Viveo launches R$ 870m capital raise to slash leverage

Brazilian medical distributor Viveo (VVEO3) has announced a capital increase of up to R$ 870 million to aggressively reduce its net debt and optimize its capital structure. Under the terms of the transaction, the company will issue up to 966.4 million new common shares priced at R$ 0.90 each, representing a 26.8% discount to the previous closing price. The capital injection comes as a strategic move to address high leverage while the stock trades near historic lows.

The transaction is anchored by DNA Capital, the investment vehicle of the founding Bueno family, which holds a 37% stake in Viveo. DNA Capital has formally committed to a minimum subscription of R$ 427 million by converting its existing debentures at face value. This structure presents a highly lucrative arbitrage opportunity for debenture holders, as Viveo’s debt has recently traded in the secondary market at a steep 55% to 60% discount, yet can be converted at 100% of face value under this plan.

This capital injection offers a clear path to de-leveraging for the company. Viveo ended the first quarter with a net debt of R$ 2.9 billion and a leverage ratio of 3.88x Net Debt/EBITDA. The minimum guaranteed conversion by the Bueno family will bring leverage down to approximately 3.3x, while a fully subscribed capital raise would slash the leverage ratio to 2.7x.

The corporate action coincides with a broader positive session for Brazilian equities. The benchmark Ibovespa index rose 0.76% to 173,295.14 points. Among major market movers, Itaú Unibanco (ITUB4) gained 1.29% to R$ 42.24, while Petrobras (PETR4) fell 1.01% to R$ 38.06 and Vale (VALE3) slipped 0.65% to R$ 78.15.