UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of June, 2019
Commission File Number: 001-38714
STONECO LTD.
(Exact name of registrant as specified in its charter)
R. Fidêncio Ramos, 308, 10th floor—Vila Olímpia
São Paulo—SP, 04551-010, Brazil
+55 (11) 3004-9680
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
| Form 20-F |
x |
Form 40-F | o |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| StoneCo Ltd. | ||||||
| By: | /s/ Thiago dos Santos Piau | |||||
| Name: | Thiago dos Santos Piau | |||||
| Title: | Chief Executive Officer | |||||
Date: June 7, 2019
EXHIBIT INDEX
| Exhibit No. | Description |
| 99.1 | English Translation of Press Release by Fitch Ratings dated June 4, 2019 |
Fitch Issues Rating at ‘AAsf(bra)’ for Third Series of Senior Quotas for FIDC Stone II
Fitch Ratings – Sao Paulo – June 4 , 2019: Fitch Ratings announced today that it has issued a National Long-Term Rating ‘Aasf(bra)’ for the third series of quotas for the Fund for Investment in Credit Rights (FIDCs) Credit Card Issuer Banks – Stone II, in a principal amount up to BRL 1.62 billion.
MAIN RATIONALE FOR RATINGS
Credit Reinforcement
Investors from all senior quotas of both funds have at least a 9.75% credit reinforcement through the subordinated quotas that Stone Pagamentos S.A. (Stone) holds in full. The amortization of the senior and subordinated classes of quotas of each fund will occur pro rata, according to the minimum subordination percentage. Historically, the performance of receivables has not presented any
default, and dilutions occur through cancellations and chargebacks, which are sustained by Stone. The degree of subordination of the series sustains the credits exposure to the dilution risks and the mismatch of interest rates applied to stresses in accordance to the 'AAsf(bra)' rating.
Credit Quality of Debtors
The transactions have six eligible debtors, three of which are rated by Fitch with the National Long-Term and Short-Term Ratings of AAA(bra)/Stable Outlook and 'F1+(bra)' (F1 plus (bra)), respectively (Itaú Unibanco S.A., Banco Bradesco S.A. and Banco Citibank S.A.); other two with ratings 'AA(bra)'/Stable Outlook and 'F1+(bra)' (F1 plus (bra)) (Banco do Brasil S.A. and Caixa Econômica Federal); and lastly Banco Santander (Brasil) S.A. If any of these issuers is rated at a credit risk lower than 'AA-(bra)' (AA minus (bra))/F1+(bra) '(F1 plus (bra)), they will no longer be eligible for new receivables purchases. Issuance ratings are limited by the credit risk of debtors with a lower rating ('AA (bra)'/Stable Outlook), given that the reinforcement in available credit is not intended to mitigate their high concentration.
Assignor's Credit Quality
Stone is a payment processor, which captures, transmits, processes and settles credit and debit card transactions, especially those of the Mastercard, Visa, Elo and Hipercard. In 2017, two FIDCs were structured, with receivables from Stone, in an initial consolidated amount of BRL 2,059.5 million in senior quotas, and BRL 225.7 million in subordinated quotas. In June 2019, FIDC Stone II issued the third series of senior quotas, in an initial principal amount of up to BRL 1.620 billion.
Counterparty Risk
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All receivables generated by Stone are paid in the accounts of the settlement banks, owned by them. Banco Votorantim S.A. settles the Visa transactions, and Banco Citibank S.A. the Mastercard transactions. The settlement banks shall transfer to the depository banks, on the same business day and in centralized accounts in the name of the assignor, the proceeds from the transactions for centralizing accounts domiciled in the same banks of the settlement accounts for each flag. The depository banks deposit the assigned receivables in the authorized accounts of each FIDC, which are held by Itaú Unibanco, in accordance with the receivables assigned individually and nominally to each fund. Non-assigned receivables, in turn, are transferred to an account free of charge from the assignor on the same business day. Fitch understands that the counterparty risk is consistent with the rating assigned to the issuance.
Interest Rate Shrinkage
The nominal value of the receivables will be discounted at a fixed rate at the time of the assignment, while the remuneration of the senior quotas will be indexed at a variable rate (based on the Brazilian Interbank Deposit - CDI). During the portfolio revolving period, the discount rate applied to new receivables will consider the CDI rate in effect. The mismatch of interest rates will be sustained by the minimum subordination of the senior quotas, considering the risk corresponding to the assigned rating.
SENSITIVITY OF RATINGS
The ratings of the senior quotas are sensitive to the performance of the receivables originated by the assignor; the rating actions related to the risk analysis of the issuing banks, which are the debtors of the transaction; and also to the credit risk of the assignor.
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SUMMARY OF TRANSACTIONS
The transaction described in this press release is a securitization of Stone's receivables owed by first-tier banks under the payment scheme rules. Receivables assigned to FIDCs originate from payment transactions between accredited merchants and end users, resulting from the purchase of goods and services when using Visa and Mastercard credit cards for payment.
The fund is managed and held in custody by Oliveira Trust DTVM S.A. The current account held by each FIDC is held in Itaú. The management of the assets is the responsibility of Oliveira Trust Servicer S.A.
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The third series of senior quotas may be issued in an amount of up to BRL 1.62 billion, and will mature in 2021. As of the first issuance, the senior quotas will be issued for 24 months, with a grace period of 18 months to repay the principal amount.
