Investment firms Elliott Investment Management and SVP Global have acquired debt positions in Brazilian petrochemical producer Braskem as the company works to secure creditor backing for a broad financial restructuring, according to a report by Bloomberg.
The report cites unnamed people familiar with the matter as revealing that the purchases include portions of Braskem’s revolving credit facility acquired from existing lenders, while Elliott has also accumulated holdings in the company’s international bonds. The transactions position both firms to play a role in ongoing negotiations over the company’s debt overhaul.
Neither Elliott, SVP, Braskem nor its controlling shareholder, IG4 Capital, have commented on the reported investments.
Braskem is attempting to restructure its liabilities after years of pressure from a prolonged downturn in the global petrochemical sector, compounded by the financial impact of an environmental disaster that weakened its balance sheet.
Sources said Elliott and SVP are expected to support restructuring terms that differ from the framework currently proposed by the company, although the two firms are acting independently rather than as part of a coordinated group.
Earlier this month, Braskem outlined a proposal to creditors that includes extending debt maturities, reducing interest coupon payments and introducing longer grace periods before repayments begin. The plan does not contemplate a capital injection or converting debt into equity.
Some creditors have reportedly viewed the proposal as ambitious, particularly the combination of a five-year extension to debt maturities alongside requests for lower coupon payments.
To move forward with an out-of-court restructuring under Brazilian rules, Braskem must secure the backing of at least one-third of its creditors. However, the company and IG4 Capital are reportedly finding it difficult to obtain sufficient support and complete the legal arrangements required to finalise an agreement before July.
The timing is significant because Braskem faces debt obligations of around $150m next month. According to people familiar with the discussions, the company hopes to avoid making that payment as part of a broader restructuring agreement.
If negotiations fail to produce the necessary creditor support, Braskem could seek emergency court protection while continuing efforts to restructure its debt outside formal insolvency proceedings.
