Rede D'Or, of hospitals, managed to withdraw financial commitments (covenants) from an issue of certificates of real estate receivables (CRI) last Friday. Although the assembly took place in the middle of a pandemic, the measure was the last step of a plan for the withdrawal of covenants from all its debts, in a restructuring that began about four years ago. The company's goal was to have leverage flexibility, in a period in which a business plan expansion.
“We have substantially released the collateral provided to creditors, we expanded the funding instruments, with five CRIs and two issues abroad, at very favorable rates ”, explains Otavio Lazcano, financial director of Rede D'Or.
Still according to the executive, the hospital chain extended the term of its debt by two years to six years and reduced the cost of CDI plus 3% to CDI plus 1.3% per year.
He reinforces that the company never broke a covenant. Now only one operation remains that has this type of commitment, but it is a bilateral loan, of lower value, in which the company has the option to make prepayment.
There was a difficulty in removing the covenant from that last CRI specifically, by the fact that it is highly dispersed among individual investors in the market.
Since the middle of last year, the company has hired a consultancy to seek these investors and ask for powers of a attorney to obtain the approval for a quorum of two-thirds required to withdraw the covenant. CRI totals R $ 660 million. To obtain the endorsement of the paper owners, the company paid a premium of 0.25% multiplied by the remaining duration of the CRIs (average remaining term of maturity of the paper weighted by the date and amount of each payment flow of interest and principal). The term today is around 2.8 years and the percentage of the premium it will be around 0.60%.
The meeting, led by the CRI securitizer, RB Capital, had a quorum of 71.13% and the covenant withdrawal was approved by 68%. The financial commitment of the company was to maintain a ratio of 3 times for net debt and ebitda.
Lucror Analytics estimates that Rede D'Or could overcome this index on June 30, due to the impacts of the pandemic on its business. In addition Rede D 'Or ended the first quarter with R $ 10 billion in cash.
And, in the last few months, it contracted lines with Bank of China (R $ 500 million); Bank of America (R $ 400 million) and Itaú (R $ 250 million). This current cash availability exceeds the total short-term debt by 14 times, which is R $ 784 million. There had been an early CRI maturity event, therefore, it would not be a problem for the company's liquidity.
Lucror also points out that the main shareholders are available to capitalise the company and have even signalled that they can act in sight of eventual liquidity problems, which do not exist today. Rede D'Or has announced in the last few two acquisitions a week. Lazcano notes that, as a market leader, the company is attentive to opportunities in the crisis and studies long-term financing for them to take advantage of.
The company's main shareholders are the Moll family (57.4%), GIC, a sovereign wealth fund Singapore (25.9%), and Carlyle (11.8%).
Lucror also says that the company has already made a promise to improve its transparency and communication in its investor relations area. The company is open but does not have shares on the stock exchange.
By Ana Paula Ragazzi - From São Paulo