During the grace period, the payment of interest will be made every six months. After this period, the amortization of the principal and the payment of interest will be monthly. The benchmark yield rate is expected to be 106% of the CDI, to be determined during the offering process.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO THE REGULATION OF SECTION 17G-10 OF THE SEC
Not applicable.
REPRESENTATIONS, GUARANTEES AND IMPLEMENTING MECHANISMS
Not applicable.
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REGULATORY INFORMATION
This publication is a credit risk classification report, in compliance with article 16 of CVM Instruction No. 521/12.
The information used in this analysis comes from Stone Pagamentos S.A.
Fitch takes all necessary steps to ensure that the information used in the credit risk classification is sufficient and from reliable sources, including, where appropriate, third-party sources. However, Fitch does not perform auditing services and cannot perform, in all cases, independent verification or confirmation of the information received.
Fitch used, for its analysis, financial information available through June 4, 2019.
Ratings History:
Date on which the national scale classification was issued for the first time: May 31, 2019.
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The risk rating classification was reported to the rated entity or related parties, and the assigned rating was not altered by virtue of this disclosure.
The ratings assigned by Fitch are reviewed at least annually.
Fitch publishes the list of actual and potential conflicts of interest in Annex X of the Reference Form, available on its website at: https://www.fitchratings.com/site/dam/jcr:015e95de-5c3f-41c8-b679-b47388194d17/CVM_Form_Referencia_2018.pdf
For information on possible changes in the credit risk classification see the item: Sensitivity of Ratings.
According to the issuance’s asset class, Fitch may perform default analysis and/or of the cash flows of the underlying assets. In such cases, the agency bases this analysis on the modeling and evaluation of different scenarios of information received from the issuer or third parties related to it. In other cases, the analysis may be based on guarantees provided by entities that are part of the evaluated emission.
Fitch does not exercise due diligence procedures for the underlying assets or the independent verification of the information received from the issuer or third parties related to it.
For the evaluation of structured transactions, Fitch receives information from third parties, usually from financial institutions, accounting offices, audit firms or law firms. The information may be obtained through prospectuses for the offer of transactions, issued in accordance with the securities market legislation. In addition, they are based on general public-domain facts, such as inflation and interest rates.
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For clarification on the differentiation of symbols for structured products and those for other financial assets, see "Ratings Definitions" on Fitch’s website at: https://www.fitchratings.com.br/pages/def_rtg_credit_emissor2?p=rtg_escala_lp_3#rtg_escala_lp_3
Contacts:
Senior Analyst
Leticia Marcante
Analyst
+ 55-11-4504-2617
Fitch Ratings Brasil Ltda.
Alameda Santos, 700 - 7th floor - Cerqueira César
São Paulo - SP - CEP: 01418-100
Secondary Analyst
Vanessa Roveri Brondino
Senior Analyst
+55-11-4504-2614
Chairman of the rating committee:
Marcelo Leitão
Senior Director
+ 55-11-4504-2602
Additional information available at ‘www.fitchratings.com' and at 'www.fitchratings.com/site/brasil'.
Fitch Ratings has been paid to determine each credit rating listed in this credit risk rating report by the debtor or classified issuer, by a related party other than
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the debtor or the sponsor, the underwriter, or the depositor of the instrument, security or security being evaluated.
Applied Methodology and Related Research:
- Global Structured Finance Rating Methodology (May 2, 2019).
Other Relevant Methodologies:
- Trade Receivables Securitisation Rating Criteria (October 16, 2018).
- Structured Finance and Covered Bonds Counterparty Rating Criteria (April 18, 2019).
Media Relations: Jaqueline Carvalho, Rio de Janeiro, Tel: +55 21 4503 2623, Email jaqueline.carvalho@thefitchgroup.com
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS .. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM .. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE AT HTTPS://WWW.FITCHRATINGS.COM/SITE/REGULATORY .. FITCH MAY
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HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUE ON THE FITCH WEBSITE.
Copyright © 2019 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. Fitch believes that Fitch believes that Fitch is a credible company, and that Fitch believes it is credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification will obtain will vary depending on the nature of the security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and / or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information is accurate or complete.
Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in providing documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of
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experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified the facts. As a result, despite any verification of current facts, ratings forecast was issued or affirmed.
The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of the recipient of the report. Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and not individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of any risk other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect of any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from $ 1,000 to $ 750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual
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fee. Such fees are expected to vary from US $ 10,000 to US $ 1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute consent by Fitch to use its name in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be electronic subscribers up to three days earlier than print subscribers.
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Fitch Ratings, Inc. is registered with the US Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (the "NRSRO"). While certain of the NRSRO's credit rating subsidiaries are listed under Item 3 of Form NRSRO and see NRSRO (see https://www.fitchratings.com/site/regulatory ), other credit rating Subsidiaries are not listed on Form NRSRO (the "non-NRSROs") and therefore credit ratings issued by those subsidiaries are not issued on behalf of the NRSRO. However, non-NRSRO personnel may participate in determining credit ratings issued by or on behalf of the NRSRO.
SOLICITATION STATUS
The ratings above were requested and assigned at the request of the rated entity. Any exceptions follow below.
Endorsement Policy
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