We were hired by a French company with a subsidiary in Brazil that was looking for a solution to the following impasse:

In previous years, the French company had sent large sums of money to the Brazilian subsidiary to finance its operations in Brazil. After a few years, realizing that these credits generated a significant debt load for the subsidiary that could not be easily repaid, it was necessary to think of alternatives for settling the obligations that would not harm the Brazilian subsidiary’s liquidity.

After holding a number of meetings with representatives of the French partner and its Brazilian subsidiary, we concluded that the best option would be to transform the debts held against the Brazilian company into an increase in the French company’s shareholding.

This mission involved carrying out strategic foreign exchange transactions and illustrates how a solid knowledge of corporate and banking law can help companies achieve their objectives in an agile, secure and profitable manner.

Thus, instead of requesting payment of the credits by the Brazilian company, the French company took this opportunity to expand its shareholding in the Brazilian company.

Strategy

• Credit analysis: We began by carrying out an assessment of the credits held by the French company and the necessary foreign exchange operations. This included a detailed analysis of Brazilian foreign exchange laws and tax regulations.
• Opinion: We drafted an opinion with clarifications about Brazilian exchange rules and the way in which the conversion of credits into foreign investment would be carried out, through simultaneous exchange operations.
• Drawing up an action plan: Based on the assessment, we developed an action plan outlining the steps needed to transform the credits into equity, taking into account a favorable euro/real exchange rate variation, which pleased our client.
• Foreign exchange transactions: We carried out foreign exchange transactions to record financial transactions between the French company and its Brazilian subsidiary.
• Corporate acts: we draw up the necessary corporate documents to complete the increase in the share capital of the Brazilian company.