Absolute and Unity increase stake in CVC. "Apex is just another shareholder"

The Apex Partners crisis has changed CVC's cap table. Funds linked to the Capixaba manager reduced their stake from 12.2% to 7.97% in recent days, making room for Absolute and Unity Capital. The operation was articulated by GJP, the investment vehicle of the Paulus family, which owns about 20% of the travel operator.

"Absolute was already an investor in CVC, and Unity had a small stake. Both saw a good entry opportunity," Gustavo Paulus, CVC's vice-chairman, told Brazil Journal.

Since the Apex crisis erupted last week, CVC's stock has plummeted almost 17%. Apex is facing a liquidity crisis, with a hole of nearly R$ 1 billion, after operations that promised investors a minimum return linked to the CDI if certain assets - such as CVC shares - did not perform came to light.

The crisis led to the departure of founder Fernando Cinelli and CFO Eduardo Siqueira, and forced the manager to seek protection from creditors.

According to Paulus, Apex needed to sell part of its stake because there were term operations maturing, with shares given as collateral.

The Absolute and Unity - whose stakes were not disclosed - did not enter into the existing shareholders' agreement between GJP and Apex funds, and remain as independent investors.

The 7.97% stake that remained with Apex funds continues to be linked to the agreement with GJP, which provides that its votes follow the guidance of Mare, the Paulus family's family office.

Despite the crisis that led to Cinelli's departure, Paulus said the Capixaba manager's funds do not intend to sell the remaining stake.

"I even asked: 'Do you want to sell? Because I have people who are interested in buying.' But they said they would keep it," he said.

Under the shareholders' agreement, the stake is subject to a two-year lock-up, until May 2028. Any sale before that must be authorized by GJP - as happened in this week's operation.

For Paulus, the crisis did not change CVC's relationship with Apex.

"They had a problem and I hope they solve it - and they are shareholders like many other minority shareholders we have in the base," he said.

The relationship between the two groups dates back to the end of last year, when Apex started building its stake in CVC. At that time, Paulus said, the manager was seen as a relevant institutional investor, with known partners in the market.

"Nothing discredited Apex."

"It was a surprise to us what happened," he said.

Apex increased its stake and, in May, Cinelli was elected to the board.

The agreement between GJP and Apex was made to provide more stability to governance, according to Paulus.

Cinelli ended up attending only two board meetings and resigned at the beginning of the month, shortly after Apex's problems became public.

The Paulus family and CVC executives said they had no knowledge of the compensation model used by Apex.

"It's a thing of their manager. We are not involved," Paulus said.

Fábio Mader, CVC's CEO, said the crisis had "zero impact" on operations, including relationships with employees, suppliers, and franchisees.

The company sought out banks, creditors, and its main partners to explain the situation.

"They bought via Stock Exchange. Cinelli himself had no management in the company, was not in the day-to-day and attended two board meetings," Mader said.

The corporate turmoil came just as CVC published its second-quarter numbers.

Compared to the previous year, consumed reserves grew 2.3% to R$ 3.9 billion, driven by a 7.2% increase in Brazil.

However, net revenue fell 6.5% to R$ 320 million.

Part of the difference came from the drop in take rate.

According to the CEO, three factors weighed on the results: a greater B2B mix, which has lower profitability; greater participation of airline tickets; and a reduction in margin on leisure to keep trips accessible to consumers.

Expenses in Brazil fell 10.1% and would have dropped by about 20% excluding non-recurring costs related to layoffs.

Adjusted EBITDA in Brazil grew 4.7%, even with pressure on revenue, with a margin of 32.7% - the highest ever recorded by the Brazilian operation in a second quarter.

In Argentina, which accounts for 16% of CVC's sales, reserves fell 13.2% and revenue dropped 17.6%, also impacted by the devaluation of the peso.

CVC also returned to generating positive operating cash flow of R$ 60 million.

For Mader, July brought a first sign of acceleration: sales were the highest in the last two years, while same-store sales had the best performance in the period.

Now, the company bets that technology can deepen efficiency gains.

In October, CVC intends to launch a new platform that will integrate stores, website, and app, in a model inspired by the Chinese Trip.com.

The goal is to combine digital with a network of 1,600 stores, so that even customers who buy online have a travel agent accompanying their journey.