Odebrecht Bondholders Offer Debt Relief Plan After Missed Coupon

(Bloomberg) -- Creditors of Odebrecht SA’s engineering and construction division holding more than $1 billion of the Brazilian company’s bonds said they have proposed a debt restructuring, including a four-year extension of maturity.

Odebrecht hasn’t responded yet to the proposal, which was presented on Wednesday, the creditor group said in a statement.

The company was said in December to be running out of collateral it can pledge to creditors of its scandal-plagued construction unit. The subsidiary, Odebrecht Engenharia e Construcao SA, said in November that it will restructure debt after missing a coupon payment.

Key terms of the proposal include:

  • a four-year maturity extension, along with the ability to pay all interest in kind through 2021 at the company’s option in order to preserve cash
  • no reduction in principal amount, no impairment of the equity interests of Odebrecht
  • other terms such as an enhanced covenant package, including prohibition on dividends and other restricted payments until notes have been fully repaid, and a guarantee from Odebrecht and liens on certain assets, including shares of Braskem

The company was planning to ask bondholders to accept losses of more than 70 percent as part of a restructuring of about $3 billion in outstanding bonds, Reuters reported last month.

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