NOTES
TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
1.
COMPANY ACTIVITY AND CORPORATE INFORMATION
(a) Description of business
Atento S.A. (the “Company”)
and its subsidiaries (“Atento Group”) offer customer relationship management services to their clients through contact centers
or multichannel platforms.
The Company was incorporated
on March 5, 2014 under the laws of the Grand Duchy of Luxembourg. Its current registered office in Luxembourg is 1, rue Hildegard Von
Bingen, L-1282, Luxembourg.
The majority direct shareholders
of the Company are Mezzanine Partners II Offshore Lux Sarl II, Mezzanine Partners II Onshore Lux Sarl II, Mezzanine Partners II Institutional
Lux Sarl II, Mezzanine Partners II AP LUX SARL II, Chesham Investment Pte Ltd. and Taheebo Holdings LLC, Arch Reinsurance Ltd.
The Company may act as
the guarantor of loans and securities, as well as assisting companies in which it holds direct or indirect interests or that form part
of its group. The Company may secure funds, with the exception of public offerings, through any kind of lending, or through the issuance
of bonds, securities or debt instruments in general.
The Company may also
carry on any commercial, industrial, financial, real estate business or intellectual property related activity that it deems necessary
to meet the aforementioned corporate purposes.
The corporate purpose
of its subsidiaries, with the exception of the intermediate holding companies, is to establish, manage and operate CRM centers through
multichannel platforms; provide telemarketing, marketing and “call center” services through service agencies or in any other
format currently existing or which may be developed in the future by the Atento Group; provide telecommunications, logistics, telecommunications
system management, data transmission, processing and internet services and to promote new technologies in these areas; offer consultancy
and advisory services to clients in all areas in connection with telecommunications, processing, integration systems and new technologies,
and other services related to the above. The Company’s ordinary shares are traded on NYSE under the symbol “ATTO”.
The interim condensed
consolidated financial information was approved by the Board of Directors on November 5, 2021.
(b) Seasonality
Our performance is
subject to seasonal fluctuations, which is primarily due to (i) our clients generally spending less in the first quarter of the year after
the year -end holiday season, (ii) the initial costs to train and hire new employees at new service delivery centers to provide additional
services to our clients which are usually incurred in the first quarter of the year, and (iii) statutorily mandated minimum wage and salary
increases of operators, supervisors and coordinators in many of the countries in which we operate which are generally implemented at the
beginning of the first quarter of each year, whereas revenue increases related to inflationary adjustments and contracts negotiations
generally take effect after the first quarter. We have also found that growth in our revenue increases in the last quarter of the year,
especially in November and December, as the year-end holiday season begins and we have an increase in business activity resulting from
the handling of holiday season promotions offered by our clients. These seasonal effects also cause differences in revenue and expenses
among the various quarters of any year, which means that the individual quarters of a year should not be directly compared with each other
or used to predict annual operating results.
2. BASIS OF PRESENTATION OF THE INTERIM
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The interim condensed
consolidated financial information for the nine months ended September 30, 2021 has been prepared in accordance with IAS 34 - Interim
Financial Reporting as issued by the International Accounting Standards Board (“IASB”) prevailing at September 30, 2021.
The information does
not have all disclosure requirements for the presentation of full annual financial statements and thus should be read in conjunction with
the consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) for
the year ended December 31, 2020. The interim condensed consolidated financial information have been prepared on a historical
costs basis, except for Argentina that is adjusted for inflation as required by IAS 29 Financial Reporting in Hyperinflationary Economies in Argentina,
and derivative financial instruments, which have been measured at fair value. The interim condensed consolidated financial information
is for the Atento Group.
The figures in this interim
condensed consolidated financial information are expressed in thousands of U.S. dollars, and all values are rounded to the nearest thousand,
unless otherwise indicated. U.S. Dollar is the Atento Group’s presentation currency.
3. ACCOUNTING POLICIES
There were no significant
changes in accounting policies and calculation methods used for the interim condensed consolidated financial information as of September
30, 2021 in relation to those presented in the annual financial statements for the year ended December 31, 2020.
a)
Critical accounting estimates and assumptions
The preparation
of the interim condensed consolidated financial information under IAS 34 requires the use of certain assumptions and estimates that affect
the recognized amount of assets, liabilities, income and expenses, as well as the related disclosures.
Some of the accounting
policies applied in preparing the accompanying interim condensed consolidated financial information required Management to apply significant
judgments in order to select the most appropriate assumptions for determining these estimates. These assumptions and estimates are based
on Management experience, the advice of consultants and experts, forecasts and other circumstances and expectations prevailing at year
end. Management’s evaluation takes into account the global economic situation in the sector in which the Atento Group operates,
as well as the future outlook for the business. By virtue of their nature, these judgments are inherently subject to uncertainty. Consequently,
actual results could differ substantially from the estimates and assumptions used. Should this occur, the values of the related assets
and liabilities would be adjusted accordingly.
Although these estimates
were made on the basis of the best information available at each reporting date on the events analyzed, events that take place in the
future might make it necessary to change these estimates in coming years. Changes in accounting estimates would be applied prospectively
in accordance with the requirements of IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, recognizing
the effects of the changes in estimates in the related interim condensed consolidated statements of operations.
An explanation of
the estimates and judgments that entail a significant risk of leading to a material adjustment in the carrying amounts of assets and liabilities
in the coming financial period is as follows:
Impairment of
goodwill
The Atento Group
tests goodwill for impairment annually, in accordance with the accounting principle disclosed in the consolidated financial statements
for the year ended December 31, 2020. Goodwill is subject to impairment testing as part of the cash-generating unit to which it has been
allocated. The recoverable amounts of cash-generating units defined in order to identify potential impairment in goodwill are determined
on the basis of value in use, applying five-year financial forecasts based on the Atento Group’s strategic plans, approved and reviewed
by Management. These calculations entail the use of assumptions and estimates and require a significant degree of judgment. The main variables
considered in the sensitivity analyses are growth rates, discount rates using the Weighted Average Cost of Capital (“WACC”)
and the key business variables.
Deferred taxes
The Atento Group
assesses the recoverability of deferred tax assets based on estimates of future earnings. The ability to recover these deferred amounts
depends ultimately on the Atento Group’s ability to generate taxable earnings over the period in which the deferred tax assets remain
deductible. This analysis is based on the estimated timing of the reversal of deferred tax liabilities, as well as estimates of taxable
earnings, which are sourced from internal projections and are continuously updated to reflect the latest trends.
The appropriate
classification of tax assets and liabilities depends on a series of factors, including estimates as to the timing and realization of deferred
tax assets and the projected tax payment schedule. Actual income tax receipts and payments could differ from the estimates made by the
Atento Group as a result of changes in tax legislation or unforeseen transactions that could affect the tax balances.
The Atento Group
has recognized deferred tax assets corresponding to losses carried forward since, based on internal projections, it is probable that it
will generate future taxable profits against which they may be utilized.
The carrying amount
of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of that deferred tax asset to be utilized. Unrecognized deferred income tax assets
are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow
the deferred tax asset to be recovered.
Provisions and
contingencies
Provisions are recognized
when the Atento Group has a present obligation as a result of a past event, it is probable that an outflow of resources will be required
to settle the obligation and a reliable estimate can be made of the amount of the obligation. This obligation may be legal or constructive,
deriving from, inter alia, regulations, contracts, customary practice or public commitments that would lead third parties to reasonably
expect that the Atento Group will assume certain responsibilities. The amount of the provision is determined based on the best estimate
of the outflow of resources embodying economic benefit that will be required to settle the obligation, taking into account all available
information as of the reporting date, including the opinions of independent experts such as legal counsel or consultants.
No provision is
recognized if the amount of liability cannot be estimated reliably. In such cases, the relevant information is disclosed in the notes
to the interim condensed consolidated financial information.
Given the uncertainties
inherent in the estimates used to determine the amount of provisions, actual outflows of resources may differ from the amounts recognized
originally on the basis of these estimates.
Fair value of
derivatives
The Atento Group
uses derivative financial instruments to mitigate risks, primarily derived from possible fluctuations in interest and exchange rates.
Derivatives are recognized at the inception of the contract at fair value.
The fair values
of derivative financial instruments are calculated on the basis of observable market data available, either in terms of market prices
or through the application of valuation techniques. The valuation techniques used to calculate the fair value of derivative financial
instruments include the discounting of future cash flow associated with the instruments, applying assumptions based on market conditions
at the valuation date or using prices established for similar instruments, among others. These estimates are based on available market
information and appropriate valuation techniques. The fair values calculated could differ significantly if other market assumptions and/or
estimation techniques were applied.
Update On COVID-19
The estimates and
assumptions included in the financial statements include our assessment of potential impacts arising from the COVID-19 pandemic that may
affect the amounts reported and the accompanying notes. To-date, no significant impacts on our collection experience and expected credit
losses have been noted and we do not currently anticipate any material impairments of our long-lived assets or of our indefinite-lived
intangible assets as a result of the COVID-19 pandemic. We will continue to monitor the impacts and will prospectively revise our estimates
as appropriate.
b)
Standards issued but not yet effective
There are no other standards
that are not yet effective and that would be expected to have a material impact on the Atento Group in the current or future reporting
periods and on foreseeable future transactions.
4. MANAGEMENT OF FINANCIAL RISK
4.1 Financial risk factors
The Atento Group's activities
are exposed to various types of financial risks: market risk (including currency risk, interest rate risk and country risk), credit risk
and liquidity risk. The Atento Group's global risk management policy aims to minimize the potential adverse effects of these risks on
the Atento Group's results of operations. The Atento Group also uses derivative financial instruments to hedge certain risk exposures.
This unaudited interim
condensed consolidated financial information does not include all financial risk management information and disclosures required in the
annual financial statements and therefore they should be read in conjunction with the Atento Group’s consolidated financial statements
as of and for the year ended December 31, 2020. For the nine months ended September 30, 2021 there have not been changes in any risk management
policies.
Country Risk
To manage or mitigate
country risk, we repatriate the funds generated in the Americas and Brazil that are not required for the pursuit of new profitable business
opportunities in the region and subject to the restrictions of our financing agreements.
Interest Rate Risk
Interest rate risk arises
mainly as a result of changes in interest rates which affect: finance costs of debt bearing interest at variable rates (or short-term
maturity debt expected to be renewed), as a result of fluctuations in interest rates, and the value of non-current liabilities that bear
interest at fixed rates.
Atento Group’s
finance costs are exposed to fluctuation in interest rates. At September 30, 2021, 3.1% of financial debt with third parties bore interests
ate variable rates, while at December 31, 2020 this amount was 4.5%. In both December 31, 2020 and September 30, 2021, the exposure was
to the Brazilian CDI rate and the TJLP (Brazilian Long-Term Interest Rate).
The Atento Group’s
policy is to monitor the exposure to interest at risk. As of September 30, 2021, there were no outstanding interest rate hedging instruments.
Foreign Currency Risk
Our foreign currency
risk arises from our local currency revenues, receivables and payables while the U.S. dollar is our presentation currency. We benefit
to a certain degree from the fact that the revenue we collect in each country, in which we have operations, is generally denominated in
the same currency as the majority of the expenses we incur.
