According to AgroGalaxy's petition, R$4.67 billion in debt is listed in the judicial recovery request; see exposed funds (Image: AgroGalaxy/Youtube)
The market, and especially investors, Fiagros (Investment Funds in Agribusiness Production Chains), closely monitor the impact of the request for judicial recovery and Agrogalaxy (AGXY3). As you saw in the Money Timesfunds that hold securities issued by the company fell this Thursday (19).
For Guilherme Sharovsky, Corporate Credit Leader at Bloxs Capital Partners, for those who are shareholders of funds with a position in AgroGalaxy, this is not a good time to sell. “It is common to see an exaggerated reaction in investments where most shareholders are individuals to events of default and lack of liquidity.”
“If we take the example of JGPX11, we see that despite the net position being 8% of net equity (NE), in the last five days the value of the share has already fallen almost twice, which shows that the market reacts irrationally. In other words, the investor would lose more than if he entered at fair value in a situation like this. This is a specific case, there is no movement of other companies in the sector entering RJ”, he adds.
Sharovsky also reinforces that there is potential for growth in these funds due to credit recovery, since Agribusiness Receivables Certificates (CRA) are extra-bankruptcy securities, which must be paid with priority.
The real estate fund analyst at Empiricus ResearchCaio Nabuco, comments that the event is an example of the risk carried by agribusiness in recent months, with commodity prices falling and margins under pressure throughout the chain. “Our recommendation since last year is to stay out of Fiagros and closely monitor this type of operation, especially in terms of guarantees and structures”.
There are 6 listed funds (AAZQ11, AGRX11, BBGO11, CPTR11, JGPX11 and XPCA11) and another 5 cetips (not listed) that have a position in the company (AZQA11, CPAC11, JGPT11, KJNT11 and XPAG11)
The request for judicial recovery
In its petition for judicial recovery, AgroGalaxy said it expects creditors to adopt a collaborative stance during this current phase of economic and financial difficulty. The company's debt is R$4.67 billion.
“It is certain that the existing alternatives – that is, the disorderly, individual and predatory execution of the assets of the AgroGalaxy Group, or the termination of contracts essential for the continuation of the exercise of the business activity of the Plaintiffs – would certainly make any attempt at an organized and more advantageous restructuring for all involved unfeasible”, they said in the document.
The company argues that receivables are essential assets for the maintenance of the AgroGalaxy Group's activities and must be protected in order to avoid a cash shortage. “Grains sold as collateral must be protected against creditor incursions in order to meet their individual interests in satisfying the credit. This is because these grains will be sold, so they will generate cash for the Plaintiffs.”