The financial crisis at Agrogalaxy , which has filed for bankruptcy protection, has thrown a spanner in the works on an asset class that has just debuted on the B3: Fiagros . But could we have foreseen these problems and avoided these losses? And if we were Agrogalaxy's consultants, what could we have done to avoid such a delicate situation? Read this article to get the perspective of both a creditor and a controlling shareholder.
Let's begin our investigation by going back in time, more precisely to the eve of the last debt securities issue .
We discovered, on the Anbima website, that the last issuance was on 09/23/2022. An issuance of half a million reais with maturity in 2027, with a remuneration of DI + 4.25%.
If we calculate the rate at which the company should pay its creditors, assuming today's SELIC is 10.75% per year, we have:
(1 + Final Rate) = (1 + DI) × (1 + Additional)
(1 + Final Rate) = 1.1075 × 1.0425 = 1.15318
Final Rate = 15.38%
This is one of the first points that draws attention, a remuneration that exceeds the standard of emissions, which is between 98% and 101% of the CDI.
Documents available at the time of new Agrogalaxy CRA issuances?
It is always a good idea to read the independent auditors ' analyses in accounting reports to ensure that the data presented accurately represents the company's real situation. After doing a little research, I found that on August 15, 2022, we had a report issued by the independent auditors PricewaterhouseCoopers, stating the following:
All documents presented in this article are in the public domain and are on the company's IR website .
"The scope of a review is significantly less than that of an audit conducted in accordance with auditing standards and, consequently, did not allow us to obtain assurance that we were aware of all significant matters that might be identified in an audit. Therefore, we do not express an audit opinion."
As we can see, we have a point of attention coming from the audit itself. From a corporate point of view, one can infer some problem in the accounting record system and management of the company. From the creditor 's point of view: point of attention.
Following our investigation, we will analyze Agrogalaxy's Income Statement to get a sense of how much the company has been generating in accounting profit in recent years.
Another point of attention: we see that the company presented a negative result in its most recent DRE , on the eve of issuing new debts.
Investigating Agrogalaxy's Balance Sheet
We note that the Balance Sheet has many lines listed as "Others", and there is no clear distinction between the actual short-term and long-term debt assumed with creditors.
I found information on the debt composition in this auxiliary report.
Here we see that the net debt, the one that discounts the cash, jumped from R$786.9 million to R$1,219.1 million in one year.
Liquidity Risk
Another key point of this analysis was revealed when studying the debt profile in relation to maturity terms. As we can see, on 06/30/2022, loans and financing that would mature within a period of one year totaled 1.53 billion, which would leave the company without enough time to reprofile its debt, which occurs when we exchange short and expensive debts for long and cheaper ones.
In short, even at the time of issuing new CRAs , it was possible to identify signs of problems related to liquidity and the ability to honor short-term debts. In the case of Agrogalaxy, adequate financial planning could have provided enough time to exchange short-term debts for long-term debts. For creditors, the best practice is to always analyze the accounting documents, forming their own opinion independent of the issuing banks.
