Shares of Casas Bahia, the Brazilian retailer formerly known as Via, have experienced a 7.8% decrease following uncertainties surrounding its recent share sale. Currently priced at 83 Brazilian centavos (equivalent to 17 cents), the shares have dropped by 63% since the end of last year. The country’s benchmark Ibovespa stocks index has remained relatively stable in early trading.
Challenging Times for Home Appliance Retailer
In an effort to improve its financial position, Casas Bahia raised BRL623 million by selling 779 million new shares. However, the shares were offered at a significant discount compared to the previous day’s closing price. As a result, Casas Bahia’s shares experienced a 19% decrease on Thursday, with a maximum plunge of 32% during the day.
The Role of the Share Sale
Although the funds generated from the share sale will help reduce the company’s leverage and financial expenses, it is unlikely to fully resolve the broader capital structure issue faced by Casas Bahia. Citi Research analysts stated in a research note that even after the share sale, it is expected that financial expenses will continue to surpass adjusted EBITDA.
