Corinthians’ financial director estimates deadline for paying off Arena in the event of a new agreement with Caixa; check out

Wesley Melo, financial director of Corinthians, set a deadline for pay off all debt relating to the financing of Neo Química Arenaif the new agreement with Caixa Econômica Federal is made official.

Corinthians wants to settle its outstanding debt with the financial institution using the following method: purchasing debt securities, similar to court orders, (bank debts that are paid over many years) and using the amounts relating to Naming Rights, which today revolve around of R$400 million, which could fall to R$350 million if used immediately.

By purchasing debt securities from Caixa, Corinthians will assume a commitment from the financial institution and, thus, will have a debt with the company that has money to receive from the bank. The issue is that these bonds lost value due to the discount, a discount that applies to a bond in relation to its initial value due to changes in rates over time.

Corinthians, with a discount of up to 90% due to the discount, can pay around R$90 million for the bank’s bonds, a value seen as very advantageous and, above all, viable. Wesley Melo set a deadline to resolve this issue with the company in question if everything goes well and, thus, pay off all remaining debt in relation to paying for the stadium.

“We will pay the company directly, in five or eight years, probably in five years. And only with IGP-M correction, interest free. And under these conditions, we can pay relatively calmly. Once my pending issue with Caixa is settled, I have other knots that are untied. The box office revenue today, which is to pay Caixa, comes to me. Food and drinks come to me. All the guarantees, player sales… I also have a fund that I need to set aside to provide a guarantee to Caixa, I won’t need it anymore. Much of the revenue from the Arena itself, which I am not counting today as it is being reserved to pay Caixa, comes to me. So, this flow to pay for this residential property is much calmer”, commented Wesley in an interview with the channel My Timon.

The director also explained why the agreement is advantageous for Caixa, as there has been much talk that the government would be “giving up” amounts receivable from Corinthians.

“When we entered into litigation with Caixa, all ‘accounts receivable’ that Caixa had to receive from Corinthians went towards losses. The auditor asked to play for losses because Corinthians did not demonstrate the ability to pay this amount. In this new operation, Caixa can say that it had ‘accounts payable’, a title for a company, but now this ‘accounts payable’ was passed on to Corinthians, and it has ‘accounts receivable’ from Corinthians which is worth 0 Now I can go back to the initial value and match ‘accounts payable’ and ‘accounts receivable’. Instead of, in the future, the bank paying the amount back to the title holder, he does not pay and does not receive. Caixa liquidates the risk and still presents a gain. It is an operation in which everyone gets along in this story, the government is not giving up an amount to be received, the person who is giving it up is the transferor of the title, not the government”, he added.

Wesley is optimistic about reaching a new agreement with Caixa soon. In the director’s view, Corinthians and the bank should make the new agreement official in “a matter of days, weeks”. Timão’s finance man stated that everything “is very well underway”.