Braskem and Creditors Fail to Reach Debt and Capital Deal in New York

Braskem concluded meetings in New York without reaching a consensus with its creditors. The deadlock involves the amount of capital to be injected by Petrobras and the portion of debt that will be converted into equity in the company.

The deadline set by the parties to define the terms of the out-of-court restructuring expired last Friday. Three previous extensions were required without success. The legal limit for a definitive solution in the judicial sphere ends on November 22.

Foreign bondholders are demanding a capital injection of 1.85 billion dollars. The company offered 1.7 billion dollars backed by Petrobras. Creditors also disagree on the conversion of 2.3 billion dollars into shares, while the company suggested converting 3.3 billion dollars.

Petrobras aims to keep leverage between 3.5 and 4 times after the restructuring. The creditors' proposal, which reduces the debt conversion, makes it difficult to reach this financial goal. If an agreement is not reached, the company may move toward a formal bankruptcy process.

Braskem obtained support from 39.6% of creditors in August for the out-of-court plan. To validate the process with other creditors, the company needs adherence exceeding 50% of the values in each class. The creditor group is preparing a new counterproposal to resume talks.