BRASILIA: Brazil’s Petrobras is weighing whether to grant improved payment terms to Braskem on some contracts as the petrochemical producer races against the clock to find a solution for its debt woes ahead of an Aug 24 deadline to avoid filing for bankruptcy protection, according to sources.
State-controlled oil giant Petrobras has tightened conditions on the naphtha it supplies Braskem as the company’s financial situation deteriorated in the past few years, the people said, asking not to be named because the information is not public.
That forced Braskem to seek other suppliers and to take more credit from banks, the people said.
“That cut Petrobras supply to about 30% of the naphtha the petrochemical company, from as much as 70% before,” they added.
Now, with distressed debt investor IG4 Capital Group taking shared control of Braskem, the oil giant has more visibility of the company’s business and is mulling extending the timeline for payments, cutting interest rates and boosting how much naphtha it offers Braskem, the sources said.
That could shrink Braskem’s need for credit from banks and reduce leverage, the sources said. No decision has been made and there is no timing for the decision, the people said.
IG4 declined to comment. Petrobras didn’t immediately reply to messages seeking comments. The companies co-own Braskem.
Newspaper Valor Economico said earlier on Monday that Petrobras was mulling granting commercial support to Braskem.
Once considered the crown jewel of Novonor SA, Braskem shares were pledged as collateral on 21 billion reais of loans to five banks that went unpaid.
After six years of contentious negotiations, the lenders agreed to sell the non-performing loans to a fund managed by IG4. — Bloomberg
