By Brazil Stock Guide – Companhia Brasileira de Distribuição, the Brazilian food retailer known as GPA, has reached a new version of its out-of-court restructuring plan with creditors representing 57.49% of the claims covered by the process, marking a key step in its effort to ease short-term liquidity pressure and repair its balance sheet.
The agreement covers R$4.568 billion in liabilities and was secured 56 days after the first version of the plan was filed, below the 90-day period provided under Brazilian restructuring law. GPA said the plan was unanimously approved by its board and will now be submitted to São Paulo’s 3rd Bankruptcy and Judicial Restructuring Court for approval.
Cash-Flow Relief
The central point for investors is the expected cash-flow relief.
GPA said the plan should reduce cash payments by more than R$4 billion over the next two years, giving the company more room to manage its capital structure while keeping its retail operations running normally.
If approved by the court, the obligations covered by the plan are expected to have their average maturity extended to 6.4 years, their average cost reduced to CDI + 0.5% per year, and their total value cut by more than 50% over time.
Convertible Debt
The plan also includes the restructuring of up to R$1.1 billion in claims into convertible debentures.
Those securities would have four conversion windows, in the first half of 2027, 2029, 2030 and 2031, at the discretion of creditors. The conversion price would be based on the 90-trading-day VWAP of GPA’s common shares on B3 before each conversion window, with a 20% discount.
For shareholders, that structure helps reduce debt pressure but also creates a potential dilution risk if creditors choose to convert the instruments into equity.
Court Approval
GPA said suppliers, customers and commercial partners are not part of the restructuring plan and will not be affected by it. The company also said it remains current on its obligations to those groups and that its stores will continue operating normally.