CVC defines terms for share sale

CVC defines terms for share sale

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Brazilian travel company CVC said on Tuesday its management entered the final stages of approving the terms and conditions of a capitalization aimed at strengthening its financial position in the face of the COVID-19 pandemic.

CVC said in a securities filing it expects impairments in the first quarter to reach BRL475 million ($88.3 million) related to the acquisition of companies mainly in Argentina and BRL81 million related to deferred tax credits stemming from accumulated losses.

CVC hired local retail bank Itaú to investigate the possibility of a share sale in April.

The travel and tourism company has been heavily impacted by the coronavirus pandemic and global travel restrictions, which have led to a sharp fall in bookings and increased costs.

"The current scenario of the travel and tourism segment imposed on the company a greater volume of travel cancellations, which reached BRL96 million by June 30, 2020...[and] generated losses related to amounts already paid by CVC and that are not recoverable," the filing said.

Among the losses are unrecoverable commissions and credit card fees and increased costs related to the repatriation of passengers during the COVID-19 pandemic, the filing stated.

Earlier this year, CVC discovered discrepancies in its accounts totalling BRL350 million related to its net sales revenues between 2015 and 2019. This discovery led the company to postpone the release of financial statements for 2019 and the first quarter of this year.

CVC's shares were down 6.84% to BRL20.30 per share late on Tuesday.