Odebrecht Will Have to Sell Its Major Companies Besides Relying on Braskem’s Profit to Survive

Odebrecht – on the 22nd of this month, the group approved the restructuring of 53 billion reais in debts within its judicial recovery plan, thus making Braskem the main source of income for the company. Boeing Breaks Contract of 4.2 Billion Dollars with Embraer and Union Calls for Reprivatization of the Company.

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Amidst the crisis in the sector, Braskem will need to generate significant profits to be the largest source of liquidity for the group.

Odebrecht is the controlling entity of Braskem with a 38% stake in its share capital. Petrobras is a partner in the control, with 36% of the business.

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Odebrecht has a total of 34 billion in debts; in 2016 – during the first major debt reorganization in the post-Lava Jato routine, Odebrecht ceded Braskem as collateral to five creditor banks, namely (Itaú, Bradesco, Santander, Banco do Brasil, and BNDES) which have the rights to the dividends paid by the petrochemical company.

The agreement made between the company and the banks was granted nine months after the group filed for creditor protection in court, which occurred on June 17, 2019.

After the judicial recovery plan was approved, the group may receive up to 1 billion reais from what is deposited in dividends, in maximum installments of 250 million reais per year, until 2022 – referring to the business performance between 2018 and 2021.

Beyond the everyday sustenance of the Odebrecht group in the coming years, Braskem is the pillar of the debt reorganization plan designed by the group and its advisors E.Munhoz Advogados and RK Partners.

The company’s shares secure debts of 13.6 billion reais for the conglomerate. To honor its debts, the company will have three years to sell Braskem.

Odebrecht will not only sell Braskem but also its other main companies such as the ethanol producer Atvos, the rig operator Ocyan, and the stake in Santo Antônio Energia (Saesa), the hydropower plant of the same name.

During this period, the banks will not execute the guarantees, even with the debts already overdue.

The Odebrecht case is the largest case of its kind ever conducted in Brazil. It is also the case with the greatest exposure to the national financial system.