Banco Inter (BIDI4) resumes ‘exit from Brazil’ with listing on Nasdaq

THE Inter Bank (BIDI4), once again, demonstrated its intentions to leave the Brazilian stock exchange and have its shares traded directly on Wall Street.

In a new material fact, published around midnight from Friday (15) to Saturday (16), Banco Inter detailed the resumption of the corporate reorganization process to migrate its shareholding base to Inter&Co.

If implemented, the change would lead to a listing of the roles in the Nasdaqin New York, while in Brazil there would only be trading in securities depositary receipts. In other words, in Brazil investors will not be able to buy Banco Inter sharesbut only BDR.

According to fintech, Inter&Co held, on the 15th, “archiving” public notice of an amendment to the registration statement with the Securities and Exchange Commission (SEC, the authority that regulates the market in USA), related to the new terms and conditions for the potential resumption of the Corporate Reorganization.

Details of Banco Inter's corporate reorganization - Photo: Reproduction/Banco Inter/CVM
Details of Banco Inter’s corporate reorganization – Photo: Reproduction/Banco Inter/CVM

Before the new Extraordinary Shareholders’ Meeting (AGE) to approve the terms of the proposal, Inter&Co will file a request for registration of a foreign issuer and a request for registration of a Level II BDRs program with the CVM and B3.

“Once and if the registration of a Level II BDRs program is granted by the CVM and B3, Level I BDRs will be automatically replaced by Level II BDRs”, says Inter in the material fact sent to the CVM.

How will Banco Inter exit for the shareholder?

The merger of all the shares issued by Inter by Inter Holding Financeira SA (HoldFin) will be carried out at their book value, resulting in the issuance, by HoldFin, in favor of ON and PN shareholders of Inter, including holders of units, of two classes of preferred shares issued by HoldFin.

One of these classes will be redeemable in BDR and the other cash class.

for every six shares common and/or preferred shares issued by Inter, one Redeemable PN issued by HoldFin will be delivered, that is, 0.16666666667 Redeemable PN will be delivered for each common or preferred share issued by Inter and, for each two Inter units, a HoldFin Redeemable PN will be delivered.

The class redeemable in cash, called the Cash-Out option, will be limited to just over R$1.131 billion, an amount equivalent to 10% of Inter’s total outstanding shares.

The Cash-Out option will only be available to Inter shareholders who are holders of the shares on April 15, 2022, the date of disclosure of this material fact.

Inter notes that the B3 issued, on April 13, 2022, the 3rd Letter B3, which reformed part of the 1st Letter B3 to allow the SoftBank shareholder to integrate the concept of ‘Outstanding Shares’.

The Cash-Out option will be available to those who exercise it within a period of up to six business days from the business date following the new EGM for reorganization.

If, after the manifestation of the shareholders who opt for the Cash-Out option, it represents a disbursement to HoldFin in an amount less than or equal to the amount destined for the Cash-Out, they will exclusively receive Redeemable PNs corresponding to the cash redemption option, “under the terms of the Cash-Out Report”.

If the amount is greater than the amount allocated to Cash-Out, shareholders will automatically receive: redeemable PNs corresponding to the Cash-Out option in a proportional manner; and PNs redeemable in BDRs backed by Class A Shares, in an amount capable of complementing the balance of the Cash-Out option not met due to the apportionment.

BIDI4 and Inter’s BDRs

In case of apportionment of Inter’s preferred (PNs) redeemable in BDRs backed by Class A Shares, Inter must inform the market about the result within two business days after the end of the period for subscription to the Cash-Out option.

Subsequently, on the same date, all the redeemable PNs will be redeemed with the delivery, to Inter shareholders, of securities deposit certificates – Level I BDRs backed by Class A Shares, and the BDRs may be undone, later, if the holder so decides.

“Each PN Redeemable Share issued by HoldFin will be redeemed upon delivery of 1 (one) BDR; or the amount of R$ 38.70 per Redeemable PN, corresponding to six times the economic value per preferred and/or common share of Inter, established under the terms of the Cash-Out Report”, says the material fact, noting that such value will be subject to adjustment at the DI rate from the date on which the New AGE Reorganization is carried out until the date of effective payment.

The corporate structure of Inter&Co, after the conclusion of the corporate reorganizationits objective, according to the bank, is to allow Inter to implement its business and growth strategy and, at the same time, ensure compliance with the regulatory requirements of the Central Bank.

Inter justifies its decision to migrate the shareholding base citing a regulation by the Central Bank, which requires Brazilian financial institutions to be required to have a controlling shareholder or defined control group.

“Additionally, Brazilian corporate law does not allow companies to issue non-voting preferred shares that exceed 50% of their total share capital,” the bank says in the text.

With the departure from Brazil, how is the social capital?

According to the relevant fact, the controller do Inter holds 53.1% of the total common shares and 8.9% of the preferred shares of Inter, with a total shareholding of 31.1%.

“For this reason, Inter’s ability to obtain additional capital to finance its growth strategy is limited, without this resulting in the dilution of its controlling shareholder’s interest to a level below 50% of the voting capital”, he says.

Upon completion of the corporate reorganization, the controlling shareholder of Inter will control Inter&Co and, indirectly, Inter, through the ownership of Class B Shares, which are entitled to 10 votes per action.

“Due to the regulation applicable to Banco Inter, such a structure is being proposed with the main objective of allowing it to raise additional capital in the future through the issuance of equity instruments, in particular sharesaiming to implement its growth strategy, thus preserving the governance and control structure required by the Central Bank”, he adds.

The completion of the reorganization will be subject to applicable corporate approvals and verification of Inter’s compliance with the implementation conditions.

The institution will also inform the date of the EGM for the reorganization. And the matters to be submitted to the shareholders and their respective installation and resolution quorums will be indicated in the call notice of what Inter calls the “New AGE Reorganization”.

THE Inter Bank relied on the financial advisory services of Bank of America, Bradesco BBI, JPMorgan, Itaú BBA and BTG Pactual. In addition, Machado Meyer Advogados and Demarest Advogados acted in the legal structuring of the Corporate Reorganization in relation to the Brazilian legal and regulatory aspects, and Cleary Gottlieb Steen & Hamilton LLP in the legal structuring of the Corporate Reorganization in relation to the North American legal and regulatory aspects. The Yazbek Advogados office was also consulted in relation to legal and regulatory aspects involved in the Corporate Reorganization.

With Estadão Content