In accordance with our
risk management policy, whenever we deem it appropriate, we manage foreign currency risk by using derivatives to hedge any exposure incurred
in currencies other than those of the functional currency of the countries.
The main source of our
foreign currency risk is related to the Senior Secured Notes due 2026 denominated in U.S. dollars. Upon issuance of the Notes, we entered
into cross-currency swaps pursuant to which we exchange an amount of U.S. dollars for a fixed amount of Euro, Peruvian Soles and Brazilian
Reais. The total amount of interest (coupon) payments are covered until maturity date and 80% of principal is covered until February 2024.
On February 10, 2021,
Atento Luxco 1 S.A., closed an offering of 500,000 thousand U.S. dollars aggregate principal amount of 8.0% Senior Secured Notes due February
10, 2026 in a private placement transaction.
On February 17, 2021,
Atento Luxco 1 S.A. purchased 275,815 thousand U.S. dollars of its 6.125% Senior Secured Notes due 2022 in a tender offer. The notes were
purchased at a price equal to 1,015.31 U.S. dollars per 1,000 U.S. dollars principal amount.
On February 18, 2021,
Atento Luxco 1 S.A redeemed the remainder 224,185 thousand U.S. dollars of its 6.125% Senior Secured Notes due2022. The redemption price
was equal to 1,015.31 U.S. dollars per 1,000 U.S. dollars principal amount, plus accrued and unpaid interest on the principal amount of
the Notes, which was equal to 1,016.67 U.S. dollars per 1,000 U.S. dollars principal amount.
With these transactions,
the Company completed the refinancing of all 500,000 thousand U.S. dollars aggregate principal amount of its 6.125% Senior Secured Notes
due 2022, extending the Company’s average life to 4.5 years from 1.5 years.
As of September 30, 2021,
the estimated fair value of the cross-currency swaps totaled a net liability of 41,713 thousand U.S. dollars (net asset of 5,868 thousand
U.S. dollars as of December 31, 2020).
Credit Risk
The Atento Group seeks
to conduct all of its business with reputable national and international companies and institutions established in their countries of
origin, to minimize credit risk. As a result of this policy, the Atento Group has no material adjustments to make to its credit accounts.
Accordingly, the Atento
Group’s commercial credit risk management approach is based on continuous monitoring of the risks assumed and the financial resources
necessary to manage the Group’s various units, in order to optimize the risk-reward relationship in the development and implementation
of business plans in the course of their regular business.
Credit risk arising from
cash and cash equivalents is managed by placing cash surpluses in high quality and highly liquid money-market assets. These placements
are regulated by a master agreement revised annually on the basis of the conditions prevailing in the markets and the countries where
Atento operate. The master agreement establishes: (i) the maximum amounts to be invested per counterparty, based on their ratings (long-
and short-term debt rating); (ii) the maximum period of the investment; and (iii) the instruments in which the surpluses may be invested.
The Atento Group’s
maximum exposure to credit risk is primarily limited to the carrying amounts of its financial assets. The Atento Group holds no guarantees
as collection insurance.
Liquidity Risk
The Atento Group seeks
to match its debt maturity schedule to its capacity to generate cash flows to meet the payments falling due, factoring in a degree of
cushion. In practice, this has meant that the Atento Group’s average debt maturity must be long enough to support business operation
normal conditions (assuming that internal projections are met).
Capital Management
The Atento Group’s
Finance Department, which is in charge of the capital management, takes various factors into consideration when determining the Group’s
capital structure.
The Atento Group’s
capital management goal is to determine the financial resources necessary both to continue its recurring activities and to maintain a
capital structure that optimizes own and borrowed funds.
The Atento Group sets
an optimal debt level in order to maintain a flexible and comfortable medium-term borrowing structure in order to be able to carry out
its routine activities under normal conditions and to address new opportunities for growth. Debt levels are kept in line with forecast
future cash flows and with quantitative restrictions imposed under financing contracts.
In addition to these
general guidelines, we take into account other considerations and specifics when determining our financial structure, such as country
risk, tax efficiency and volatility in cash flow generation.
The Super Senior Revolving
Credit Facility carries no financial covenant obligations regarding debt levels. However, the notes do impose limitations of the distributions
on dividends, payments or distributions to shareholders, the incurring of additional debt, and on investments and disposal of assets.
As of the date of these
interim condensed consolidated financial information, the Atento Group was in compliance with all restrictions established in the aforementioned
financing contracts and does not foresee any future non-compliance. To that end, the Atento Group regularly monitors figures for net financial
debt with third parties and EBITDA.
4.2 Fair value estimation
a)
|
Level 1: The fair value of financial instruments traded on active markets is based on the quoted market price at the reporting date.
|
b)
|
Level 2: The fair value of financial instruments not traded in active market (i.e. OTC derivatives) is determined using valuation techniques. Valuation techniques maximize the use of available observable market data, and place as little reliance as possible on specific company estimates. If all of the significant inputs required to calculate the fair value of financial instrument are observable, the instrument is classified in Level 2. The Atento Group’s Level 2 financial instruments comprise interest rate swaps used to hedge floating rate loans and cross currency swaps.
|
c)
|
Level 3: If one or more significant inputs are not based on observable market data, the instrument is classified in Level 3.
|
The Atento Group’s assets and liabilities
measured at fair value as of December 31, 2020 and September 30, 2021 are classified as Level 2. No transfers were carried out between
the different levels during the period.
5. SEGMENT INFORMATION
The following tables
present financial information for the Atento Group’s operating segments for the nine months ended September 30, 2020 and 2021 (in
thousand U.S. dollars):
For the nine months ended September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
Thousands of U.S. dollars
|
|
EMEA
|
|
Americas
|
|
Brazil
|
|
Other and eliminations
|
|
Total Group
|
|
(unaudited)
|
Sales to third parties
|
168,467
|
|
418,702
|
|
451,436
|
|
-
|
|
1,038,605
|
Sales to group companies
|
5
|
|
7,422
|
|
1,017
|
|
(4,376)
|
|
4,068
|
Other operating income and expense
|
(160,626)
|
|
(389,204)
|
|
(402,076)
|
|
17,015
|
|
(934,891)
|
EBITDA
|
7,846
|
|
36,920
|
|
50,377
|
|
12,639
|
|
107,782
|
Depreciation and amortization
|
(9,142)
|
|
(33,260)
|
|
(47,546)
|
|
(235)
|
|
(90,183)
|
Operating profit/(loss)
|
(1,296)
|
|
3,660
|
|
2,831
|
|
12,404
|
|
17,599
|
Financial results
|
533
|
|
(6,396)
|
|
(33,872)
|
|
(16,943)
|
|
(56,678)
|
Income tax
|
(585)
|
|
(5,217)
|
|
9,667
|
|
(3,641)
|
|
224
|
Profit/(loss) for the period
|
(1,348)
|
|
(7,953)
|
|
(21,374)
|
|
(8,180)
|
|
(38,855)
|
EBITDA
|
7,846
|
|
36,920
|
|
50,377
|
|
12,639
|
|
107,782
|
Capital expenditure
|
3,035
|
|
6,375
|
|
14,122
|
|
(101)
|
|
23,431
|
Intangible, Goodwill and PP&E (as of December 31, 2020)
|
43,794
|
|
150,046
|
|
232,930
|
|
494
|
|
427,264
|
Allocated assets (as of December 31, 2020)
|
377,634
|
|
521,300
|
|
560,476
|
|
(297,535)
|
|
1,161,875
|
Allocated liabilities (as of December 31, 2020)
|
132,791
|
|
280,691
|
|
476,192
|
|
182,947
|
|
1,072,621
|
For the nine months ended September 30, 2021
|
|
|
|
|
|
|
|
|
|
|
Thousands of U.S. dollars
|
|
EMEA
|
|
Americas
|
|
Brazil
|
|
Other and eliminations
|
|
Total Group
|
|
(unaudited)
|
Sales to third parties
|
192,162
|
|
473,161
|
|
456,580
|
|
-
|
|
1,121,903
|
Sales to group companies
|
-
|
|
3,033
|
|
705
|
|
(3,665)
|
|
73
|
Other operating income and expense
|
(173,265)
|
|
(431,001)
|
|
(393,188)
|
|
16,545
|
|
(980,909)
|
EBITDA
|
18,897
|
|
45,193
|
|
64,097
|
|
12,880
|
|
141,067
|
Depreciation and amortization
|
(9,564)
|
|
(34,711)
|
|
(45,349)
|
|
(147)
|
|
(89,771)
|
Operating profit/(loss)
|
9,333
|
|
10,482
|
|
18,748
|
|
12,733
|
|
51,296
|
Financial results
|
(2,099)
|
|
(2,149)
|
|
(25,717)
|
|
(51,181)
|
|
(81,146)
|
Income tax
|
(6,053)
|
|
(7,733)
|
|
1,392
|
|
(4,357)
|
|
(16,751)
|
Profit/(loss) for the period
|
1,181
|
|
600
|
|
(5,577)
|
|
(42,805)
|
|
(46,601)
|
EBITDA
|
18,897
|
|
45,193
|
|
64,097
|
|
12,880
|
|
141,067
|
Capital expenditure
|
3,826
|
|
10,640
|
|
33,425
|
|
(1)
|
|
47,890
|
Intangible, Goodwill and PP&E (as of September 30, 2021)
|
41,269
|
|
140,789
|
|
225,324
|
|
325
|
|
407,707
|
Allocated assets (as of September 30, 2021)
|
372,794
|
|
532,518
|
|
517,773
|
|
(311,401)
|
|
1,111,684
|
Allocated liabilities (as of September 30, 2021)
|
139,798
|
|
328,328
|
|
438,876
|
|
173,464
|
|
1,080,466
|
"Other and eliminations" includes
activities of the intermediate holding in Spain (Atento Spain Holdco, S.L.U.), Luxembourg holdings, as well as inter-group transactions
between segments.
6. INTANGIBLE ASSETS
The following table
presents the breakdown of intangible assets between December 31, 2020 and September 30, 2021:
|
Thousands of U.S. dollars
|
|
Balance at December 31, 2020
|
Additions
|
Disposals
|
Reclassifications between Intangible and PP&E
|
Translation differences
|
Hyperinflation Adjustments
|
Balance at September 30, 2021
|
Cost
|
|
|
|
|
|
|
|
Development
|
3,101
|
233
|
-
|
-
|
(80)
|
196
|
3,450
|
Customer base
|
243,341
|
-
|
-
|
-
|
9,378
|
3,211
|
255,930
|
Software
|
188,117
|
2,718
|
(14,332)
|
13,324
|
(16,024)
|
1,531
|
175,334
|
Other intangible assets
|
56,958
|
-
|
(1,907)
|
-
|
(24,153)
|
194
|
31,092
|
Work in progress
|
75
|
174
|
(21)
|
-
|
(112)
|
-
|
116
|
Total cost
|
491,592
|
3,125
|
(16,260)
|
13,324
|
(30,991)
|
5,132
|
465,922
|
Accumulated amortization
|
|
|
|
|
|
|
|
Development
|
(1,335)
|
(123)
|
-
|
-
|
163
|
(195)
|
(1,490)
|
Customer base
|
(172,005)
|
(16,301)
|
693
|
-
|
(3,079)
|
(2,932)
|
(193,624)
|
Software
|
(140,858)
|
(17,787)
|
14,311
|
-
|
10,853
|
(1,053)
|
(134,534)
|
Other intangible assets
|
(45,715)
|
(1,403)
|
1,908
|
-
|
15,708
|
(194)
|
(29,696)
|
Total accumulated amortization
|
(359,913)
|
(35,614)
|
16,912
|
-
|
23,645
|
(4,374)
|
(359,344)
|
Impairment
|
(25,037)
|
-
|
-
|
-
|
1,412
|
-
|
(23,625)
|
Net intangible assets
|
106,643
|
(32,489)
|
652
|
13,324
|
(5,934)
|
758
|
82,954
|
The main changes in intangible
assets between the nine-month period ended September 30, 2021 and the year ended the December 31, 2020 are related to amortization of
period and the negative impact of exchange variance.
