billion into companies that found themselves strangled by the liquidity crisis that began in January of last year. This estimate comes from Seneca Evercore, an independent financial advisory firm that mediated several transactions with these funds on behalf of its clients amid one of the most severe liquidity crunches in recent years.
Daniel Wainstein, a senior partner at the firm with years of experience at Goldman Sachs in Brazil and the U.S., notes that many of these companies received 12-month grace periods to repay the loans. However, they will need to seek new solutions to meet their obligations with the special sits funds by mid-year. This is expected to generate activity for firms like Seneca Evercore, involving market-based solutions such as structuring debt instruments, mergers and acquisitions (M&A), and equity injections in exchange for shares.
“We’re seeing several cases where the bill is coming due, and companies, without any material changes to their fundamentals, will need to rethink their balance sheets,” says the executive. Due to the high risk of the assets in which they invest—typically distressed companies—funding from these special sits funds tends to be expensive.
The Market Created Competition for Banks
Wainstein emphasizes that the development of capital markets through investment platforms, independent asset managers, and family offices has been crucial for companies accessing resources that were previously concentrated solely among major banks. “Today, competition for banks comes from the capital markets, and the drop in the Selic rate is starting to be reflected in funding costs for companies,” he explains.
The executive also notes that his own firm, founded ten years ago with a focus on M&A operations, has opened a new division for structuring and distributing fixed-income instruments. This move was made to address client demand and to gain a better understanding of investors’ appetite. Nonetheless, Wainstein stresses that the company’s intention is to remain an open platform, partnering with banks and other investors when needed to execute transactions.
The new division is led by three partners. One of them is Nelson Campos, a pioneer in Brazil’s securitization market and a key player in establishing Ourinvest Real Estate. Another partner is Luis Miraglia, who led Morgan Stanley’s fixed-income division for Latin America for many years. The third partner is Joaquim Oliveira, who has been with Seneca since April of last year and was previously the CEO of Cescon, Barrieu, Flesch & Barreto Advogados.
According to Wainstein, Seneca Evercore announces 8 to 10 transactions annually, which can rise to 15 when including non-public deals, such as many of those involving special sits funds last year. Seneca’s mandates are always tied to liquidity solutions, including securing resources from asset managers, conducting M&A transactions, and raising funds through the issuance of Agribusiness (CRA) or Real Estate (CRI) Receivables Certificates.
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