By Brazil Stock Guide – Braskem (BRKM3, BRKM5, BRKM6; NYSE: BAK) set out the breakdown in talks between its Mexican unit Braskem Idesa and bondholders after releasing the Project Lavoisier Cleansing Materials in a filing to Brazil’s securities regulator.
According to the material disclosure, the sides exchanged proposals and held in-person meetings but failed to reach agreement, with the company stating it did not accept the creditors’ terms. The documents expose a critical financial position at the Mexico subsidiary: roughly US$2.3bn in gross debt, accelerating cash burn and reliance on a deep restructuring to keep operations running.
Structure under strain
The papers describe a prolonged period of compressed margins across the petrochemicals cycle, structural constraints on ethane supply in Mexico and elevated logistics costs. Under a status-quo scenario, cash turns negative in 2026 and deepens to about US$1.7bn negative by 2029, while debt remains largely unchanged at close to US$2.3bn.
Numbers that don’t add up
Projections point to US$136m of EBITDA in 2026, with net leverage above 44 times EBITDA. Even by 2028, after a gradual operational recovery, leverage still exceeds 21 times, signalling that a cyclical rebound alone does not fix the balance sheet.
What’s at stake
Braskem Idesa’s proposal centres on a shareholder-backed, defensive solution. The package includes up to US$300m in a liquidity facility and US$400m of new equity to fund a tender offer. Bondholders would be offered two paths: an exchange at par (100%) into new notes due in 2033 with a five-year interest holiday, or a 55% cash-out capped at US$400m. On a pro-forma basis, debt would fall to about US$1.6bn.
Clash of proposals
Creditors countered with a tougher plan, demanding US$900m of shareholder new money, including first-lien debt at 11%, additional equity injections and tighter control over collateral, covenants and capex. The divide reflects a core conflict: management seeks time and optionality until the cycle turns, while bondholders push for immediate value capture and greater operational control.
Outlook
With no agreement in place, Braskem Idesa’s restructuring is likely to drag on. As cash deteriorates ahead of the expected petrochemicals upturn, the risk of more coercive outcomes rises through 2026, increasing pressure on shareholders and creditors to reach a swift resolution.
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