7. GOODWILL
Goodwill was mainly
generated on December 1, 2012 from the acquisition of the Customer Relationship Management (“CRM”) business from Telefónica,
S.A. and on December 30, 2014 from the acquisition of Casa Bahia Contact Center Ltda. (“CBCC”). On September 2, 2016, additional
goodwill was generated from the acquisition of RBrasil, and on June 9, 2017 an additional goodwill from the acquisition of Interfile in
the amount of 8,400 thousand U.S. dollars was recorded in Brazil.
The breakdown and changes in goodwill
between December 31, 2020 and September 30, 2021 are as follow:
|
Thousands of U.S. dollars
|
|
12/31/2020
|
|
Hyperinflation
|
|
Translation
differences
|
|
9/30/2021
|
Peru
|
27,103
|
|
-
|
|
(3,355)
|
|
23,748
|
Chile
|
16,245
|
|
-
|
|
(1,867)
|
|
14,378
|
Colombia
|
5,463
|
|
-
|
|
(573)
|
|
4,890
|
Mexico
|
1,820
|
|
-
|
|
(58)
|
|
1,762
|
Brazil
|
50,790
|
|
-
|
|
(2,266)
|
|
48,524
|
Argentina
|
1,593
|
|
17,109
|
|
(16,858)
|
|
1,844
|
Total
|
103,014
|
|
17,109
|
|
(24,977)
|
|
95,146
|
|
|
|
|
|
|
|
|
The variations of
amounts related to the period ended December 31, 2020 and September 30, 2021 are mainly related to exchange variance of Argentine Peso
against the U.S. dollar.
8. PROPERTY, PLANT AND EQUIPMENT (PP&E)
The following table
presents the breakdown of property, plant and equipment between December 31, 2020 and September 30, 2021:
|
Thousands of U.S. dollars
|
|
Balance at December 31, 2020
|
Reclassification to right-of-use assets
|
Additions
|
Disposals
|
Transfers
|
Reclassifications between Intangible and PP&E
|
Translation differences
|
Hyperinflation
Adjustments
|
Balance at September 30, 2021
|
Cost
|
|
|
|
|
|
|
|
|
|
Buildings
|
15,824
|
-
|
48
|
-
|
(797)
|
-
|
(1,165)
|
-
|
13,910
|
Plant and machinery
|
4,519
|
-
|
40
|
-
|
(1,208)
|
-
|
(88)
|
23
|
3,286
|
Furniture, tools and other tangible assets
|
315,448
|
558
|
4,912
|
(39,433)
|
11,298
|
4,870
|
(20,673)
|
5,906
|
282,886
|
PP&E under construction
|
14,070
|
(9,237)
|
39,765
|
(2,041)
|
(10,975)
|
(18,194)
|
(688)
|
-
|
12,700
|
Total cost
|
349,861
|
(8,679)
|
44,765
|
(41,474)
|
(1,682)
|
(13,324)
|
(22,614)
|
5,929
|
312,782
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
Buildings
|
(4,586)
|
-
|
(150)
|
-
|
(2,969)
|
-
|
281
|
-
|
(7,424)
|
Plant and machinery
|
(8,265)
|
-
|
(237)
|
14
|
4,804
|
-
|
579
|
(24)
|
(3,129)
|
Furniture, tools and other tangible assets
|
(246,122)
|
(423)
|
(17,947)
|
39,398
|
(153)
|
-
|
17,129
|
(5,521)
|
(213,639)
|
Total accumulated depreciation
|
(258,973)
|
(423)
|
(18,334)
|
39,412
|
1,682
|
-
|
17,989
|
(5,545)
|
(224,192)
|
Property, plant and equipment
|
90,888
|
(9,102)
|
26,431
|
(2,062)
|
-
|
(13,324)
|
(4,625)
|
384
|
88,590
|
The variations of
amounts related to the period ended December 31, 2020 and September 30, 2021 are related mainly to the negative impact of exchange variance,
due to Brazilian Real and Argentine Peso devaluation against the U.S. dollar.
9. LEASES
The Atento Group
holds the following right-of-use assets:
|
|
Thousands of U.S. dollars
|
|
|
Net carrying amount of asset
|
|
|
12/31/2020
|
|
9/30/2021
|
Furniture, tools and other tangible assets
|
|
9,518
|
|
14,714
|
Buildings
|
|
128,324
|
|
126,303
|
Total
|
|
137,842
|
|
141,017
|
Leases are shown
as follow in the balance sheet between December 31, 2020 and September 30, 2021:
|
|
December 31, 2020
|
|
Additions/
(Disposals)
|
|
Reclassification between PPEQ and right-of-use assets
|
|
Translation difference
|
|
September 30, 2021
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Right-of-use assets
|
|
237,651
|
|
14,439
|
|
8,679
|
|
(38,874)
|
|
221,895
|
(-) Accumulated depreciation
|
|
(99,809)
|
|
(34,714)
|
|
423
|
|
53,222
|
|
(80,878)
|
Total
|
|
137,842
|
|
(20,275)
|
|
9,102
|
|
14,348
|
|
141,017
|
10.
Equity
Share capital
As of September
30, 2021, share capital stood at 49 thousand U.S dollars, equivalent to €33,979 (49 thousand U.S. dollars, equivalent to €33,979
as of December 31, 2020), divided into 15,000,000 shares (15,000,000 shares in December 31, 2020).
On July 28, 2020,
an extraordinary shareholder’s meeting approved the reverse share split of 75,406,357 ordinary shares without nominal value, representing
the entire share capital of the Company, into 15,000,000 ordinary shares without nominal value using a ratio of 5.027090466672970, and
subsequently amending article 5 of the articles of association of the Company.
Mezzanine Partners
II Offshore Lux Sarl II, Mezzanine Partners II, Onshore Lux Sarl II, Mezzanine Partners II Institutional Lux Sarl II and Mezzanine Partners
II AP LUX SARL II, owns 25.36%; Chesham Investment Pte Ltd. owns 21.85%, and Taheebo Holdings LLC owns 14,87% of ordinary shares of Atento
S.A.
Share premium
The share premium refers
to the difference between the subscription price that the shareholders paid for the shares and their nominal value. Since this is a capital
reserve, it can only be used to increase capital, offset losses, redeem, reimburse or repurchase shares.
On January 2, 2020, the
Company vested the total of 1,305,065 TRSUs, issued by treasury shares, with an impact in share premium of 5,842 thousand of U.S. dollars.
On January 4, 2021, the Company vested the total of 149,154 TRSUs, issued by treasury shares, and on August 3, 2021, the Company vested
the total of 493,871 SOPs, being exercised 92,065 SOPs, issued by treasury shares, with a total impact in share premium of 3,975 thousand
of U.S. dollars.
Treasury shares
In 2020, as a result
of the vesting of 1,305,065 TRSUs (corresponding to 259,606 shares of the reserve share split), Atento S.A. had 4,226,592 shares in treasury
(corresponding to 840,763 shares of the reserve share split).
As of July 28, 2020,
Atento S.A. announced a reverse share split that converted the Company’s entire share capital of 75,406,357 into15,000,000 shares.
At that time Atento S.A. had 4,771,076 shares on treasury that became 949,073.
Considering the
reverse share split basis, during 2020, Atento S.A. repurchased 169,739 shares at a cost of 1,337 thousand of U.S. dollars and an average
price of $7.87. As of September 30, 2021, Atento S.A. had 850,808 shares in treasury (1,010,502 shares as of December 31, 2020, in the
reverse share split basis).
Legal reserve
According to commercial
legislation in Luxembourg, Atento S.A. must transfer 5% of its year profits to legal reserve until the amount reaches 10% of share capital.
The legal reserve cannot be distributed.
On February 26, 2020,
the Board of Directors has proposed the allocation to legal reserve of the amount of sixty-seven with forty-seven cents Euros (EUR 67.47).
At July 28, 2020, the
Annual Meeting resolves to (i) allocate the amount of EUR 67.47 to the legal reserve of the Company out of the profit of EUR 1,071,315.52
and (ii) to carry forward the remaining amount of the profit to the next financial year.
At September 30, 2021,
no legal reserve had been established, mainly due to the losses incurred by Atento S.A.
Hedge accounting effects
The Company records
all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended
use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting
and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying
as hedges of the foreign currency exposure of a net investment in a foreign operation are considered net investment hedges. The Company
may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not
apply or the Company elects not to apply hedge accounting.
Certain of the Company’s
derivatives are designated as net investment hedges of a portion of the Company’s net investments in consolidated subsidiaries,
using the forward method to assess and measure hedge effectiveness. Other of the Company’s derivatives are designated as net investment
hedges of a portion of the Company’s net investments in consolidated subsidiaries, using the spot method to assess and measure hedge
effectiveness. Net investment hedges are recorded at fair value on the balance sheet, with the effective portion of the derivative’s
change in fair value being recorded in Other Comprehensive Income. Certain derivative instruments do not qualify for hedge accounting.
Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognized immediately in profit
or loss and are included in “Change in fair value of financial instruments”.
Translation differences
Translation differences
reflect the differences arising on account of exchange rate fluctuations when converting the net assets of fully consolidated foreign
companies from local currency into Atento Group’s presentation currency (U.S. dollars).
