Shares of Brazil's Casas Bahia jump on debt restructuring plan

Analysts at Safra also viewed the news as positive, but noted that total interest payment would rise substantially to 2.397 billion reais from 971 million reais previously, which would impact future cash flow. Casas Bahia, formerly known as Via, had already announced last year a series of restructuring measures that also included shrinking inventories, closing stores, and laying off thousands of workers.

Shares in Brazilian retailer Casas Bahia soared on Monday after the firm unveiled an agreement to restructure 4.1 billion reais ($801.45 million) in debt, extending the average maturity of its obligations to 72 months from 22 months. The retailer, which controls the Casas Bahia and Ponto Frio brands and also has large e-commerce operations, was the biggest gainer on Brazil's Bovespa stock index by midday, jumping 20% while the benchmark index rose 0.4%.

The out-of-court debt restructuring, which was announced late on Sunday, is expected to improve the company's cash flow by 4.3 billion reais in the next four years, it said. "The measure provides important leeway for Casas Bahia's short- and medium-term cash flows and, to a certain extent, reduces the risks of liquidity concerns," Bradesco BBI analysts said in a note to clients, calling the move "very positive".

"We believe that the company's management can now have a greater focus and make a greater effort in executing its transformation plan without the distraction of significant cash disbursements in the short term," they added. Analysts at Safra also viewed the news as positive, but noted that total interest payment would rise substantially to 2.397 billion reais from 971 million reais previously, which would impact future cash flow.

Casas Bahia, formerly known as Via, had already announced last year a series of restructuring measures that also included shrinking inventories, closing stores, and laying off thousands of workers. Year-to-date, Casas Bahia's shares are still down some 43%. ($1 = 5.1157 reais)

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