Renova Energia signed today an amendment to its judicial recovery plan that will extend the maturity of debts and reduce interest rates — giving breathing room for the energy generator to meet its obligations using cash flow from operations.
The agreement — reached with Class II creditors (mostly banks) — should allow the company to exit judicial recovery in the coming weeks, five years after entering the process.
“There is no longer a reason for it to stay in judicial recovery. It has already fulfilled everything it needed to and with this amendment, it should be able to comfortably pay off the recovery plan and still maintain Alto Sertão III [the last remaining asset within it],” one of the creditors told Brazil Journal. “It is natural for them to file for an exit soon.”
Renova entered judicial recovery in 2019 with a debt of R$3 billion. Today, this debt has fallen to around R$1 billion after the company sold assets.
The main creditors now are Citi, Itaú, Jive (who bought credits from Bradesco), and BNDES.
The amendment signed today provides for a 36-month grace period for Class II credits. Starting from month 36, the company will begin making semi-annual payments at a rate of IPCA + 5.5% (emulating an NTN-B).
As a result, the creditors will receive 100% of the amount due — even though there is an implicit haircut in the rate, as in a normal situation a Renova bond should pay much more than IPCA + 5.5%.
Located in Bahia, Alto Sertão III is a wind farm with a generation capacity of nearly 400 MW. The asset is new and is already 80% contracted, ensuring a predictable cash flow for the coming years.
Renova also has a pipeline of approved projects that it can develop over the next few years — if it has access to capital — or sell to other players in the sector.
Despite the likely exit from judicial recovery, a manager believes that the stock is not likely to be revalued anytime soon.
“The stock will only have fundamentals to be revalued if they have access to credit to execute the pipeline they have, which is unlikely to happen in the short term because all major banks are creditors and will not open a window for them anytime soon,” he said.
“It is a company with appeal, one of the few listed in the clean energy segment, and now with all liabilities restructured and extended, but I do not see a unlocking of value in the short term.”
This manager also points out that a significant portion of the company’s cash flow will have to be used in the coming years to repay the debt.
With the stock trading at R$1,16, Renova is valued at R$290 million on B3. The stock has decreased by 2.5% in the last 12 months and more than 95% since the peak in December 2020.
Renova, which has two classes of shares, is controlled by Angra Partners, which holds over 60% of ordinary shares. Founder Renato do Amaral holds another 13% of ONs.
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Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