Stock-based compensation
a) Description
of share-based payment arrangements
The 2018 Plan
On July 2, 2018, Atento
granted a new share-based payment arrangement to directors, officers and other employees, for the Company and its subsidiaries. The share-based
payment had the following arrangements:
|
1.
|
Time Restricted Stock Units (“RSUs”) (equity settled)
|
• Grant
date: July 2, 2018
• Amount:
1,065,220 RSUs
• Vesting
period: 100% of the RSUs vests on January 4, 2021
• There
are no other vesting conditions
The 5 Years Plan
On March 1, 2019,
Atento granted a new share-based payment arrangement to Board directors (a total of 238,663 RSUs) in a one-time award with a five-year
vesting period of 20% each year.
|
1.
|
Time Restricted Stock Units (“RSU”) (equity settled)
|
• Grant
date: March 1, 2019
• Amount:
238,663 RSUs
• Vesting
period: 20% of the RSUs each year beginning on January 2, 2020 and last vested on January 4, 2024
• There
are no other vesting conditions
The 2019 Plan
On June 3, 2019, Atento
granted a new share-based payment arrangement to directors, officers and other employees, for the Company and its subsidiaries. The share-based
payment had the following arrangements:
|
1.
|
Time Restricted Stock Units (“RSU”) (equity settled)
|
• Grant
date: June 3, 2019
• Amount:
2,560,666 RSUs
• Vesting
period: 100% of the RSUs vests on January 3, 2022
• There
are no other vesting conditions
The 2020 Plan –
Board and Extraordinary
On March 2, 2020,
Atento granted a new share-based payment arrangement to Board directors and an Extraordinary Grant for a total in a one-time award with
a one-year vesting period.
|
1.
|
Time Restricted Stock Units (“RSU”) (equity settled)
|
• Grant
date: March 2, 2020
• Amount:
153,846 and 16,722 RSUs
• Vesting
period: 100% of the RSUs vests on January 4, 2021
• There
are no other vesting conditions
The 2020 Plan –
Stock Option
On August 3, 2020,
Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and its subsidiaries.
The share-based payment is composed by Stock Options with the following arrangements:
•
|
Grant date: August 3, 2020
|
•
|
Vesting period: 1/3 each year (August 3, 2021, August 3, 2022 and August 3, 2023)
|
•
|
Expiration date: 4.5 years since the grant date or on February 3, 2025
|
•
|
There are no other vesting conditions
|
On August 3, 2020,
Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and its subsidiaries.
This payment is composed by a Long-Term Performance Award with the following arrangements:
|
2.
|
Long-Term Performance Award
|
•
|
Grant date: August 3, 2020
|
•
|
*Matching shares Amount: USD 2,152,550
|
•
|
Vesting conditions: linked to the degree of achievement of the objective – 3-year average EBITDA margin (external view / as reported) and the possibility to opt to receive part of this incentive in shares – at least 50% (*with a 3-year holding restriction to receive the additional matching shares)
|
•
|
There are no other vesting conditions
|
The 2020 Plan
– Extraordinary SOP
On August 3, 2020,
Atento granted a new share-based payment arrangement to directors as an Extraordinary Grant for a total in a one-time award with a three-year
vesting period.
•
|
Grant date: August 3, 2020
|
•
|
Vesting period: 100% of the SOPs vests on August 3, 2023
|
•
|
There are no other vesting conditions
|
As of January 4, 2021,
a total of 149,154 TRSUs vested, which is composed of 105,728 RSUs of the 2018 Plan granted on July 2, 2018, 30,604 RSUs of the Board
of directors Plan granted on March 2, 2020, 3,327 RSUs of the Extraordinary Plan granted on March 2, 2020 and 9,495 RSUs of the 20% of
the 5 Years Plan granted on March 1, 2019.
The 2021 Special
Grant
On January 29, 2021,
Atento granted a new share-based payment arrangement to Board directors for a total in a one-time award with a two-year performance conditions
vesting period.
|
1.
|
Performance Restricted Stock Units (“PRSU”) (equity settled)
|
•
|
Grant date: January 29, 2021
|
•
|
Vesting period: 100% of the PRSUs will vests on 2023 (50% subject to 2021 EBITDA’s achievement targets and 50% subject to 2022 EBITDA´s achievement targets)
|
•
|
There are no other vesting conditions.
|
Board Grant
2021
On February 24, 2021,
Atento granted a new share-based payment arrangement to Board directors for a total in a one-time award with a one-year vesting period.
|
1.
|
Time Restricted Stock Units (“RSU”) (equity settled)
|
•
|
Grant date: February 24, 2021
|
•
|
Vesting period: 100% of the RSUs will vests on January 3, 2022
|
•
|
There are no other vesting conditions
|
As of June 9, 2021,
was issued a complementary grant of 3,204 new RSUs, linked to a new appointment in the Board.
The 2021 Plan – Stock
Option
On February 24, 2021,
Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and its subsidiaries.
The share-based payment is composed by Stock Options with the following arrangements:
•
|
Grant date: February 24, 2021
|
•
|
Vesting period: 1/3 each year (February 24, 2022, February 24, 2023 and February 26, 2024)
|
•
|
Expiration date: 4.5 years since the grant date or on August 25, 2025
|
•
|
There are no other vesting conditions
|
As of September 1,
2021, was issued a new grant of 17,343 SOPs to a new Board member.
On February 24, 2021,
Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and its subsidiaries.
This payment is composed by a Long-Term Performance Award with the following arrangements:
|
2.
|
Long-Term Performance Award
|
•
|
Grant date: February 24, 2021
|
•
|
*Matching shares Amount: USD 2,704,918.5
|
•
|
Expiration date: 4.5 years since the grant date or on August 25, 2025
|
•
|
There are no other vesting conditions
|
As of September 1,
2021, was issued a new amount of USD 137,504 to a new Board member.
On August 3, 2021,
a total of 493,871 SOPs vested of the 2020 Plan - Stock Option ("SOP"), which represents 1/3 of the Plan.
b) Measurement
of fair value
The fair value of
the RSUs, for all arrangements, has been measured using the Black-Scholes model. For all arrangements are equity settled and the fair
value of RSUs is measured at grant date and not remeasured subsequently.
c) Outstanding
RSUs
On January 4,
2021, the Company vested the total of 149,154 TRSUs. And on August 3, 2021, a total of 493,871 SOPs vested.
The 2018 Plan
|
Time RSU
|
Outstanding December 31, 2020
|
531,385
|
Outstanding December 31, 2020 after Reverse Split (**)
|
105,728
|
Vested after Reverse Split (**)
|
(105,728)
|
Outstanding September 30, 2021
|
-
|
|
|
The 2019 Plan – 5 Years
|
Time RSU
|
Outstanding December 31, 2020
|
190,930
|
Outstanding December 31, 2020 after Reverse Split (**)
|
37,981
|
Vested after Reverse Split (**)
|
(9,495)
|
Forfeited (*)
|
(24,530)
|
Outstanding September 30, 2021
|
3,956
|
|
|
The 2019 Plan
|
Time RSU
|
Outstanding December 31, 2020
|
2,138,442
|
Outstanding December 31, 2020 after Reverse Split (**)
|
424,373
|
Forfeited (*)
|
(21,597)
|
Outstanding September 30, 2021
|
402,776
|
|
|
The 2020 Plan – Board and Extraordinary
|
Time RSU
|
Outstanding December 31, 2020
|
170,568
|
Outstanding December 31, 2020 after Reverse Split (**)
|
33,931
|
Vested after Reverse Split (**)
|
(33,931)
|
Outstanding September 30, 2021
|
-
|
|
|
The 2020 Plan – Stock Option
|
SOP
|
Outstanding December 31, 2020
|
1,507,518
|
Forfeited (*)
|
(72,490)
|
Vested
|
(493,871)
|
Outstanding September 30, 2021
|
941,157
|
|
|
The 2020 Plan – Performance Award
|
Performance Award (USD)
|
Outstanding December 31, 2020
|
4,256,300
|
Forfeited (*)
|
(455,000)
|
Outstanding September 30, 2021
|
3,801,300
|
|
|
The 2020 Plan – Extraordinary SOP
|
SOP
|
Outstanding December 31, 2020
|
195,000
|
Forfeited (*)
|
-
|
Outstanding September 30, 2021
|
195,000
|
|
|
The 2021 Special Grant
|
Performance RSU
|
Granted January 29, 2021
|
121,802
|
Forfeited (*)
|
-
|
Outstanding September 30, 2021
|
121,802
|
|
|
Board Grant 2021
|
Time RSU
|
Granted February 24, 2021
|
51,803
|
Complementary Granted June 9, 2021
|
3,204
|
Forfeited (*)
|
(10,072)
|
Outstanding September 30, 2021
|
44,935
|
|
|
The 2021 Plan – Stock Option
|
SOP
|
Granted February 24, 2021
|
621,974
|
Complementary granted September 1, 2021
|
17,343
|
Forfeited (*)
|
(35,755)
|
Outstanding September 30, 2021
|
603,562
|
|
|
The 2021 Plan – Performance Award
|
Performance Award (USD)
|
Granted February 24, 2021
|
5,409,837
|
Complementary granted September 1, 2021
|
137,504
|
Forfeited (*)
|
(364,247)
|
Outstanding September 30, 2021
|
5,183,094
|
|
|
(*) RSUs are forfeited during the year due to employees failing to satisfy the service conditions.
|
|
(**) Number of RSUs converted by the ratio of 5.027090466672970.
|
|
d) Impacts in Profit or Loss
In the nine months
ended September 30, 2021 8,878 thousand U.S. dollars related to stock-based compensation and the related social charges were recorded
as employee benefit expenses.
11. FINANCIAL ASSETS
As of December 31, 2020 and September 30, 2021 all the financial
assets of the Company are classified as amortized cost, and all Cross Currency Swaps are designated as Net Investment Hedges to the extent
they are eligible.
Credit risk arises from
the possibility that the Atento Group might not recover its financial assets at the amounts recognized and in the established terms. Atento
Group Management considers that the carrying amount of financial assets is similar to the fair value.
As of September 30, 2021,
Atento Teleservicios España S.A., Atento Brasil S.A. and Atento Colombia S.A. have entered into factoring agreements without recourse,
anticipating an amount of 132,759 thousand U.S. dollars, receiving cash net of discount, the related trade receivables were realized and
interest expenses was recognized in the statement of operations. As of December 31, 2020, Atento Teleservicios España S.A., Atento
Chile S.A., Teleatento del Perú S.A.C, Atento Brasil S.A. and Atento Mexico have entered into factoring agreements without recourse,
anticipating an amount of 117,295 thousand U.S. dollars, receiving cash net of discount, the related trade receivables were realized and
interest expenses was recognized in the statement of operations.
Details of other
financial assets as of December 31, 2020 and September 30, 2021 are as follow:
|
Thousands of U.S. dollars
|
|
12/31/2020
|
|
9/30/2021
|
|
(audited)
|
|
(unaudited)
|
Other non-current receivables (*)
|
5,972
|
|
6,866
|
Non-current guarantees and deposits
|
32,220
|
|
29,392
|
Total non-current
|
38,192
|
|
36,258
|
Other current receivables
|
12
|
|
13
|
Current guarantees and deposits
|
1,146
|
|
1,023
|
Total current
|
1,158
|
|
1,036
|
Total
|
39,350
|
|
37,282
|
(*) “Other non-current receivables”
as of December 31, 2020 and September 30, 2021 primarily comprise a loan granted by the subsidiary RBrasil to third parties. The effective
annual interest rate is CDI + 3.75% p.a., maturity in five years beginning on May 4, 2017, when the value of the loan will be amortized
in a single installment.
