CVC approves capital raise
July 13, 2020 |
Brazilian tourism and travel company targets $56.6 million through share sale
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Brazilian tourism and travel company CVC said on Friday it approved a capital raise of up to BRL310.7 million ($56.6 million) to it help combat the impact of COVID-19 on the company.
CVC will issue up to 23.5 million common shares at BRL12.84 per share and a minimum of 15.6 million shares to raise BRL200 million, the company said in a securities filing.
The company said the funds will be used to strengthen its cash position in order to "enable the recovery of sales on credit and through installments," which account for 85% of total sales, and help it overcome the "great volatility and uncertainty" caused by the COVID-19 pandemic.
CVC hired local retail bank Itaú to investigate the possibility of a share sale in April.
Banco Bradesco is the bookkeeper of the shares issued by the company. The shares will be traded on the B3 Stock Exchange in São Paulo on July 14, according to the filing.
Latin America’s largest tour operator said earlier this week it expects impairments in the first quarter to reach BRL475 million related to the acquisition of companies mainly in Argentina and BRL81 million related to deferred tax credits stemming from accumulated losses.
CVC also revealed travel cancellations totaled BRL96 million by the end of June and the company’s losses so far this year included unrecoverable commissions and credit card fees and increased costs related to the repatriation of passengers due to the pandemic.
Travel and tourism companies have been among those to suffer the greatest impact from travel restrictions and social distancing measures imposed by governments around the world in a bid to contain the novel coronavirus.
Standard & Poor’s downgraded CVC’s rating to brCCC- with a negative outlook earlier this month.
CVC itself has also been dealing with the fallout from financial irregularities in its accounts after discovering discrepancies totalling BRL350 million related to its net sales revenues between 2015 and 2019.
CVC shares were trading at BRL21.08 up 9.22% in Friday afternoon trade.