15 de diciembre de 2015 / 21:14 / en 2 años

UPDATE 2-Lone Star, Apollo seen bidding for BTG Pactual unit, sources say

(Adds comments from companies)

By Guillermo Parra-Bernal and Tatiana Bautzer

SAO PAULO, Dec 15 (Reuters) - Brazilian investment bank Grupo BTG Pactual SA has asked interested parties in its stake in debt collection firm Recovery do Brasil SA to deliver their proposals by Wednesday, five people with direct knowledge of the situation said.

According to one source, as many as 23 firms expressed interest in Recovery, Latin America’s largest debt collector, although no more than half a dozen are expected to submit non-binding offers.

Lone Star Funds, Apollo Global Management LP, Elliot Management Corp, Oaktree Capital LLC and KKR & Co LP are among firms specializing in distressed debt investments that may bid for the 82 percent stake that BTG Pactual owns in Recovery, said the sources, who requested anonymity because negotiations are under way.

According to three of the sources, Lone Star seems best placed to buy the stake. A representative for Lone Star declined to comment.

BTG Pactual is seeking about 1.7 billion reais ($439 million) from the sale, should it include the bank’s platform that Recovery uses to price loans, two of the sources said. Without that, the sale could earn 800 million reais for BTG Pactual, which is selling assets to raise cash in the wake of the arrest of founder André Esteves, the same sources added.

Centerbridge Partners LP and Monarch Alternative Capital LP are also eyeing the asset and may submit a proposal, the second source noted. The results of the first round will define how fast the divestment will occur, the sources said.

An unidentified São Paulo-based distressed debt company, which is teaming up with undisclosed partners to explore the purchase of Recovery’s bad debt portfolio or collection platform, has also entered talks and is considering bidding, said the first source.

The move follows the arrest of Esteves, who founded BTG Pactual, in a corruption probe last month. Latin America’s No. 1 independent investment bank is rushing to sell assets and pools of loans to rivals to shore up cash holding and restore investor confidence.

BTG Pactual declined to comment. Apollo, Elliot, Oaktree, Centerbridge and Monarch did not have an immediate comment.


Interested parties have done some due diligence work on Recovery’s portfolio and platform, the sources said. Recovery oversees about 50 billion reais in distressed debt loans and is a large buyer of bad credit from Brazil’s biggest financial institutions.

The remaining stake in Recovery is held by the World Bank’s International Finance Corp and the company’s founders from Argentina.

With unemployment spiking and inflation eroding disposable income, Brazilian households are defaulting on loans at the fastest pace in six years. Toxic debt is also increasing for companies, which are succumbing to flagging sales and rising borrowing costs.

Industry players estimate sales of toxic loans will rise 40 percent this year to more than 25 billion reais. State-controlled lender Caixa Econômica Federal, which only entered this market last year, has sold almost 11 billion reais in bad loans this year, executives told Reuters this month.

Distressed debt companies acquire a large portfolio of credit from a bank at a steep discount and then rework each loan individually, profiting after repackaging them into securities, taking over the collateral or restructuring them. For banks, bad-loan sales help them clean up their balance sheets in times of economic hardship.

$1 = 3.8749 Brazilian reais Editing by James Dalgleish

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