The breakdown of
“Trade and other receivables” as of December 31, 2020 and September 30, 2021 is as follows:
|
Thousands of U.S. dollars
|
|
12/31/2020
|
|
9/30/2021
|
|
(audited)
|
|
(unaudited)
|
Non-current trade receivables
|
8,477
|
|
15,361
|
Other non-financial assets (*)
|
12,518
|
|
15,672
|
Total non-current
|
20,995
|
|
31,033
|
Current trade receivables
|
274,355
|
|
283,467
|
Other receivables
|
4,678
|
|
1,028
|
Prepayments
|
14,698
|
|
14,723
|
Personnel
|
5,355
|
|
5,719
|
Total current
|
299,086
|
|
304,937
|
Total
|
320,081
|
|
335,970
|
(*)
“Other non-financial assets” as of September 30, 2021 primarily comprise tax credits with the Brazilian social security authority
(Instituto Nacional do Seguro Social), recorded in Atento Brasil S.A.
For the purpose
of the interim condensed consolidated financial statements of cash flows, cash and cash equivalents are comprised of the following:
|
Thousands of U.S. dollars
|
|
12/31/2020
|
|
9/30/2021
|
(audited)
|
|
(unaudited)
|
Deposits held at call
|
139,264
|
|
99,732
|
Short-term financial investments
|
69,730
|
|
45,922
|
Total
|
208,994
|
|
145,654
|
“Short-term
financial investments” comprises short-term fixed-income securities in Brazil, which mature in less than 90 days and accrue interest
pegged to the CDI.
12. FINANCIAL LIABILITIES
Details of debt
with third parties as of December 31, 2020 and September 30, 2021 are as follow:
|
Thousands of U.S. dollars
|
|
12/31/2020
|
|
9/30/2021
|
|
(audited)
|
|
(unaudited)
|
Senior Secured Notes
|
493,701
|
|
487,873
|
Bank borrowing
|
1,420
|
|
577
|
Lease liabilities
|
99,515
|
|
109,754
|
Total non-current
|
594,636
|
|
598,204
|
Senior Secured Notes
|
11,910
|
|
5,556
|
Super Senior Credit Facility
|
30,038
|
|
25,024
|
Bank borrowing
|
38,055
|
|
22,435
|
Lease liabilities
|
53,184
|
|
44,560
|
Total current
|
133,187
|
|
97,575
|
TOTAL DEBT WITH THIRD PARTIES
|
727,823
|
|
695,779
|
Senior Secured Notes
On August 10, 2017,
Atento Luxco 1 S.A., closed an offering of 400,000 thousand U.S. dollars aggregate principal amount of 6.125% Senior Secured Notes due
2022 in a private placement transaction. The notes are due in August 2022. The 2022 Senior Secured Notes are guaranteed on a senior secured
basis by certain of Atento’s wholly owned subsidiaries. The issuance costs of 11,979 thousand U.S. dollars related to this new issuance
are recorded at amortized cost using the effective interest method.
On April 4, 2019,
Atento Luxco 1 S.A., closed an offering of an additional $100.0 million in aggregate principal amount of its 6.125% Senior Secured Notes
due 2022 (the "Additional Notes"). The Additional Notes were offered as additional notes under the indenture, dated as of August
10, 2017, pursuant to which the Issuer previously issued $400.0 million aggregate principal amount of its 6.125% Senior Secured Notes
due 2022 (the "Existing Notes"). The Additional Notes and the Existing Notes are treated as the same series for all purposes
under the indenture and collateral agreements, each as amended and supplemented, that govern the Existing Notes and the Additional Notes.
On February 10, 2021,
Atento Luxco 1 S.A., closed an offering of a $500.0 million aggregate principal amount of 8.0% Senior Secured Notes due February 10, 2026
in a private placement transaction. Atento Luxco 1 used the net proceeds to repurchase all of its 6.125% Senior Secured Notes due 2022.
On February 17, 2021,
Atento Luxco 1 S.A. purchased 275,815 thousand U.S. dollars of its 6.125% Senior Secured Notes due 2022 in a tender offer. The notes were
purchased at a price equal to 1,015.31 U.S. dollars per 1,000 U.S. dollars principal amount. And on February 18, 2021, Atento Luxco 1
S.A. redeemed the remainder 224,185 thousand U.S. dollars of its 6.125% Senior Secured Notes due 2022. The redemption price was equal
to 1,015.31 U.S. dollars per 1,000 U.S. dollars principal amount, plus accrued and unpaid interest on the principal amount of the Notes,
which was equal to 1,016.67 U.S. dollars per 1,000 U.S. dollars principal amount. With these transactions, the Company completed the refinancing
of all 500,000 thousand U.S. dollars aggregate principal amount of its 6.125% Senior Secured Notes due 2022, extending the Company’s
average life to 4.5 years from 1.5 years.
All interest payments
are made on a half yearly basis.
The fair value of
the Senior Secured Notes, calculated on the basis of their quoted price on September 30, 2021 is 539,942 thousand U.S. dollars.
The fair value hierarchy
of the Senior Secured Notes is Level 1 as the fair value is based on the quoted market price at the reporting date.
The terms of the Indenture
governing the 2026 Senior Secured Notes, among other things, limit, in certain circumstances, the ability of Atento Luxco 1 and its restricted
subsidiaries to: incur certain additional indebtedness; make certain dividends distributions, investments and other restricted payments;
sell the property or assets to another person; incur additional liens; guarantee additional debt; and enter into transaction with affiliates.
As of September 30, 2021, we were in compliance with these covenants. The outstanding amount at September 30, 2021 is 493,429 thousand
U.S. dollars.
Details of the corresponding
debt at each reporting date are as follow:
|
|
|
Thousands of U.S. dollars
|
|
|
|
2020
|
|
2021
|
Maturity
|
Currency
|
|
Principal
|
|
Accrued interests
|
|
Total debt
|
|
Principal
|
|
Accrued interests
|
|
Total debt
|
2022
|
U.S. dollar
|
|
493,701
|
|
11,910
|
|
505,611
|
|
-
|
|
-
|
|
-
|
2026
|
U.S. dollar
|
|
-
|
|
-
|
|
-
|
|
487,873
|
|
5,556
|
|
493,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank borrowings
On February 3, 2014,
Atento Brasil S.A. entered into a credit agreement with Banco Nacional de Desenvolvimento Econômico e Social - BNDES (“BNDES”)
in an aggregate principal amount of 300,000 thousand Brazilian Reais (the “BNDES Credit Facility”), equivalent to 109,700
thousand U.S. dollars as of each disbursement date.
The total amount of the
BNDES Credit Facility is divided into five tranches subject to the following interest rates:
Tranche
|
|
Interest Rate
|
|
Tranche A
|
|
Long-Term Interest Rate (Taxa de Juros de Longo Prazo -TJLP) plus 2.5% per annum
|
Tranche B
|
|
SELIC Rate plus 2.5% per annum
|
Tranche C
|
|
4.0% per year
|
Tranche D
|
|
6.0% per year
|
Tranche E
|
|
Long-Term Interest Rate (Taxa de Juros de Longo Prazo -TJLP)
|
Each tranche intends to
finance different purposes, as described below:
• Tranche
A and B: investments in workstations, infrastructure, technology, services and software development, marketing and commercialization,
within the scope of BNDES program – BNDES Prosoft.
• Tranche
C: IT equipment acquisition, covered by law 8.248/91, with national technology, necessary to execute the project described on tranches
“A” and “B”.
• Tranche
D: acquisitions of domestic machinery and equipment, within the criteria of FINAME, necessary to execute the project described on tranches
“A” and “B”.
• Tranche
E: investments in social projects to be executed by Atento Brasil S.A.
BNDES releases amounts
under the credit facility once the debtor meets certain requirements in the contract including delivering the guarantee (stand-by letter
of credit) and demonstrating the expenditure related to the project. Since the beginning of the credit facility, the following amounts
were released:
|
|
(Thousands of U.S. dollars)
|
Date
|
|
Tranche A
|
|
Tranche B
|
|
Tranche C
|
|
Tranche D
|
|
Tranche E
|
|
Total
|
March 27, 2014
|
|
11,100
|
|
5,480
|
|
7,672
|
|
548
|
|
-
|
|
24,800
|
April 16, 2014
|
|
4,714
|
|
2,357
|
|
3,300
|
|
236
|
|
-
|
|
10,607
|
July 16, 2014
|
|
-
|
|
-
|
|
-
|
|
-
|
|
270
|
|
270
|
August 13, 2014
|
|
27,584
|
|
3,013
|
|
4,430
|
|
477
|
|
-
|
|
35,504
|
Subtotal 2014
|
|
43,398
|
|
10,850
|
|
15,402
|
|
1,261
|
|
270
|
|
71,181
|
March 26, 2015
|
|
5,753
|
|
1,438
|
|
2,042
|
|
167
|
|
-
|
|
9,400
|
April 17, 2015
|
|
12,022
|
|
3,006
|
|
4,266
|
|
349
|
|
-
|
|
19,643
|
December 21, 2015
|
|
7,250
|
|
1,807
|
|
-
|
|
-
|
|
177
|
|
9,234
|
Subtotal 2015
|
|
25,025
|
|
6,251
|
|
6,308
|
|
516
|
|
177
|
|
38,277
|
October 27, 2016
|
|
-
|
|
-
|
|
-
|
|
-
|
|
242
|
|
242
|
Subtotal 2016
|
|
-
|
|
-
|
|
-
|
|
-
|
|
242
|
|
242
|
Total
|
|
68,423
|
|
17,101
|
|
21,710
|
|
1,777
|
|
689
|
|
109,700
|
This facility should
be repaid in 48 monthly instalments. The first payment was made on March 15, 2016 and the last payment would be due on February 15, 2020,
however Atento Brasil S.A. repaid in advance on April 30, 2019 all the outstanding amount. The amount repaid was BRL61.7 million (equivalent
to $15.6 million) plus interest accrued and a penalty of BRL 0.7 million (equivalent to $0.2 million).
The BNDES Credit
Facility contains covenants that restrict Atento Brasil S.A.’s ability to transfer, assign, change or sell the intellectual property
rights related to technology and products developed by Atento Brasil S.A. with the proceeds from the BNDES Credit Facility. As of September
30, 2021, Atento Brasil S.A. was in compliance with these covenants. The BNDES Credit Facility does not contain any other financial maintenance
covenant.
The BNDES Credit
Facility contains customary events of default including the following: (i) reduction of the number of employees without providing program
support for outplacement, as training, job seeking assistance and obtaining pre-approval of BNDES; (ii) existence of unfavourable court
decision against the Company for the use of children as workforce, slavery or any environmental crimes and (iii) inclusion in the by-laws
of Atento Brasil S.A. of any provision that restricts Atento Brasil S.A’s ability to comply with its financial obligations under
the BNDES Credit Facility.
On September 26,
2016, Atento Brasil S.A. entered into a new credit agreement with BNDES in an aggregate principal amount of 22,000 thousand Brazilian
Reais, equivalent to 6,808 thousand U.S. dollars as of September 30, 2016. The interest rate of this facility is Long-Term Interest Rate
(Taxa de Juros de Longo Prazo - TJLP) plus 2.0% per annum. The facility should be repaid in 48 monthly instalments. The first payment
was due on November 15, 2018 and the last payment will be due on October 15, 2022. This facility is intended to finance an energy efficiency
project to reduce power consumption by implementing new lightening, air conditioning and automation technology. On November 24, 2017,
6,500 thousand Brazilian Reais (equivalent to 1,993 thousand U.S. dollars as of November 30, 2017) were released under this facility.
