Banks are raising the heat on Brazilian conglomerate Odebrecht SA to put its house in order after months of treating the scandal-hit company with kid gloves because of fears its collapse could hurt their balance sheets, sources said.
Odebrecht has agreed to accelerate asset sales as part of a deal with creditor banks to let the heavily indebted company keep $800 million from the divestiture of its water and waste unit announced last month, enough to fund its cash needs for two years, according to several executives, bankers and lawyers involved in the talks.
The conglomerate also agreed to surrender to creditors all dividends from its crown jewel, petrochemicals unit Braskem SA (BRKM5.SA), and to place more assets as collateral for loans under renegotiation, said the people, who asked not to be named because the terms of the agreement with creditors were not made public.
“All the parties agreed that steps to resolve this drama once and for all must be taken carefully but quickly,” said one of the people involved.
The agreement shows how creditor banks holding a big chunk of Odebrecht’s 76 billion reais ($24.34 billion) in outstanding debt are growing increasingly assertive.
In part, banks’ new-found confidence stems from a plea deal struck by Odebrecht in December with U.S., Brazilian and Swiss prosecutors, which drew a line under the main legal risks to the group.
Odebrecht and Braskem admitted to bribing officials in 12 countries, mostly Latin America, and agreed to pay $3.5 billion in fines in return for freedom from prosecution.
Lenders also feel they have given Odebrecht enough time and have dealt with other headaches in their credit portfolio over the last year, giving them more room to maneuver.