Brazil's Americanas CEO Rial, CFO Covre resign amid $3.8 bln accounting `inconsistency` (updated)

Banco Santander Brasil SA

11/01/2023 22:34

(Adds details on resignation, background and analyst comment)
       SAO PAULO, Jan 11 (Reuters) - Brazilian retailer
Americanas SA  AMER3.SA  said on Wednesday its chief executive
and chief financial officer had resigned after the discovery of
around 20 billion reais ($3.88 billion) in accounting
"inconsistencies."
        Lojas Americanas CEO Sergio Rial departed less than two
weeks after taking the job, after six years heading lender
Santander Brasil  SANB11.SA . Rial replaced Miguel Gutierrez,
who was CEO and head of investor relations.
  
        CFO Andre Covre also had just joined Lojas Americanas,
long controlled by Brazilian billionaires Jorge Paulo Lemann,
Marcel Telles and Carlos Alberto Sicupira, founders of 3G
Capital.
  
        The "accounting inconsistencies" value is larger than
the company´s net equity, 15 billion reais, said Fabrício
Gonçalvez, CEO at Box Asset Management.
  
        "This is awful news for the retail sector, specially
considering it happened with a large company such as
Americanas", said Gonçalvez. "How can $3.9 billion escape from
auditors?"
  
        Despite his resignation, Rial will continue to advise 3G
Capital, the firm said. He is currently chairman of the board at
fuel distributor Vibra Energia  VBBR3.SA , a board member at BRF
SA  BRFS3.SA  and at Delta Air Lines  DAL.N . 
  
        In late 2021, founders of private equity firm 3G
Capital, which controls behemoths such as beverages maker
Anheuser Busch Inbev  ABI.BR  and Kraft Heinz Co  KHC.O  reduced
their stake in the retailer as part of a restructuring but
continue to be "reference shareholders."
    The disparities found "reduced the balance in the suppliers
account related to previous fiscal years" and are estimated to
be of around 20 billion reais ($3.88 billion), or almost twice
the Americanas' 10.7 billion reais market capitalization,
according to Refinitiv data.
    The firm also estimated that the cash impact of the
inconsistencies is not material. However, it is not possible to
assess all of its impacts on Americanas income statement and
balance sheet.
        Brazilian retailers are under pressure from high
borrowing costs. Americanas shares ended 2022 with a 68.7%
slump, but since then have climbed about 24%.
  
        Among the inconsistencies, Americanas cited supplier
financing operations in which the firm is a debtor to financial
institutions and are not "adequately reflected in the suppliers
account in the financial statements dated Sept. 30, 2022," it
said.
  
        Joao Guerra, a long-time executive in the retailer who
had not been previously involved with accounting or financial
management, will take over as CEO on an interim basis.
  
        The accounting problems will make unfeasible 
    the recently announced plan
     to migrate the company to U.S. markets, that had been
delayed late last year.
  
($1 = 5.1600 reais)
 (Reporting by Peter Frontini in Sao Paulo and Carolina Pulice
in Mexico City; Editing by Christian Plumb)
 ((Peter.Siqueira@thomsonreuters.com; +55 11 56447727;))