As of September
30, 2021, the outstanding amount under BNDES Credit Facility was 328 thousand U.S. dollars.
The fair value as
of September 30, 2021 calculated based on discounted cash flow is 312 thousand U.S. dollars.
On August 10, 2017,
Atento Luxco 1 S.A. entered into a new Super Senior Revolving Credit Facility (the “Super Senior Revolving Credit Facility”)
which provides borrowings capacity of up to 50,000 thousand U.S. dollars and will mature on February 10, 2022. Banco Bilbao Vizcaya Argentaria,
S.A., as the agent, the Collateral Agent and BBVA Bancomer, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer,
Morgan Stanley Bank N.A. and Goldman Sachs Bank USA are acting as arrangers and lenders under the Super Senior Revolving Credit Facility.
The Super Senior
Revolving Credit Facility may be utilized in the form of multi-currency advances for terms of one, two, three or six months. The Super
Senior Revolving Credit Facility bears interest at a rate per annum equal to LIBOR or, for borrowings in euro, EURIBOR or, for borrowings
in Mexican Pesos, TIIE plus an opening margin of 4.25% per annum. The margin may be reduced under a margin ratchet to 3.75% per annum
by reference to the consolidated senior secured net leverage ratio and the satisfaction of certain other conditions.
The terms of the
Super Senior Revolving Credit Facility Agreement limit, among other things, the ability of the Issuer and its restricted subsidiaries
to (i) incur additional indebtedness or guarantee indebtedness; (ii) create liens or use assets as security in other transactions; (iii)
declare or pay dividends, redeem stock or make other distributions to stockholders; (iv) make investments; (v) merge, amalgamate or consolidate,
or sell, transfer, lease or dispose of substantially all of the assets of the Issuer and its restricted subsidiaries; (vi) enter into
transactions with affiliates; (vii) sell or transfer certain assets; and (viii) agree to certain restrictions on the ability of restricted
subsidiaries to make payments to the Issuer and its restricted subsidiaries. These covenants are subject to a number of important conditions,
qualifications, exceptions and limitations that are described in the Super Senior Revolving Credit Facility Agreement.
The Super Senior
Revolving Credit Facility Agreement includes a financial covenant requiring the drawn super senior leverage ratio not to exceed 0.35:1.00
(the “SSRCF Financial Covenant”). The SSRCF Financial Covenant is calculated as the ratio of consolidated drawn super senior
facilities debt to consolidated pro forma EBITDA for the twelve month period preceding the relevant quarterly testing date and is tested
quarterly on a rolling basis, subject to the Super Senior Revolving Credit Facility being at least 35% drawn (excluding letters of credit
(or bank guarantees), ancillary facilities and any related fees or expenses) on the relevant test date. The SSRCF Financial Covenant only
acts as a draw stop to new drawings under the Revolving Credit Facility and, if breached, will not trigger a default or an event of default
under the Super Senior Revolving Credit Facility Agreement. The Issuer has four equity cure rights in respect of the SSRCF Financial Covenant
prior to the termination date of the Super Senior Revolving Credit Facility Agreement, and no more than two cure rights may be exercised
in any four consecutive financial quarters. As of September 30, 2021, we were in compliance with this covenant.
On October 16, 2017,
Atento El Salvador S.A. de C.V. entered into an overdraft credit line agreement with Banco de America Central, S.A. - BAC for an amount
of 1,600,000 thousand U.S. dollars, maturing in one year, extendable with simple exchange of letters with an annual interest rate of 8.0%
per annum. As of September 30, 2021, the outstanding balance was paid on the due date.
On October 14, 2020,
Atento El Salvador S.A. de C.V. entered into an overdraft credit line agreement with Inversiones Financieras Banco Agrícola, S.A.
for an amount of 1,200,000 thousand U.S. dollars, maturing in one year, extendable with simple exchange of letters with an annual interest
rate of 6.5% per annum. As of September 30, 2021, the outstanding balance was paid on the due date.
On March 25, 2020,
Atento Luxco 1 S.A. withdrew the full amount of 50,000 thousand U.S. dollars maturing on September 21, 2020 with an annual interest rate
of Libor + 4.25%. On September 21, 2020, the full amount of 50,000 thousand U.S. dollars was rolled over until December 20, 2020, at the
same interest rate.
On December 20,
2020, Atento Luxco 1 S.A. repaid 20,000 thousand U.S. dollars and the outstanding 30,000 thousand U.S. dollars as of such date was rolled
over until March 22, 2021.
On March 22, 2021,
the amount of 30,000 thousand U.S. dollars was rolled over until June 21, 2021, at the same interest rate.
On June 21, 2021,
the amount of 30,000 thousand U.S. dollars was rolled over until September 22, 2021, at the same interest rate.
On September 22,
2021, Atento Luxco 1 S.A. repaid 5,000 thousand U.S. dollars and the outstanding 25,000 thousand U.S. dollars as of such date was rolled
over until November 22, 2021, at the same interest rate.
As of September30,
2021, the outstanding amount under this facility was 25,024 thousand U.S. dollars.
On October 14, 2020,
Atento Brasil entered into a bank credit certificate with Banco do Brasil for an amount of 30,000 thousand Brazilian Reais, maturing on
February 28, 2021 with an annual interest rate of CDI plus 2,127%.
On February 28,
2021, Atento Brasil rolled-over the bank credit certificate (cédula de crédito bancário) with Banco do Brasil for
an amount of 30,000 thousand Brazilian Reais, until August 28, 2021, with an annual interest rate of CDI plus 2,65%.
On August 28, 2021,
Atento Brasil rolled-over the bank credit certificate with Banco do Brasil for an amount of 30,000 thousand Brazilian Reais, until Aug
28, 2022, at the same interest rate. As of September 30, 2021, the outstanding balance was 5,553 thousand U.S. dollars.
On March 13, 2020,
Atento Brasil S.A. entered into a financing agreement with Banco Itaú (“Risco Sacado”) for the annual Microsoft software
licenses, for an amount of 24,499 thousand Brazilian Reais, maturing on April 1, 2021, with an annual interest rate of 7.2%. The total
outstanding balance was paid on the due date.
On April 6, 2020,
Atento Brasil S.A. entered into a loan agreement with Banco Santander for an amount of 110,000 thousand Brazilian Reais, maturing on April
06, 2021 with an annual interest rate of CDI plus 4.96% per annum. On July 13, Atento Brasil S.A. made a partial amortization in the amount
of 60,000 thousand Brazilian Reais plus accrued interest. The total outstanding balance was paid on the due date.
On June 12, 2020,
Atento Brasil entered into a financing agreement with Banco De Lage Landen for an amount of 10,000 thousand Brazilian Reais to finance
the purchase of Microsoft software licenses, maturing on June 30, 2023 with an annual interest rate of 9.0% per annum. Atento Brasil drew
down on the financing agreement on July 01, 2020. The outstanding balance as of September 30, 2021 was 1,287 thousand U.S. dollars.
On August 26, 2020,
Atento Brasil entered into a bank credit certificate (cédula de crédito bancário) with Banco ABC Brasil for an amount
of 50,000 thousand Brazilian Reais, maturing on February 22, 2021 with an annual interest rate of CDI plus 2.70% per annum.
On February 22,
2021, Atento Brasil rolled-over the bank credit certificate with Banco ABC Brasil for an amount of 50,000 thousand Brazilian Reais, until
February 22, 2022 with an annual interest rate of CDI plus 2.75% per annum. The balance under the loan agreement as of September 30, 2021
was 9,270 thousand U.S. dollars.
On December 15,
2020, Atento Brasil entered into a bank credit certificate (cédula de crédito bancário) with Banco ABC Brasil for
an amount of 35,000 thousand Brazilian Reais, maturing on June 14, 2021 with an annual interest rate of CDI plus 2.50% per annum.
On June 14, 2021,
Atento Brasil rolled-over the bank credit certificate with Banco ABC Brasil for an amount of 35,000 thousand Brazilian Reais, until June
9, 2022, at the same interest rate. As of September 30, 2021, the outstanding balance was 6,574 thousand U.S. dollars.
Derivatives
Details of derivative
financial instruments as of December 31, 2020 and September 30, 2021 are as follow:
|
Thousands of U.S. dollars
|
|
12/31/2020
|
|
9/30/2021
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Cross currency swaps - net investment hedges
|
11,088
|
|
(5,220)
|
|
16,644
|
|
(58,357)
|
Total
|
11,088
|
|
(5,220)
|
|
16,644
|
|
(58,357)
|
|
|
|
|
|
|
|
|
Non-current portion
|
11,088
|
|
(5,220)
|
|
16,644
|
|
(58,357)
|
Atento Luxco1 entered
into Cross-Currency Swaps to reduce its foreign exchange risk, since it generates cashflow in local currencies. With these instruments,
the company ensures that its cashflow in local currencies is swapped into a fixed dollar amount, the currency used to pay debt obligations,
therefore reducing foreign exchange risks.
Derivatives held
for trading are classified as current assets or current liabilities. The fair value of a hedging derivative is classified as a non-current
asset or a non-current liability, as applicable, if the remaining maturity of the hedged item exceeds twelve months. Otherwise, it is
classified as a current asset or liability.
On April 1, 2015,
the Company started a hedge accounting for net investment hedge related to exchange risk between the U.S. dollar and foreign operations
in Euro (EUR), Mexican Peso (MXN), Colombian Peso (COP) and Peruvian Nuevo Sol (PEN). In connection with the Refinancing process, 8 of
the 10 derivatives contracts designated as Net Investment Hedges were terminated between August 1, 2017 and August 4, 2017, generating
positive cash of 46,080 thousand U.S. dollars, net of charges. During August 2017, Atento Luxco 1 also entered into new Cross-Currency
Swaps related to exchange risk between U.S. dollars and Euro (EUR), Mexican Peso (MXN), Brazilian Reais (BRL) and Peruvian Nuevo Sol (PEN).
Except for the Cross-Currency Swap between U.S. dollars and Brazilian Reais (BRL), all Cross-Currency Swaps were designated for hedge
accounting as net investment hedge.
On January 1, 2019,
the Company designated the Cross-Currency Swap between U.S. dollars and Brazilian Reais for hedge accounting as net investment hedge.
Prior to the date of designation of the Cross-Currency Swap, this hedging instrument was electively not designated as a hedge accounting
because the change in fair value was intended to partially offset changes in the USD-BRL foreign currency component of the BRL denominated
intercompany debt, which were recorded in earnings. Effective January 1, 2019, the intercompany debt was reclassified as “permanent
in equity” (which assumes that the related payable is neither planned nor likely to occur in the foreseeable future, since it is
in substance, a part of the entity’s net investment in that foreign operation) and, as a consequence, the changes arising from the
exchange rate are recorded in other comprehensive income.
On January 1, 2020
Atento decided to assign the loan agreement between Atento Luxco 1 and Atento Mexico Holdco as “permanent in equity”, with
its maturities to be renewed per indefinite time, since the repayment is neither planned nor likely to occur in the foreseeable future.
Therefore, changes related to the USD-MXN exchange rate are now recorded in other comprehensive income.
