Braskem eyes out-of-court restructuring as early as this month, sources say

Aug 12 (Reuters) – Braskem, Latin America’s largest petrochemical firm, is in advanced talks for a potential out-of-court restructuring that could ​be filed as early as this month, two people familiar ‌with the matter said on Wednesday

The company is grappling with over $10 billion in debt across operations in Brazil, Europe and the U.S.

The restructuring proposal could come ahead ​of an August 24 deadline when Braskem’s 60-day emergency protection ​expires, the sources said, requesting anonymity due to the ⁠sensitivity of negotiations.

Braskem, which private equity firm IG4 Capital recently acquired ​from engineering group Novonor, has been facing a prolonged downcycle in the ​petrochemical sector and is expected to need three to five years to resolve its issues, the sources said.

In addition to depressed prices in the petrochemical sector, ​Braskem’s cash position has been severely weakened by a disaster linked to ​its salt mines in northeastern Brazil.

The company declined to comment.

While Braskem has been discussing ‌alternatives ⁠with creditors, including bondholders and banks, to avoid a lengthy restructuring process, the parties have not reached a deal yet, the sources said. Creditors rejected Braskem’s offer to repay principal after a five-year grace period, ​with a 2-1/2-year grace ​period for interest ⁠payments, sources added.

If the current restructuring discussions proceed, sources said Braskem’s out-of-court framework will include a 90-day ​stay period to negotiate a comprehensive plan, buying time ​to reach ⁠a mutual agreement while protecting it from creditor claims.

Separately, Braskem, whose control is shared between IG4 and Brazilian state-run oil company Petrobras , is exploring ⁠restructuring options ​for its Mexican subsidiary’s $2 billion debt, ​including a potential U.S. Chapter 11 filing timed closely with the Brazilian proceedings, one of ​the sources said.