Braskem Bondholders Reject Debt Restructuring Proposal

Bondholders of Braskem SA are rejecting a proposal to restructure the petrochemical company's $11 billion debt pile. The conflict centers on the refusal of Braskem's controllers, Petrobras and IG4 Capital Group, to provide enforceable capital commitments to support the company.

Under the proposal presented in late August, creditors would provide $2 billion in new money. Of that amount, $1.25 billion would be used to repurchase existing debt at up to 50% of face value, while $750 million would be allocated for working capital. Creditors oppose this debt haircut and demand a guaranteed capital injection from shareholders before agreeing to the terms.

While Petrobras seeks to avoid a bankruptcy filing, its unwillingness to provide the specific commitments sought by creditors has widened the gap between the parties. This impasse has renewed the possibility that Braskem may be forced to file for bankruptcy.