In connection with
the new 8.0% Senior Secured Notes due 2026, Atento Luxco 1 S.A. entered into new Cross-Currency Swaps related to exchange rate risk between
U.S. dollars and Euro (EUR), Brazilian Reais (BRL) and Peruvian Soles (PEN).
The new coupon payments
were hedged 70% in USD/BRL, 15% in USD/EUR and 15% in USD/PEN with final maturity on February 10, 2026. The USD/BRL Cross-Currency Swap
was structured as Fix-Float, where Atento receives USD at a fixed rate and pays BRL at a floating rate (percentage of CDI).
Also, Atento Luxco
1 S.A. hedged 56% of the principal in USD/BRL, 14% in USD/PEN and 10% in USD/EUR, with maturity on February 05, 2024.
All previous (coupon-only)
cross-currency swaps with maturity in August 2022 were terminated.
At September 30,
2021, details of net investment hedges were as follow:
Cross-curry swaps - Net Investment Hedges
|
Bank
|
|
Maturity
|
|
Purchase currency
|
|
Selling currency
|
|
Notional (thousands)
|
|
Fair value asset/(liability)
|
|
Other comprehensive income
|
|
Change in
OCI
|
|
Statements of operations - Change in fair value
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
D/(C)
|
|
D/(C)
|
|
D/(C)
|
|
D/(C)
|
Nomura International
|
|
Aug-22
|
|
USD
|
|
EUR
|
|
34,109
|
|
-
|
|
(482)
|
|
28
|
|
-
|
Goldman Sachs
|
|
Aug-22
|
|
USD
|
|
MXN
|
|
1,065,060
|
|
-
|
|
(128)
|
|
169
|
|
(48)
|
Goldman Sachs
|
|
Aug-22
|
|
USD
|
|
PEN
|
|
194,460
|
|
-
|
|
(475)
|
|
136
|
|
-
|
Goldman Sachs
|
|
Aug-22
|
|
USD
|
|
BRL
|
|
754,440
|
|
-
|
|
(7,007)
|
|
840
|
|
(1)
|
Santander
|
|
Jan-20
|
|
USD
|
|
EUR
|
|
20,000
|
|
-
|
|
1,742
|
|
-
|
|
-
|
Santander
|
|
Jan-20
|
|
USD
|
|
MXN
|
|
11,111
|
|
-
|
|
(2,113)
|
|
-
|
|
-
|
Goldman Sachs
|
|
Jan-20
|
|
USD
|
|
EUR
|
|
48,000
|
|
-
|
|
3,587
|
|
-
|
|
-
|
Goldman Sachs
|
|
Jan-20
|
|
USD
|
|
MXN
|
|
40,000
|
|
-
|
|
(7,600)
|
|
-
|
|
-
|
Nomura International
|
|
Jan-20
|
|
USD
|
|
MXN
|
|
23,889
|
|
-
|
|
(4,357)
|
|
-
|
|
-
|
Nomura International
|
|
Jan-20
|
|
USD
|
|
EUR
|
|
22,000
|
|
-
|
|
1,620
|
|
-
|
|
-
|
Goldman Sachs
|
|
Jan-18
|
|
USD
|
|
PEN
|
|
13,800
|
|
-
|
|
22
|
|
-
|
|
-
|
Goldman Sachs
|
|
Jan-18
|
|
USD
|
|
COP
|
|
7,200
|
|
-
|
|
(80)
|
|
-
|
|
-
|
BBVA
|
|
Jan-18
|
|
USD
|
|
PEN
|
|
55,200
|
|
-
|
|
71
|
|
-
|
|
-
|
BBVA
|
|
Jan-18
|
|
USD
|
|
COP
|
|
28,800
|
|
-
|
|
(359)
|
|
-
|
|
-
|
Morgan Stanley
|
|
Aug-22
|
|
USD
|
|
BRL
|
|
308,584
|
|
-
|
|
(2,987)
|
|
398
|
|
-
|
Morgan Stanley
|
|
Aug-22
|
|
USD
|
|
PEN
|
|
66,000
|
|
-
|
|
(158)
|
|
43
|
|
-
|
Goldman Sachs
|
|
Aug-22
|
|
USD
|
|
MXN
|
|
1,065,060
|
|
-
|
|
2,229
|
|
-
|
|
-
|
Goldman Sachs
|
|
Aug-22
|
|
USD
|
|
PEN
|
|
194,460
|
|
-
|
|
2,965
|
|
-
|
|
-
|
Nomura International plc
|
|
Feb-26
|
|
USD
|
|
EUR
|
|
61,526
|
|
3,398
|
|
(2,739)
|
|
2,740
|
|
(858)
|
Nomura International plc
|
|
Feb-26
|
|
USD
|
|
BRL
|
|
276,450
|
|
(8,588)
|
|
1,093
|
|
(1,093)
|
|
7,214
|
Nomura International plc
|
|
Feb-26
|
|
USD
|
|
USD
|
|
50,000
|
|
(3)
|
|
-
|
|
-
|
|
(167)
|
Morgan Stanley
|
|
Feb-26
|
|
USD
|
|
BRL
|
|
551,350
|
|
(18,053)
|
|
5,514
|
|
(5,514)
|
|
11,849
|
Morgan Stanley
|
|
Feb-26
|
|
USD
|
|
USD
|
|
100,000
|
|
517
|
|
-
|
|
-
|
|
(927)
|
Morgan Stanley
|
|
Feb-26
|
|
USD
|
|
PEN
|
|
277,050
|
|
12,730
|
|
(9,787)
|
|
9,787
|
|
(2,771)
|
Goldman Sachs
|
|
Feb-26
|
|
USD
|
|
BRL
|
|
1,101,000
|
|
(31,456)
|
|
2,416
|
|
(2,416)
|
|
27,416
|
Goldman Sachs
|
|
Feb-26
|
|
USD
|
|
USD
|
|
200,000
|
|
(258)
|
|
-
|
|
-
|
|
(499)
|
Total
|
|
|
|
|
|
|
|
|
|
(41,713)
|
|
(17,013)
|
|
5,118
|
|
41,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instrument - asset
|
|
16,644
|
|
|
|
|
|
|
Derivative financial instrument - liability
|
|
(58,357)
|
|
|
|
|
|
|
Gains and losses
on net investment hedges accumulated in equity will be taken to the statement of operations when the foreign operation is partially disposed
of or sold.
Lease liabilities
Leases are shown
as follow in the balance sheet between December 31, 2020 and September 30, 2021:
|
|
December 31, 2020
|
|
Additions/ (Disposals)
|
|
Payments
|
|
Interest accrued
|
|
Interest paid
|
|
Transfer
|
|
Translation difference
|
|
September 30, 2021
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
53,184
|
|
10,598
|
|
(35,746)
|
|
10,353
|
|
(709)
|
|
15,919
|
|
(9,039)
|
|
44,560
|
Non-current liabilities
|
|
99,515
|
|
16,113
|
|
-
|
|
-
|
|
-
|
|
(15,919)
|
|
10,045
|
|
109,754
|
Total
|
|
152,699
|
|
26,711
|
|
(35,746)
|
|
10,353
|
|
(709)
|
|
-
|
|
1,006
|
|
154,314
|
The future lease
liabilities payments are as follow:
|
|
2021
|
2022
|
2023
|
2024
|
2025
|
Others
|
Total
|
Lease liabilities payments
|
|
13,927
|
51,494
|
45,674
|
30,952
|
18,490
|
21,405
|
181,942
|
13.
PROVISIONS AND CONTINGENCIES
Atento has contingent
liabilities arising from lawsuits in the normal course of its business. Contingent liabilities with a probable likelihood of loss are
recorded as liabilities and the breakdown is as follows:
|
Thousands of U.S. dollars
|
|
12/31/2020
|
|
9/30/2021
|
|
(audited)
|
|
(unaudited)
|
Non-current
|
|
|
|
Provisions for liabilities
|
18,165
|
|
16,593
|
Provisions for taxes
|
17,971
|
|
7,893
|
Provisions for dismantling
|
8,379
|
|
8,751
|
Other provisions
|
1,102
|
|
1,069
|
Total non-current
|
45,617
|
|
34,306
|
|
|
|
|
Current
|
|
|
|
Provisions for liabilities
|
14,710
|
|
20,223
|
Provisions for taxes
|
1,925
|
|
159
|
Provisions for dismantling
|
24
|
|
290
|
Other provisions
|
5,216
|
|
4,113
|
Total current
|
21,875
|
|
24,785
|
“Provisions
for liabilities” primarily relate to provisions for legal claims underway in Brazil. Atento Brasil S.A. has made payments in escrow
related to legal claims from ex-employees, amounting to 26,763 thousand U.S. dollars and 22,981 thousand U.S. dollars as of December 31,
2020 and September 30, 2021, respectively. Also, the variation of the period was impacted by the Brazilian Reais and Argentinian Peso
depreciations against the U.S. dollar.
“Provisions
for taxes” mainly relate to probable contingencies in Brazil with respect to social security payments and other taxes, which are
subject to interpretations by tax authorities. Atento Brasil S.A. has made payments in escrow related to taxes claims of 2,393 thousand
U.S. dollars and 2,306 thousand U.S. dollars as of December 31, 2020 and September 30, 2021, respectively.
The amount recognized
under “Provision for dismantling” corresponds to the necessary cost of dismantling of the installations held under operating
leases to bring them to its original condition.
As of September
30, 2021, lawsuits outstanding in the courts were as follow:
Brazil
At September 30, 2021,
Atento Brasil was involved in 8,762 labor-related disputes (9,208 labor disputes as of December 31, 2020), being 8,620 of labor massive
and 43 of outliers and others, filed by Atento’s employees or ex-employees for various reasons, such as dismissals or claims over
employment conditions in general. The total amount of the main claims classified as possible was 32,217 thousand U.S. dollars (33,598
thousand U.S. dollars on December 31, 2020), of which 17,874 thousand U.S. dollars Labor Massive-related, 1,573 thousand U.S. dollars
Labor Outliers-related and 12,771 thousand U.S. dollars Special Labor cases related.
On September 30,
2021, the subsidiary RBrasil Soluções S.A. holds contingent liabilities of labor nature classified as possible in the amount
of 56 thousand U.S. dollars.
On September 30,
2021, the subsidiary Interfile holds contingent liabilities of labor nature and social charges classified as possible in the amount of
134 thousand U.S. dollars.
As of September
30, 2021, Atento Brasil S.A. is party to 10 civil lawsuits ongoing for various reasons (10 on December 31, 2020) which, according to the
Company’s external attorneys, materialization of the risk event is possible. The total amount of the claims is 3,055 thousand U.S.
dollars (3,464 thousand U.S. dollars on December 31, 2020).
As of September 30, 2021,
the subsidiary RBrasil Soluções S.A. holds 21 civil lawsuits ongoing for various reasons classified as possible in the amount
of 24 thousand U.S. dollars.
On September 30,
2021, the subsidiary Interfile holds 4 civil lawsuits ongoing for various reasons classified as possible in the amount of 70 thousand
U.S. dollars.
