RIO DE JANEIRO: Just months after a massive accounting error dragged retailer Americanas SA into bankruptcy protection, a second corporate blow-up is tarnishing Brazilian billionaire Carlos Alberto Sicupira’s reputation and fortune.
The 74-year-old dealmaker, who co-founded buyout firm 3G Capital Inc and helped build global juggernauts Anheuser-Busch InBev SA and Kraft Heinz Co, has lost 86% on his investment in Rio de Janeiro-based utility Light SA as the cash-starved firm tries to fend off default.
Sicupira’s 10% stake in Light falls outside the norm for the elusive businessman, who’s made most major investment decisions since the 1970s alongside his 3G partners Jorge Paulo Lemann and Marcel Telles.
He went out on his own to bet on the electricity firm in 2020, persuaded by a friend and fellow investor Ronaldo Cezar Coelho, according to a person familiar with the wager, who asked not to be named because they were discussing private matters.
It was pitched as a chance to cash in on Light’s comeback but has instead resulted in losses of about 480 million reais (US$97mil or RM429.9mil), based on the date when his investment was disclosed.
For Sicupira, it’s a matter of both cash and image. He’s been the most active of the 3G trio in Brazil in recent years, even getting personally involved in talks with creditors of Americanas to try to reach a solution after the retailer imploded earlier this year.
The accounting errors and subsequent downfall of Americanas dealt a blow to the reputation of all three 3G billionaires. Telles, Lemann and Sicupira, who currently own a stake of around 30%, have invested in the century-old company since the 1980s, leading to questions about how some of Brazil’s most successful business executives could have missed a massive liability.
But the bet on Light comes down to Sicupira. His net worth is near US$8.7bil (RM38.6bil), according to the Bloomberg Billionaires Index, making him Brazil’s fourth-richest man.
A representative for Sicupira said he wasn’t available for comment.
Light, which began activity in 1899, provides power to some 11.6 million people in the billionaire’s hometown of Rio de Janeiro.
Management has struggled to combat illegal power connections, especially in the densely populated communities that crawl up the mountains of the city.
That’s compounded issues with payment collection and delinquencies under the pressure of soaring interest rates.
Shares are hovering near a record low after the company posted a much wider-than-expected loss for the fourth quarter.
Light’s US$600mil (RM2.7bil) in bonds maturing in 2026 collapsed to an all-time low of 27 US cents (RM1.20) last week, according to Trace bond data.
“This is going to be one big mess,” said Declan Hanlon, chief strategist for emerging market corporate credit at Santander Investment Securities.
“In a normal restructuring, you have the company and a group of bondholders. Here you have the regulator and the concessions as well.”
Light, which as a power utility has to abide by different bankruptcy protection laws, has won court approval to suspend payments on about US$2.2bil (RM9.8bil) of debt for 30 days while it negotiates with creditors.
The company is also trying to extend a key contract that ends in 2026, and it has retained financial adviser Laplace and legal firm BMA.
Representatives for Light didn’t respond to requests for comment.
“From an investor’s perspective, this legal uncertainty about Light is extremely worrying,” said Marcelo Farias, a manager at BB Asset and one of the 26-member group that holds 4.7 billion reais (RM4.2bil) in Light debt.
“We criticise the company’s lack of diligence with the capital markets and this ‘kamikaze’ approach from management. They screwed their shareholders and all the possible financing routes, and kidnapped their creditors.”
Farias said the investor group has been trying to talk with the company since February and has received only curt answers. — Bloomberg
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