Braskem Creditors and Shareholders Edge Closer to Agreement on $11 Billion Debt Restructuring

Creditors and major shareholders of Braskem SA are moving closer to an agreement to restructure approximately $11 billion in debt, marking the closest the opposing sides have come during ongoing out-of-court negotiations.

Negotiation documents released on Saturday outline proposals from both the petrochemical company and its creditors that incorporate a follow-on equity offering alongside a capital injection from primary shareholders and third parties, coupled with a simultaneous debt-to-equity swap by creditors. Under the creditors’ proposal, the initial capital injection and debt-to-equity conversion would total about $4 billion, whereas Braskem’s internal proposal targets roughly $5 billion. Sources familiar with the private discussions note that while progress has been substantial, significant differences remain and a final deal is not yet guaranteed.

Under Braskem’s current proposal, creditors would convert $2.8 billion into equity, while shareholders and third parties would commit to injecting $1.2 billion through a $2.25 billion follow-on offering expected to take place this year. To meet specific financial metrics, the company’s plan outlines an additional capital injection of up to $500 million from shareholders and up to $1.5 billion in combined capital and debt conversion from creditors by June 2029.

Conversely, the creditors’ counterproposal agrees to a $2.25 billion follow-on capital injection but insists that $1.85 billion be backstopped immediately by main shareholders or third parties. Any third party offering these backstop commitments would require creditor approval prior to the formal plan approval. Additionally, creditors have proposed an upfront debt-to-equity conversion of $1.85 billion, supplemented by a commitment of more than $450 million in June 2029 if required.

A central issue in the corporate structure remains control of the enterprise. Under Braskem’s proposal, state-controlled oil company Petrobras and investment firm IG4 Capital Group would maintain management and control of the firm. Representatives for IG4 declined to comment on the proceedings, while Petrobras did not immediately respond to requests for comment. Braskem confirmed that negotiations regarding its out-of-court restructuring process are ongoing but declined to provide further details.

The discussions follow Braskem’s August filing for an out-of-court restructuring. The initial framework submitted in court documents established a commitment by main shareholders and agreed-upon third parties to supply or backstop fresh equity following a relief period, though precise amounts, structures, and timelines were left open. In the interim, the company and a group of bondholders have engaged in rigorous talks to finalize a restructuring plan and avoid bankruptcy. Earlier in the process, bondholders had requested $3 billion in fresh capital from controlling shareholders Petrobras and IG4 Capital Group, a demand that was initially rejected.

Both parties face a firm deadline of November 22 to reach a definitive agreement, though participants involved in the discussions indicate an expectation that an accord could be finalized sooner.