As of September
30, 2021 Atento Brasil is party to 38 disputes ongoing with the tax authorities and social security authorities for various reasons relating
to infraction proceedings filed (42 on December 31, 2020) which, according to the Company’s external attorneys, materialization
of the risk event is possible. The total amount of these claims is 29,384 thousand U.S. dollars (38,198 thousand U.S. dollars on December
31, 2020).
In March 2018, Atento
Brasil S.A. an indirect subsidiary of Atento S.A. received a tax notice from the Brazilian Federal Revenue Service, related to Corporate
Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) for the period from 2013 to 2015. Tax authorities has challenged the disallowance
of the expenses related to goodwill tax amortization, the deductibility of certain financing costs originated by the acquisition of Atento
Brasil S.A. by Bain Capital in 2012, and the Withholding Income Tax for the period of 2012 related to payments made to certain of our
former shareholders.
The amount of the tax
assessment from the Brazilian Federal Revenue Service, not including interest and penalties, was 350,542 thousand Brazilian Reais (approximately
66,453 thousand U.S. dollars considering the current currency exchange rate) and was assessed by the Company’s outside legal counsel
as possible loss to the merit discussion. Since we disagree with the proposed tax assessment, we are defending our position, which we
believe is meritorious, through applicable administrative and, if necessary, judicial remedies. On September 26, 2018 the Federal Tax
Office issued a decision accepting the application of the statute of limitation on the withholding tax discussion. We and the Public Attorney
appealed to the Administrative Tribunal (CARF). On February 11, 2020 CARF issued a partially favorable decision to Atento, confirming
the application of the statute of limitation on the withholding tax discussion and reducing the penalty imposed. On September 18, 2020
the decision issued by CARF regarding the Withholding Income Tax became final (the Public Attorney filed a Special Appeal challenging
the penalty reduction and Atento Brasil filed a Special Appeal challenging the goodwill and the financing costs discussion. Both Appeals
were not judged yet). Thus, the tax at stake was reduced from 350,542 thousand Brazilian Reais to 230,771 thousand Brazilian Reais (approximately
43,748 thousand U.S. dollars considering the current currency exchange rate). Based on our interpretation of the relevant law and based
on the advice of our legal and tax advisors, we believe the position we have taken is sustainable. Consequently, no provisions are recognized
regarding these proceedings.
Afterward the issuance
of the tax notice in March 2018, the Brazilian tax administration started a procedure to audit the Corporate Income Tax (IRPJ) and Social
Contribution on Net Income (CSLL) of Atento Brasil S.A. for the period from 2016 to 2017. This tax audit was concluded on July 10, 2020
with the notification of a tax assessment that rejected the deductibility of the above-mentioned financing expenses and the deductibility
of the tax amortization of goodwill.
The total tax assessment
notified by the Brazilian Federal Revenue Service, not including interest and penalties, was 101,604 thousand Brazilian Reais (approximately
19,261 thousand U.S. dollars considering the current currency exchange rate). We disagree with the proposed tax assessment and we are
defending our position, which we believe is meritorious, through applicable administrative and, if necessary, judicial remedies.
On September 30,
2021, the subsidiaries Interfile and Interservicer hold 19 disputes with the tax authorities and social security authorities ongoing for
various reasons classified as possible in the amount of 507 thousand U.S. dollars.
Spain
At
September 30, 2021, Atento Teleservicios España S.A.U. including its branches and our other Spanish companies were party to
labor-related disputes filed by Atento employees or former employees for different reasons, such as dismissals and disagreements
regarding employment conditions. According to the Company’s external lawyers, materialization of the risk event is possible
for 785 thousand U.S. dollars.
Mexico
At September 30, 2021,
Atento Mexico through its two entities (Atento Servicios, S.A. de C.V. and Atento Atencion y Servicios, S.A. de C.V.) is a party of labor
related disputes filed by Atento employees that abandoned their employment or former employees that base their claim on justified termination
reasons, totaling 15,571 thousand U.S. dollars (Atento Servicios, S.A. de C.V. 10,696 thousand U.S. dollars and Atento Atencion y Servicios,
S.A. de C.V. 4,875 thousand U.S. dollars), according to the external labor law firm for possible risk labor disputes.
14. INCOME TAX
The breakdown of the Atento Group’s
income tax expense is as follows:
|
Thousands of U.S. dollars
|
|
For the three months ended
September 30,
|
|
For the nine months ended
September 30,
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
(unaudited)
|
|
(unaudited)
|
Current tax expense
|
(7,264)
|
|
(3,872)
|
|
(16,094)
|
|
(16,883)
|
Deferred tax
|
4,620
|
|
(2,473)
|
|
16,857
|
|
1,670
|
Tax adjustments over previous years
|
341
|
|
(409)
|
|
(539)
|
|
(1,538)
|
Total income tax (expense)/benefit
|
(2,303)
|
|
(6,754)
|
|
224
|
|
(16,751)
|
For the three months
ended September 30, 2021, Atento Group’s interim condensed consolidated financial information presented a loss before income tax
in the amount of loss of 4,920 thousand U.S. dollars and an income tax expense of 6,754 thousand U.S. dollars compared to a loss before
income tax in the amount of 10,789 thousand U.S. dollars and an income tax expense of 2,303 thousand U.S. dollars for the three months
ended September 30, 2020. The increasing of 4,451 thousand U.S. dollars in the income tax expense for the period refers mainly to the
income tax result of Atento Brasil which has changed from a tax loss position in 2020 to a profitable tax base in the current fiscal year
(3,308 thousand U.S. dollars effect) as well as a 1,336 thousand U.S. dollars amount that relates to the consolidation of deferred tax
assets effects in the Spanish entities.
For
the nine months ended September 30, 2021, Atento Group’s interim condensed consolidated financial information presented a loss before
income tax in the amount of 29,850 thousand U.S. dollars and an income tax expense of 16,751 thousand U.S. dollars compared to a loss
before income tax in the amount of 39,079 thousand U.S. dollars and an income tax benefit of 224 thousand U.S. dollars for the nine months
ended September 30, 2020. As previously mentioned, the income tax expense variation of 16,975 thousand U.S. dollars refers mainly to the
income tax result of Atento Brasil which has changed from a tax loss position in 2020 to a profitable tax base in the current fiscal year
as well as the consolidation of deferred tax assets effects in the Spanish entities (9,546 thousand U.S. dollars and 4,925 thousand U.S.
dollars, respectively).
IFRIC 23 Uncertainty
over Income Tax Treatment
Atento reviewed the
tax treatment under the terms of IFRIC 23 in all subsidiaries and as at the reporting date, the Group did not identify any material impact
on the financial statements.
Atento implemented
a process for periodically review the income tax treatments consistent under IFRIC 23 requirements across the group.
15. EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss)
per share is calculated by dividing the profit/(loss) attributable to equity owners of the Company by the weighted average number of ordinary
shares outstanding during the periods as demonstrated below:
|
For the three months ended September 30,
|
|
For the nine months ended September 30,
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
(unaudited)
|
|
(unaudited)
|
Result attributable to equity owners of the Company
|
|
|
|
|
|
|
|
Atento’s loss attributable to equity owners of the parent (in thousands of U.S. dollars)
|
(13,092)
|
|
(11,674)
|
|
(38,855)
|
|
(46,601)
|
Weighted average number of ordinary shares (*)
|
14,040,360
|
|
14,080,509
|
|
14,109,041
|
|
14,079,695
|
Basic loss per share (in U.S. dollars)
|
(0.93)
|
|
(0.83)
|
|
(2.75)
|
|
(3.31)
|
(*) As a
consequence of the reverse share split occurred on July 28, 2020, weighted average number of ordinary shares was calculated by applying
the ratio of conversion of 5.027090466672970 into the previous weighted average number of ordinary shares outstanding.
Diluted results
per share are calculated by adjusting the weighted average number of ordinary shares outstanding to reflect the conversion of all dilutive
ordinary shares. The weighted average number of ordinary shares outstanding used to calculate both basic and diluted net loss per share
attributable to common stockholders is the same. The losses in the periods presented are anti-dilutive.
|
For the three months ended
September 30,
|
|
For the nine months ended
September 30,
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
(unaudited)
|
|
(unaudited)
|
Result attributable to equity owners of the Company
|
|
|
|
|
|
|
|
Atento’s loss attributable to equity owners of the parent (in thousands of U.S. dollars)
|
(13,092)
|
|
(11,674)
|
|
(38,855)
|
|
(46,601)
|
Adjusted weighted average number of ordinary shares (*)
|
14,040,360
|
|
14,080,509
|
|
14,109,041
|
|
14,079,695
|
Diluted loss per share (in U.S. dollars) (1)
|
(0.93)
|
|
(0.83)
|
|
(2.75)
|
|
(3.31)
|
(*) As
a consequence of the reverse share split occurred on July 28, 2020, weighted average number of ordinary shares was calculated by applying
the ratio of conversion of 5.027090466672970 into the previous weighted average number of ordinary shares outstanding.
(1) For the three and nine months ended
September 30, 2020 and 2021 potential ordinary shares of 1,515,763 and 10,558,968, respectively, relating to the stock option plan were
excluded from the calculation of diluted loss per share as the losses in the period are anti-dilutive.
16. RELATED PARTIES
Directors
The directors of
the Company as of the date on which the interim condensed consolidated financial information were prepared are John Madden, Roberto Rittes,
David Garner, Antenor Camargo, Bill Payne, Antonio Viana-Baptista and Carlos López-Abadía.
At September 30,
2021, some members of Board of Directors have the right to the stock-based compensation as described in Note 10.
Key management personnel
Key management personnel
include those persons empowered and responsible for planning, directing and controlling the Atento Group’s activities, either directly
or indirectly.
The following table
shows the total remuneration paid to the Atento Group’s key management personnel in the nine months ended September 30, 2020 and
2021:
|
For the nine months ended September 30,
|
2020
|
|
2021
|
|
(unaudited)
|
Total remuneration paid to key management personnel
|
3,211
|
|
4,102
|
17. OTHER INFORMATION
a. Guarantees
and commitments
As of September 30, 2021, the Atento Group has guarantees to third
parties amounting to 272,230 thousand U.S. dollars (307,403 thousand U.S. dollars at December 31, 2020).
18. SUBSEQUENT EVENTS
a) Cyber-security attack
As disclosed by press
release and in the relevant 6-K, Atento S.A. detected a cyber-security attack on its IT systems in Brazil on Sunday, October 17, 2021.
Atento immediately
deployed all available cyber security protocols to assess and contain the threat. Atento’s top priority has always been to ensure
the protection and integrity of its customers' data and systems. In order to prevent any possible risk to its clients, Atento proactively
isolated the impacted systems inside of Atento and also suspended the connections from its systems to those of customers in Brazil. That
is what caused the interruption of the service.
At this time, all the operations in Brazil have been resumed while
investigations are still ongoing. Atento is working closely with its advisors and the relevant authorities to assess the business impact
of the incident and take the appropriate measures.
PART I - OTHER INFORMATION
LEGAL PROCEEDINGS
See Note 13 to the unaudited interim
condensed consolidated financial information.
RISK FACTORS
There were no material
changes to the risk factors described in section “Risk Factors” in our Annual Form 20-F, for the year ended December 31, 2020,
other than the information disclosed in the 6-K published as October 22, 2021.