IG4 resists new contributions to Braskem and closes door on Petrobras rescue

The controllers of Braskem are unwilling to inject new capital into the petrochemical group, according to NeoFeed. Neither IG4 Capital nor Petrobras intend to make additional contributions to the company, which is attempting to restructure approximately US$ 10.9 billion in financial debts through an out‑of‑court recovery. The contribution had been the main demand of the creditors. Bloomberg reported that bondholders of Braskem require the shareholders to commit to injecting US$ 3 billion of new capital, without the creditors themselves providing funds. Among the investors pressing for a firmer commitment from shareholders are American managers Elliott Investment Management and Contrarian Capital Management. The requirement came after Braskem asked creditors to make available US$ 2 billion — about US$ 1.25 billion to repurchase existing debt at up to 50 % of face value and US$ 750 million for working capital. Petrobras had already signaled resistance. The issue was discussed last week during the Rio Oil & Gas event, where the state company's president, Magda Chambriard, spoke with journalists. According to iNFRA Agency, she said the company will not exceed 50 % of voting shares of Braskem and therefore will not proceed unless other shareholders also contribute resources. At the same event, the director of industrial processes and products of the state-owned company, William França, said Petrobras participates in seeking a capital solution within the out‑of‑court recovery, but indicated that a potential injection of resources has not yet been decided. Now, with IG4 also out of a new contribution, the door that Magda's statement left open closes. According to a source close to the negotiations, talks with creditors, mostly foreign, have been difficult and have not shown relevant progress in recent weeks. Braskem filed the out‑of‑court recovery request in August with the adhesion of creditors representing 39.6 % of the credits subject to the plan.

By law, it must reach more than half by the end of November for the plan to be approved. Tension has reached the courts. On September 24, at the request of creditors, the 2nd Bankruptcy and Judicial Recovery Court of São Paulo prohibited Braskem from making new contributions and transfers to Braskem Idesa, its Mexican subsidiary, which is undergoing restructuring in the United States under Chapter 11. The decision, signed by Judge Tainá Maria Leonardo de Oliveira, responded to a request from the Ad Hoc Group, composed of holders of notes and debentures of Braskem, and had the favorable opinion of the Public Prosecutor's Office. It suspends new acts of the so‑called Operation BAKIDE, a package of commitments estimated by creditors at about US$ 800 million with Idesa. The creditors claim that the operation empties the cash of the Brazilian companies precisely when they are prevented from collecting their debts. The US$ 800 million figure mixes amounts already disbursed with future commitments. According to the Ad Hoc Group's filing, the DIP financing to Idesa, granted by Braskem Netherlands B.V., totals about US$ 415 million, of which US$ 131 million is a rollover of a previous loan. This amount is added to a US$ 71 million contribution intended for Idesa's exit from the process. The remainder, according to creditors' calculations, corresponds to the option that may oblige Braskem to buy back the shares delivered to Idesa's creditors and can only be exercised between the fifth and sixth year after restructuring. Braskem has appealed. On September 28, the company and other debtors filed an instrument appeal with the São Paulo Court of Justice, requesting a suspensive effect to resume the operation. The case is before Judge Marcelo Fortes Barbosa Filho, of the 1st Reserved Business Law Chamber. Excerpts of the appeal cited by creditors in a filing on September 29 state that the company argues that both phases of the DIP have been completed before the decision.

The remaining US$ 71 million contribution is to be made by October 11, along with the signing of a new shareholders' agreement and the granting of purchase and sale options for shares. The company contends that the request is apocryphal, presented by unidentified creditors and filed confidentially, without Braskem being heard. The creditors rebut this, stating that they are identified in the adhesion terms to the out‑of‑court recovery plan, and point to documents filed by Braskem itself to prove the quorum. They say they were excluded only from the Ad Hoc Group that also signed the Idesa restructuring agreement. The group also says it requested information on September 4, without response, and reiterated the request on subsequent days. The first response, according to the petition, arrived only on the night of September 22, after the case was already in court and two days before the hearing that would confirm Idesa's plan in the United States. The creditors also question the economic logic of the operation. Currently, Braskem holds, through Braskem Netherlands, 75 % of the Mexican company. After restructuring, even with the money placed, it would hold about 58 %, according to creditors' calculations. The September 24 decision also brought another setback for the company. By accepting appeals from Banco Safra and funds holding notes of Braskem America Finance Company, the judge ordered that creditor adhesion be assessed separately for each group company. By law, each company in the group must reach more than half of its credits by the end of November for the plan to be approved. Until then, Braskem had summed the creditors of all debtors to reach 39.6 %. Individually, however, two subsidiaries fell below the minimum one‑third required by law