(Bloomberg) -- Brazilian health-care firm Kora Saude Participações SA is working on a restructuring plan that will include some 1.5 billion reais ($259 million) in new money from creditors, according to people familiar with the matter.
The plan also includes pushing back debt maturities, two of the people said, asking not to be named discussing a private matter. Lumina Capital Management has become a relevant creditor after scooping up the company’s local notes and is involved in the talks, the people said, adding that any plan would still need to be approved by a creditors’ assembly.
Kora, owned by private equity firm HIG Capital, has seen cash flow generation drop and operating costs increase. Its shares are down more than 47% this year, part of a widespread downturn for the Brazilian health-care sector. Companies, which took advantage of record-low interest rates during the pandemic to fund a wave of mergers with floating-rate debt, are now struggling as borrowing costs climb.
Kora, HIG and Lumina declined to comment.
Waiver
Kora had been negotiating a waiver with local bondholders ahead of an expected breach of the terms of its debt, Bloomberg News reported in September. The company said in October that it was studying measures to re-profile its debt, looking to balance its books and boost liquidity, according to filings. Its board approved the issuance of 2.25 billion reais of local notes earlier this month.
Fitch Ratings downgraded Kora’s local credit rating last week, citing “frustration” with the pace of the company’s recovery. It has a negative outlook on the rating.
The refinancing with resources from the local debt sale is positive, but “does not eliminate the pressure on Kora’s credit profile,” Fitch analysts led by Tatiana Thomaz wrote.
Kora doesn’t have any dollar bonds outstanding, borrowing only in local currency, according to data compiled by Bloomberg.
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