Ambipar (AMBP3) shares opened Friday (3) down 30.91% to R$1.90 (R$0.34) and then suspended for auction after a fall of 61.48% on the last session.
According to local media InfoMoney, this plunge highlights the severity of the confidence crisis, as the company filed for protection from creditors towards the end of last month.
Ambipar is a Brazilian multinational provider of environmental emergency response and waste management solutions.
Today, the company is a leading Latin American sustainability player with an increasing global presence and one of the most recognised names in Brazil’s capital markets.
That aggressive expansion and debt-fueled growth effort now lies at the eye of a financial and judicial storm that has investors in a frenzy.
Allegations of irregularities in the credit fund
The latest hit came from the notification of so-called anomalies in a Credit Rights Investment Fund (FIDC) in which Ambipar said it has a portion of its liquidity.
It has been suggested that associated parties to the corporation may have engaged in ambiguous activities by giving credit while also borrowing it.
These allegations came to light shortly after Ambipar obtained a precautionary measure from a court in Rio de Janeiro.
The company filed for temporary protection and said that creditor actions could activate cross-default clauses requiring it to immediately pay over R$10 billion (US$1.8 billion) in debts.
The collections had already been held for 30 days owing to the injunction, which can be prolonged for another 30 days.
It is not yet a formal legal recovery, but the initiative is seen as a critical step if negotiations with creditors fail.
Banks challenge creditor protection
The legal manoeuvre is being questioned.
Banco Sumitomo said that Ambipar utilised contracts unlawfully to shelter 353 firms and questioned the need for protection, considering that the group reported R$4.7 billion (US$850 million) in cash, with R$2 billion (US$360 million) allegedly available in immediate liquidity.
However, these data are under review due to alleged FIDC violations.
Another source of conflict is jurisdiction.
While Ambipar’s case is being handled in Rio de Janeiro, significant creditors like ABC Brasil, Bradesco, BB, Santander, Sumitomo Mitsui, and Itaú claim that São Paulo, home to the company’s board and the majority of its income, should oversee proceedings.
Debt restructuring efforts intensify
After failing to reach an agreement with Seneca Evercore, Ambipar hired BR Partners to provide restructuring advice.
At the same time, bondholders have begun mobilising to actively bargain with the corporation.
The urgency is evident. Ambipar’s debts have been increasing for years, and despite stock price improvements earlier in 2024, its financial indicators have continued to deteriorate.
Analysts warn that the corporation is running out of time.
Bankruptcy risk on the horizon
Corporate restructuring experts argue that a bankruptcy filing is unavoidable.
Ambipar faces the threat of default in the future months due to its limited ability to generate the cash required to meet its obligations.
Credit rating agencies have already responded. Fitch warned that any formal debt restructuring plan would likely reduce Ambipar’s ratings to “RD” (restricted default), or to “D” if bankruptcy proceedings were initiated.
S&P Global Ratings acted more quickly, downgrading the company’s global issuer and issue ratings to “D” from “BB-.”
Investor outlook: extreme caution
XP Investimentos, a brokerage firm, cautioned investors to tread carefully.
For those without present exposure, the risk profile remains elevated, and keeping away from the stock appears to be the safest option.
For existing shareholders, the decision is more difficult.
Selling now would result in heavy losses, whilst keeping on would entail wagering on an uncertain recovery process, with the prospect of further declines—or perhaps entire loss—if Ambipar pursues court recovery.
A company at a crossroads
The unravelling crisis at Ambipar underscores how easily investor confidence can falter when corporate governance and financial transparency are called into question.
The company is at a critical juncture, with over R$10 billion (US$1.8 billion) of liabilities that could start coming due, and its cash pile is now a source of controversy.
It is unclear whether Ambipar could bargain with its creditors and stay away from bankruptcy.
In the short term, investors are readying for more whipsaws, and shareholders are in a high-stakes quagmire without a clear exit.
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