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Before making an investment decision, Liq recommends that investors carefully consider all information available on this website, including the risk factors.
Contax Participações S.A.’ businesses, financial situation and operating results may be materially and adversely affected by any of these risks and, subsequently, negatively impact the securities issued by the Company. A few risks are briefly described below.
The risks are briefly described below.
For a comprehensive list of the risks and risk management, please refer to itens 4.1, 4.2, 5.1 and 5.2 of the Company’s Reference Form (in Portuguese).
1) Risks related to the Company
- The Company’s indebtedness is higher than its peers and depends on the generation of operating cash and/or renegotiation of future debt in order not to compromise its creditworthiness or generate liquidity restrictions in the Company.
- The Company cannot guarantee that its efforts will be sufficient to minimize losses or reverse them, generating adverse material impacts in its results, in its business, and in its capacity to distribute dividends to shareholders, obtain financing and readjust due to changes in market conditions.
- The Company may not be able to comply with the financial covenants of its loan agreements and debentures indentures.
- Difficulty to pass on the cost increases to clients may impact profit margins.
- The Company’s ability to recruit, motivate and retain qualified employees and managers, and key members may negatively affect the Companys operating and financial results.
- Capacity to efficiently manage employee productivity.
- Labor, civil or tax contingencies may negatively affect the Company’s profitability.
- Possible technological obsolescence and inadequate response to changes in consumer behavior may jeopardize the Company’s competitiveness.
- The interruption of contact center services may significantly affect the Company’s financial situation and its operating results.
- The insurance coverage contracted by the Company may not be sufficient to indemnify potential losses.
- Breach of services contracts may subject the Company to payment of heavy fines.
- The Company’s compliance procedures, policies and programs may not be sufficient to prevent breaches in existing anticorruption laws and regulations.
- The Company may be held liable for fraudulent activities or for unlawful appropriation of client’s information by its employees or third parties.
2) Risks related to the Company’s shareholders
- The inexistence of a single controlling shareholder or a group of controlling shareholders may make the Company susceptible to new shareholder alliances, hostile offers or other adverse events due to the lack of control.
- The Company may need additional capital in the future, which may not be available. Investors’ interest in our capital may be diluted if additional capital is raised through the issue of new shares.
- The Company may not pay dividends or interest on equity to its shareholders.
- The Company’s shareholders’ investment may be diluted in case of an eventual exercise of subscription bonus issued in the scope of the Company’s 2nd Debenture Issue, and in the case of an eventual conversion of the debentures into shares by the debentures holders of the 3rd and 4th Series of the 5th Debentures Issue and 6th Debentures Issue.
- Stock option plans approved by the Company’s Board of Directors may induce eligible managers and employees to seek short-term returns, which may be conflicting with the interests of the shareholders who seek long-term returns when investing in the Company’s shares.
- The deterioration of market and economic conditions in other countries, specifically in emerging countries or in the United States, may negatively affect the Brazilian economy or the Company’s business.
- An active and liquid market for the Company’s shares may not be developed, which may limit the capacity of the Company’s shareholders to sell their shares when and at the price they wish so.
- The relative volatility and lack of liquidity in Brazil’s capital markets may substantially limit investors’ ability to sell the Company’s shares at the desired price and the desired time.
- The conversion of debentures into shares may represent an exit of the Companys creditors, and may affect the Companys shares liquidity and price.
3) Risks related to the Company’s suppliers
- The Company may not guarantee that its suppliers will not use unregular practices.
4) Risks related to the Company’s clients
- A large portion of the Company’s revenue originates from a limited number of clients and the loss of one or more of these clients may significantly affect the Company’s financial situation.
5) Risks related to sectors of the economy in which the Company operates
- If the trend of outsourcing contact center services is reversed, the growth rate of the Company’s businesses may decline.
- The sector in which the Company operates is highly competitive and if the Company does not compete effectively, it may lose clients or its profits may decline.
- Risks inherent to the Trade Marketing segment.