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Odebrecht Will Have to Sell Its Main Companies, the Petrochemical Braskem, the Ethanol Producer Atvos, the Drilling Operator Ocyan, and the Stake in Saesa, the Hydroelectric Plant of the Same Name.
Odebrecht reaches an agreement with major creditor banks to restructure over R$ 50 billion in debts. The company, which was one of the biggest symbols of Operation Car Wash, currently has a debt that reaches the amount of 98 billion reais. Atvos, formerly Odebrecht Agroindustrial and the third largest ethanol and sugar producer in Brazil, is expected to be sold for 13 billion reais
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The company expects to update its judicial recovery plan today (18) at the 1st Bankruptcy Court in São Paulo. The vote on the restructuring in a general assembly of creditors is scheduled for the 25th.
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In the process, there are more than 500 creditors who sold their stake in the business and have not yet received their payment. The company is being advised by RK Partners, led by Ricardo Knoepfelmacher, and by the law firm E.Munhoz Advogados.
Odebrecht has accrued 34 billion in debts with the six largest banks in Brazil: Itaú, Bradesco, Banco do Brasil, Caixa, Santander, and BNDES.
The agreement made between the company and the banks was granted nine months after the group requested protection from creditors in court, which occurred on June 17, 2019.
The company reached 98 billion in liabilities; however, 10 billion reais in guarantees for insurance companies of projects and an additional 33 billion reais in commitments among group companies will be excluded from the total.
The Odebrecht case is the largest process of its kind ever carried out in Brazil. It is also the case with the highest exposure to the national financial system.
The restructuring of Odebrecht’s debt will, in practice, have two agreements: one private, for the debts that remain outside the judicial process, and the plan to be voted on proper.
To honor its debts, the company will have to sell its main companies: the petrochemical Braskem, the ethanol producer Atvos, the drilling operator Ocyan, and the stake in Santo Antônio Energia (Saesa), the hydroelectric plant of the same name.
Odebrecht will have three years to sell Braskem and four years to dispose of Ocyan. During this period, the banks will not execute the guarantees, even with the debts already due.
The company plans to rebuild from its original business, construction. The company, which is now titled OEC, for Odebrecht Engenharia e Construção, has faced a severe reputation crisis since Operation Car Wash.
The ethanol producer Atvos currently reaches 11 billion reais in debts. The creditors’ assembly for the company is scheduled for the 27th of this month; however, there is a possibility that the meeting will be postponed.
With the sale, Atvos will be the first company officially put up for sale by the conglomerate. Odebrecht Engenharia e Construção will undergo a private restructuring to renegotiate 3.1 billion dollars in bonds issued in the international market.
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