Oncoclínicas files a request for extrajudicial recovery to renegotiate R$5.1 billion in debt

Company already has support from creditors Oncoclínicas reported that it already has the support of creditors representing around 37% of the debts included in the plan, a sufficient percentage to present the request to the Court. Now, the company will have up to 90 days to obtain the necessary support for the plan to be approved and become valid for all creditors involved. According to the company, the restructuring plan may include measures such as: contribution of resources by shareholders; conversion of part of the debt into company shares; exchange of current debts for new financing; lengthening of payment terms. The company highlighted that these alternatives will still be negotiated and will not necessarily be adopted. Oncoclínicas stated that the extrajudicial recovery does not affect patient care or payments related to day-to-day operations, such as suppliers and partners considered essential. According to the company, the units continue to operate normally across the country. As part of the financial restructuring, the company reported that it terminated two property rental contracts. One of them refers to a property on Avenida Angélica, in São Paulo. The fine for termination is estimated at R$76 million and was included in the debt renegotiation. The other contract was for a hospital that would be built in Goiânia. In this case, the amount of the fine is still being calculated. The request for extrajudicial recovery was unanimously approved by the company's board of directors and will still be submitted to shareholders at a meeting. The company stated that it will continue to inform the market about the progress of the restructuring. End of negotiations with Porto and Fleury and attempts at restructuring The request for extrajudicial recovery marks another stage in Oncoclínicas' attempt to reorganize its financial situation after months of difficulties. The measure also takes place approximately three months after the end of negotiations with Porto Seguro and Fleury for the creation of a new oncology company. Negotiations began in March and envisaged the transfer of Oncoclínicas clinics to a new company, which would receive an investment of around R$500 million from Porto Seguro and Fleury. The project was part of the strategy to reduce the company's debt and facilitate the renegotiation of its liabilities, including the possibility of converting part of the debts into participation in the new company. However, negotiations ended in April without an agreement. With the end of the negotiations, Oncoclínicas began to look for other alternatives to restructure its debts, until reaching the request for extrajudicial recovery announced this Tuesday. In a report published in February this year, Santander stated that the company had already been adopting measures to try to recover its financial health, such as increasing capital, selling assets considered non-strategic and changes to the board of directors and management. For the bank, the change in the financial board, announced at the beginning of the year, is part of this process and can help bring the company closer to investors and creditors. Citi assesses that Oncoclínicas' difficulties could open up opportunities for competitors in the sector. According to the bank, which released a report last week, larger companies, such as Rede D’Or, may attract patients if part of the oncology care is no longer provided by the company. Citi also points out possible impacts for health plan operators. The analysis considers that Oncoclínicas has a lower cost structure in the oncology area and that a migration of patients to more expensive networks could increase operators' expenses and put pressure on their results.