Braskem is set to file for an out-of-court restructuring next week to address its $10.3 billion debt. This move comes as a 60-day protective order, which suspended creditor enforcement actions, is expiring on August 24. The company has been granted a preliminary injunction by a São Paulo court to protect against collections and seizures.
To proceed with the extrajudicial recovery plan, Braskem needs the approval of at least one-third of its creditors. Negotiations have intensified, involving Braskem, its shareholders IG4 Capital and Petrobras, and various creditors. Petrobras, a minority shareholder with 36% of Braskem's total capital, has reportedly offered commercial support, including potentially more flexible payment terms for naphtha, a key raw material supplied by Petrobras.
The initial plan does not involve selling assets due to time constraints, but asset sales may be considered later. The current goal is to secure another 90-day period of court protection to develop a detailed restructuring plan. While a capital injection from shareholders is currently ruled out, creditors, including Elliott Investment Management, have been pressing Petrobras for financial commitment, potentially through a capital increase or other forms of financing. Some participants in the negotiations believe that a portion of the debt might eventually need to be converted into equity, possibly with a trigger mechanism for future conversion if financial conditions aren't met.
Braskem's financial director, Carlos Brandão, indicated that discussions with banks and bondholders have been positive. The company's new controlling shareholder, IG4 Capital, alongside Petrobras, is working to establish solid financial foundations. The company is seeking to avoid a court-supervised restructuring, a scenario that creditors also wish to avert. The hope is that a recovery in the petrochemical cycle, driven by factors like higher oil prices, could improve Braskem's margins and help it meet its debt obligations.
