By Brazil Stock Guide — Braskem’s out-of-court restructuring plan opens the door for its main shareholders to inject fresh capital into the petrochemical company and for part of its debt to be converted into equity, according to documents filed with a São Paulo court on Monday.
The framework, which remains subject to negotiation, sets out how Braskem, its creditors and shareholders intend to build a long-term solution for the company’s capital structure, potentially combining maturity extensions, capitalized interest, fresh money and a debt-to-equity conversion.
The negotiations cover R$56.48 billion in financial claims subject to the plan, of which 39.6% have already signed on to the initial agreement. The document identifies Shine I, a vehicle linked to the controlling shareholder group, and Petrobras as Braskem’s main shareholders.
Under the plan, the final restructuring could combine revised payment terms with a commitment by shareholders — or potentially third parties — to inject or backstop enough capital for Braskem to meet financial metrics that have yet to be agreed.
The plan also explicitly provides for the capitalization of part of the claims, allowing debt to be converted into an equity stake in the company.
The size of any capital injection, the amount of debt that could be converted into shares and the resulting dilution of existing shareholders have not yet been determined. Those terms will be negotiated as part of the final restructuring plan.
The document states, however, that capital commitments, the structure of any injection, dilution parameters and the terms of a debt-to-equity conversion that directly affect the main shareholders will require their consent.
Petrobras prepares R$2.35 billion commercial credit support
Separately, Braskem disclosed that it had provided certain previously non-public information to holders and investment managers of its senior notes and debentures as part of the restructuring talks.
The information had been shared under confidentiality agreements signed in August and was made public after the disclosure period set out in those agreements expired, Braskem said.
Among the information released is a proposed increase in Braskem’s commercial credit limit with Petrobras to R$2.35 billion, aimed at financing raw-material purchases under certain supply contracts with payment terms of up to 30 days. The facility would remain available through December 31, 2026.
The arrangement is significant because it provides a more concrete indication of how Petrobras could help support Braskem’s liquidity during the restructuring. It is commercial credit rather than an equity injection, and therefore is separate from the potential shareholder capital contribution contemplated in the restructuring plan.
The Petrobras facility would be backed by a fiduciary assignment of receivables of at least R$1 billion per month, an escrow account with a minimum R$300 million cash-retention mechanism, and rights over a favorable tax-related court claim known as CIDE Combustíveis, valued at approximately R$2.7 billion.
The transaction remains subject to completion of Petrobras’ internal corporate approvals and final documentation. The terms also state that the contracts would only be executed after Braskem filed its out-of-court restructuring proceeding with a plan backed by creditors representing at least one-third of the claims subject to it.
Petrobras would also be entitled to suspend the commercial credit limit if Braskem failed to maintain the required monthly receivables flow. Default events include breaches of monetary or non-monetary obligations, bankruptcy, certain judicial reorganization events, liquidation or acceleration of the company’s financial debt.
During an initial stage of the broader debt restructuring, Braskem may also negotiate extensions of its debt maturities and the payment of interest in PIK, or payment-in-kind, meaning interest would be added to the principal rather than paid in cash.
In exchange for the maturity extensions, creditors could receive improved economic or credit terms on the new instruments, as well as additional oversight rights.
The restructuring document also says creditors expect any liquidity support provided by shareholders to be subordinated to existing financial claims, preventing fresh shareholder funding from ranking ahead of current creditors.
Bondholders take center stage
The creditor list filed with the court highlights the weight of international investors in the negotiations.
Bank of New York Mellon is formally associated with roughly R$37 billion across several of Braskem’s international bond issues, including securities maturing between 2028 and 2081.
That figure does not represent R$37 billion of economic exposure for BNY Mellon itself. The bank acts as trustee for the issuances and represents the investors that ultimately own the bonds. The figure therefore primarily illustrates the scale of the international bondholder bloc involved in the restructuring.
Among the other major names formally listed is Crédit Agricole CIB, acting as administrative agent for a revolving credit facility of approximately R$3.9 billion.
In Brazil’s domestic market, Pentágono, the trustee for several Braskem debenture issues, is associated with about R$2.3 billion in claims. Santander appears across several credit facilities and letters of credit totaling roughly R$2.3 billion, while Barclays is listed with about R$1.1 billion related to the revolving credit facility.
The creditor mix brings together large international bond investors, global banks and holders of Braskem’s Brazilian debt instruments at the same negotiating table.
Creditors gain greater say over Braskem decisions
The agreement also places significant restrictions on Braskem’s management while negotiations are underway.
Without the required approval from signatory creditors, Braskem is barred from carrying out a range of extraordinary transactions, including paying dividends or interest on equity, repurchasing shares, completing certain asset sales, pursuing mergers and acquisitions, and taking on new debt.
Certain asset disposals and M&A transactions are capped at $50 million without additional approval, while new supplier financing is, under specified circumstances, capped at $25 million.
In practice, the plan gives creditors significant influence over extraordinary financial decisions while the final restructuring is being negotiated.
Braskem also plans to seek recognition of the Brazilian restructuring in the United States through a Chapter 15 filing, according to minutes of a board meeting held on Monday.
The restructuring covers Braskem S.A. and subsidiaries Braskem Netherlands B.V., Braskem Netherlands Inc. B.V., Braskem Trading & Shipping B.V., Braskem Netherlands Finance B.V. and Braskem America Finance Company. The board also authorized the group to pursue additional protective measures in other jurisdictions if needed, underscoring the cross-border nature of the restructuring.
Detailed proposal due by August 31
Braskem has committed to delivering an updated business plan and a detailed restructuring proposal by August 31.
By September 9, company executives and representatives of its main shareholders are expected to be available for in-person meetings with creditors in São Paulo or New York.
The timetable calls for an agreement in principle on the commercial terms of the restructuring by October 9.
The key question for the coming weeks, therefore, is no longer simply the size of the R$56.5 billion being restructured. The negotiations will determine how much debt is pushed out, how much additional support Petrobras and Shine are prepared to provide, and how much of the existing claims could ultimately be converted into Braskem equity.
The R$2.35 billion Petrobras commercial credit facility adds the first concrete piece to that broader liquidity picture, even as the size and structure of any eventual shareholder equity contribution remain to be negotiated.
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