Braskem Files for Creditor Protection as Debt Talks on Capital Structure Snag

Q: To survive its debt crisis, will Brazil's petrochemical giant be forced to sell its valuable international assets?

Not immediately. Braskem’s emergency court protection is aimed at buying time to renegotiate with financial creditors, and management has explicitly said major asset sales are not part of the current rescue plan. The company’s near-term strategy is an out-of-court restructuring focused on extending maturities, lowering coupon payments and securing grace periods, rather than raising cash through disposals or a debt-for-equity swap. New CEO Helcio Tokeshi has said this is “not the time for major divestments,” arguing that Braskem benefits from keeping its diversified international footprint. He also said the group does not plan to give up control of Braskem Idesa in Mexico. That said, the risk cannot be dismissed. Braskem’s balance sheet is under severe strain, with high leverage, heavy cash burn, large environmental liabilities in Alagoas and debt coming due soon. Its Mexican unit is itself under pressure and negotiating with creditors, and any deeper restructuring there could dilute Braskem’s stake or weaken its control. Reports that outside investors could gain influence at Braskem Idesa show that at least some international assets are vulnerable if talks fail. So the most accurate answer is that Braskem is not currently being forced to sell valuable overseas assets, and management is resisting that path. But if creditor negotiations break down or liquidity worsens, selective divestments or dilution of stakes in non-core or stressed assets could become much harder to avoid.

1 articles · Updated · Bloomberg · Jun 25

Braskem sought emergency protection from financial creditors after negotiations on an out-of-court fix for its mounting debt problems stalled, according to a Thursday regulatory filing.
The Brazilian petrochemical producer said the move is meant to preserve a stable environment for continuing talks exclusively with those creditors rather than disrupt operations more broadly.
Braskem said it is pursuing a consensual, comprehensive and orderly solution for its capital structure, tying any deal to its liquidity position and weak conditions in the global petrochemical industry.