The astonishment of the Lava Jato corruption investigations still haunts Odebrecht and Queiroz Galvão, who face a decrease in cash flow generation and force a new wave of debt restructuring.
to Odebrecht started a process of restructuring a plan for the payment of its debts. Initially, it is focused on debts related to large national banks and holders of group guaranteed bonds. The value should revolve around R$ 40 billion. Odebrecht's first option is still to reach an agreement with the banks, paying all international Eurobonds on time. Odebrecht confirmed that it is “in constant negotiations with its relationship banks”.
Principal and external interest payments alone will eat away at all of the $350 million expected operating cash gains for 2018, according to S&P. The payment of this amount should not affect Braskem's operations, Braskem's biggest business. Odebrecht currently, and Ocyan. Braskem shares, used as collateral to restructure Odebrecht unit debts in recent years, appreciated by more than 25% last year and can be used as additional collateral for the new loan. All of Braskem's dividends paid to Odebrecht, which owns 51% of the petrochemicals' capital, already go directly to the creditors.
The company is relying on sales of assets in Peru to pay debts, including the Chaglla hydroelectric plant, which it sold in September to China Three Gorges for US$1,4 billion, but has not yet received the funds, pending government authorization. of Peru for the conclusion of the deal, said Odebrecht.
This week, a Financial Committee should be set up, coordinated by João Nogueira Batista, which will advise on the restructuring process. Marco Rabello was also announced as the group's new financial director.
To Queiroz Galvão It is also in talks with the banks and its oil and gas unit has US$ 400 million in securities in dollars and loans maturing this year, it is trying to negotiate with creditors to restructure the company's debt within an extrajudicial recovery process. This depends, however, on an agreement with the holders of the bonds, which have been making this exit difficult for the company. If an understanding is not reached with these investors, the process should move towards a judicial recovery. However, the solution should come out in the next few days, since on December 10th, the grace period expires for the payment of US$ 27 million in interest on bonds maturing in 2024 and also US$ 3 million in interest on securities for 2019, which should have been paid on November 9th.
Queiroz Galvão Oil and Gas has a $300 million loan plus $100 million in bonds due this year, according to data compiled by Bloomberg. In total, Queiroz Galvão has about US$ 800 million in international bonds, US$ 1 billion in loans in dollars and R$ 1,2 billion in local debt.
The company does not have cash for this payment, hence the need to renegotiate the debt with creditors. For the extrajudicial recovery to take place, the approval of at least 60% of the creditors is required, which the company has not yet achieved. The local and international debt restructurings carried out in recent years have not been sufficient to resolve the group's debt situation.
