November 3, 2016 / 10:47 PM / 2 years ago

UPDATE 1-Brazil's PDG mulls filing for bankruptcy protection -source

(Adds details of plan, company and industry background)

By Tatiana Bautzer and Guillermo Parra-Bernal

SAO PAULO, Nov 3 (Reuters) - PDG Realty Empreendimentos e Participações SA is considering filing for bankruptcy protection should banks refuse to pump fresh cash into the debt-laden Brazilian homebuilder or refinance maturing obligations, a person directly involved in the process said on Thursday.

The potential move comes after PDG Realty announced in a securities filing on Thursday that Chief Executive Officer Márcio Trigueiro and Chairman Gilberto Sayão relinquished their posts. PDG Realty has hired RK Partners Assessoria Financeira e Gestão de Recursos Ltda to work on a new restructuring plan.

PDG Realty could not immediately be reached for comment.

Trigueiro will be replaced by Vladimir Ranevsky, who will also assume the position of chief financial officer. The person said the sudden board and management shuffle came as financial creditors assessed that Rio de Janeiro-based PDG Realty had lost the ability of negotiating a restructuring deal with them.

The person requested anonymity because of the sensitivity of the issue.

Once the country’s largest homebuilder by revenue, PDG Realty would be the second Brazil homebuilder to file for court protection in the past two months. The situation reflects the problems facing homebuilders, many of whom have been forced to consider painful reorganizations in the wake of soaring cancellations, record defaults and high borrowing costs.

At the end of June, the company had gross debt totaling about 5.5 billion reais ($1.7 billion) and about 270 million reais in cash and equivalents.

In August, PDG Realty - itself the byproduct of a series of mergers - announced a plan to restructure 4 billion reais with local lenders including state-controlled Banco do Brasil SA and Banco Bradesco SA. PDG Realty had previously hired investment bank Rothschild & Co and law firms E Munhoz Advogados and Machado Meyer as restructuring advisers.


Shares, which have plunged 25 percent over the past three months, shed 2.2 percent to 2.68 reais on Thursday.

PDG Realty struggled with integration and cost overruns almost since Sayão spearheaded the purchase of smaller rival Agre Participações SA in May 2010. PDG Realty, which is majority-owned by Sayão-led investment firm Vinci Partners, has posted 15 quarterly losses over the past five years.

Headwinds stemming from the harshest recession in Latin America’s No. 1 economy in eight decades led to rapid cash burn at PDG Realty, which had to postpone 15 of 35 projects under construction.

Viver Incorporadora & Construtora SA filed for bankruptcy protection on Sept. 16, becoming the first homebuilder in Latin America’s largest economy to seek an in-court reorganization. ($1 = 3.2563 reais) (Editing by Jonathan Oatis and Matthew Lewis)

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