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9/22/06
For the second time in two months, ABN AMRO Real Bank has
auctioned off a large debt portfolio to an American company. The portfolio consisted of distressed assets
that had already been charged off as bad debt.
Credigy purchased the portfolio of R$1.6 billion for just over 4% of
face value, well above the normal value of 2-3% for this type of distressed
asset. Sugarloaf’s partner firm,
Multicred, also participated in the auction and had valued the portfolio at
2.75%.
This is very significant to Sugarloaf investors because we
are beginning to see a trend in increased value of foreign distressed assets
and greater interest from American investors.
Even more important is the increased value of charged off debt, meaning
that Sugarloaf’s portfolio could better retain its value even after the debt is
written off.
The following is an article dated 9/15/06 from the Brazilian
business newspaper Jornal Valor which
further details the transaction:
"Real Auctions R$ 1.6
Billion On Distressed Receivables
Maria Christina
Carvalho
09/15/2006
ABN AMRO Real bank
sold, this week, through an auction, R$ 1.6 billion in retail distressed
receivables that had been already written-off as losses to the American Company
Credigy. It is the second operation of this nature carried out by the bank that, in August, sold a portfolio of R$ 900 million in defaulter corporate
distressed receivable, in an auction won by the American Investment Bank
Lehman.
Five interested
parties participated in the auction – among national and foreign
parties –
informed the superintended of ABN AMRO Real bank’s credit recovery,
Otávio
Lourenção. The amount of the operation was not revealed, but it will
not exert
impact upon the bank’s result once that the receivables have already
been considered as losses, clarified Lourenção. The advantage to
the bank–he added–is to reduce operational costs involved with
data processing and to be able
to concentrate on receivables with lower late payment periods,
which have a
greater recovery probability.
The portfolio sold
encompasses Real and Sudameris’ operations with more than 760 thousand clients
(individuals and legal entities), presenting no payments for more than 360 days
and which amounts vary from R$ 50 to R$ 30 thousand. They can be divided into
the following categories: special check debts, credit card debts and debt from
products paid in installments (such as financings, personal loans and
renegotiations) that are found in friendly negotiation. Currently, an
outsourced company was trying to recover those operations.
The sale was
structured by KPMG in a process which started back in April and had the legal
assistance of the Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados Law
Firm. Credigy is represented in Brazil
by Betacred Aquisição e Administração de Créditos Ltda [Betacred Acquisition
and Administration of Credits].
Lourenção informed that Real had, in the beginning of the year, sold a retail portfolio of R$ 40 million. In the end of the first semester, Itaú Bank also sold a retail defaulter distressed receivables portfolio in the amount of R$ 1 billion, with remote recovery possibility, but sold it to a company of the group itself." |
