Risk Factors

An investment in securities involves a high degree of risk. All investors should carefully consider the following factors in addition to the other information in this investor relations website before investing in Aliansce’s securities. In general, investing in the securities of issuers in emerging market countries, such as Brazil, involves a higher degree of risk than investing in the securities of U.S. issuers or issuers in other countries with highly developed capital markets. Aliansce’s business, financial condition, results of operations and prospects may be materially adversely affected by any of these risks.

The risks briefly described below are those that the Company currently believes most likely may materially affect its performance.

Risks Relating to Brazil

  • The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This involvement, as well as Brazilian political and economic conditions, could adversely affect Aliansce’s activities and the trading price of its common shares.
  • Government efforts to combat inflation may hinder the growth of the Brazilian economy and could harm the Company’s business.
  • Exchange rate instability may have a material adverse effect on the Brazilian economy, as well as on the Company and the market price of its common shares.
  • Developments and the perception of risks in other countries, especially in the United States and in emerging market countries, may adversely affect the Company’s access to financing and the market price of Brazilian securities, including the Company’s common shares.
  • The Company’s financial situation and reported results may be adversely affected by changes in Brazilian accounting practices.

Risks Relating to Aliansce’s Business

  • Adverse economic and social conditions in the regions where Aliansce’s shopping malls are located may adversely affect the Company’s levels of occupancy and its ability to lease available areas, and consequently may have an adverse effect on the Company.
  • The Company’s financial performance depends on rent received from its tenants, which depends on the tenants’ sales.
  • The shopping malls may face strong competition.
  • Because shopping malls are public places, incidents beyond the Company’s control may occur, which could result in material damage to the image of Aliansce’s shopping malls, adversely affecting the Company.
  • The Brazilian shopping mall industry is subject to extensive regulation, which may affect the development of certain projects and negatively affect Aliansce’s business.
  • Losses not covered by insurance may adversely affect the Company.
  • The Company’s lease agreements are subject to compulsory renewal by tenants, which may create risks to Aliansce’s business and management services, and adversely affect the Company.

Risks Related to Aliansce

  • The Company may be unable to fully implement its business strategy, under the conditions contemplated by the business plan, which may have a material adverse effect.
  • The Company may not succeed in executing its growth strategy, including the acquisition of interests in shopping malls with the expected regularity, volume or price, which may have a material adverse effect.
  • The interests of certain members of the Company’s management may be excessively tied to the price of the Company’s shares, given that their compensation is also based on subscription warrants.
  • Aliansce shares control of its shopping malls with other investors, whose interests may differ from the ones of the Company.
  • Most of the Company’s shopping malls are organized as condominiums in which Aliansce holds an ownership interest. In the event of any contingencies in these shopping malls, the respective owners will be responsible for the payment of these contingencies. Should any of these condominiums lack the financial resources to fund their liabilities, the Company may be liable for these obligations of the shopping malls.
  • Risks relating to outsourcing of a substantial part of the Company’s activities may have an adverse effect.

Risks Related to Aliansce’s Common Shares

  • The market price and trading volume of the common shares may be volatile, and the investor may not be able to resell its common shares at a price equal to or above the offering price.
  • Substantial sales or issuances of Aliansce’s common shares could result in a decline in the market price of its common shares and result in a dilution in the Company’s shareholders’ interest in its common shares.
  • The interest of the Company’s controlling shareholders may conflict with those of the other shareholders.
  • Developments in connection with the Chapter 11 proceedings of GGP in the United States, including any actions taken by GGP or the US Bankruptcy Court in connection with these proceedings, may have a material adverse effect on the price of Aliansce’s common shares.
  • Aliansce may be a passive foreign investment company for US federal income tax purposes in any year.
  • Investors in the Offering will probably suffer am immediate dilution of their investments on acquiring the Company’s shares.
  • The Company may not pay dividends or interest on equity to its shareholders.
  • The Company’s shares may not develop the expected liquidity, resulting in an inappropriate price per share.
  • The participation of institutional investors who are part of the bookbuilding process may have an adverse impact on the price per share, while investments by these investors may reduce the shares’ liquidity on the secondary market.
  • The Company’s bylaws does not restrict its shareholders’ ability to redeem or otherwise eliminate poison pills or other hostile takeover defense mechanisms.
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