Braskem's board has approved an out-of-court restructuring plan covering approximately $10.9 billion (R$56.1 billion) in unsecured financial debt. This move aims to establish a stable legal framework for negotiating and implementing a restructuring of its financial obligations. The company intends to formally file the request after completing the necessary documentation. This restructuring follows weeks of discussions between Braskem, its creditors, and controlling shareholders, IG4 Capital and Petrobras.
The restructuring process will be limited to financial scope, ensuring that trade obligations to suppliers, customers, and other stakeholders are honored under existing contracts. A key element in these negotiations is the potential for Petrobras, a state-controlled oil giant and Braskem's main naphtha supplier, to offer improved commercial credit terms. Currently, Petrobras supplies about 30% of Braskem's naphtha, down from 70% previously, due to tightened conditions as Braskem's financial situation deteriorated. The proposed new arrangement involves an increase in Braskem’s commercial credit limit with Petrobras to R$2.35 billion for raw material purchases with payment terms of up to 30 days, available until December 31, 2026. This facility would be backed by a fiduciary assignment of receivables of at least R$1 billion per month, an escrow account with a minimum R$300 million cash retention, and rights over a tax-related court claim valued at approximately R$2.7 billion.
While this commercial credit would provide crucial liquidity support without being an equity injection, it sets a precedent as Petrobras is typically strict with payment terms, usually allowing up to 14 days. The arrangement is still subject to Petrobras’ internal corporate approvals and final documentation, and would only be executed after Braskem files its out-of-court restructuring proceeding with at least one-third of the claims subject to it backed by creditors. Major financial creditors involved in the R$56.48 billion in claims include bondholders, Bank of New York Mellon (associated with roughly R$37 billion in international bonds), Crédit Agricole CIB (for a R$3.9 billion revolving credit facility), and various Brazilian banks such as Banco do Brasil, BNDES, Itaú Unibanco, Bradesco, and Santander (with about R$2.3 billion across credit facilities). Pentágono, acting as trustee for several Braskem debentures, is associated with approximately R$2.3 billion in claims, and Barclays with about R$1.1 billion related to the revolving credit facility.
Discussions also involve potential extensions of debt maturities, capitalization of interest (payment-in-kind), and the possibility of debt-to-equity conversions. Creditors are pushing for a more significant contribution from shareholders, and while Petrobras and IG4 have not yet committed to fresh capital injections, this remains a central point of negotiation. Braskem's injunction shielding it from collection efforts is set to expire on August 24, underscoring the urgency to secure minimum creditor support for the out-of-court filing to gain more time for negotiations. Braskem had about $1 billion in cash and financial investments (excluding Mexico operations) against a consolidated gross debt of $10.3 billion at the end of June. Its financial leverage improved from 18.18 times to 6.74 times (net debt to EBITDA) in Q2 due to temporary operational performance improvement.
