Braskem, one of the world's largest petrochemical companies, has initiated an out-of-court debt restructuring to overhaul $10.9 billion (R$56.5 billion) in financial debt. The company announced on Monday, August 24, that it has secured backing from holders representing 39.6% of the financial debt covered by the proceeding, which meets the initial threshold to begin the process. The total amount involved in the restructuring is R$56.5 billion, but this figure includes R$130.6 billion in intercompany claims that will be restructured separately and will not count towards the creditor approval threshold. Braskem aims to achieve the required support of over 50% of claims within the next 90 days.
The restructuring plan primarily targets unsecured financial claims, excluding obligations to customers, suppliers, distributors, and other commercial partners. Key terms agreed upon with creditors include extending debt maturities and introducing a grace period for interest payments, although the specific duration of extensions, interest rates, or potential haircuts are still under negotiation. The original proposal outlined a five-year grace period on principal payments and 2.5 years on interest. Braskem's assessment is that it does not need new debt but rather an extension of existing obligations.
The majority of Braskem's creditors are foreign entities, with approximately $7 billion owed to bondholders. The Bank of New York Mellon is a significant creditor, formally associated with roughly R$37 billion across several international bond issues as a trustee. Other major creditors include Crédit Agricole CIB (R$3.9 billion) as an administrative agent for a revolving credit facility, Pentágono (R$2.3 billion) as trustee for domestic debentures, Santander (R$2.3 billion), and Barclays (R$1.1 billion). The plan also provides for the potential conversion of debt into an equity stake in the company and includes commitments from controlling shareholders, IG4 Capital and Petrobras, to provide funding if certain milestones are not met.
Following the filing, Braskem's shares fell 6.7% on B3 to R$4.73, marking their lowest level in 17 years, and the stock was subsequently removed from B3's indices. The out-of-court restructuring provides Braskem with a 90-day standstill on payments, during which it will further develop its operational turnaround plan and financial restructuring details. An agreement has been reached for Petrobras to potentially increase Braskem's commercial credit limit to R$2.35 billion for raw-material purchases through December 31, 2026, backed by receivables and other assets. This commercial credit facility is separate from any potential equity injection from shareholders. Creditors now have significant influence over extraordinary transactions during this period.
