Odebrecht proposes to creditors to swap debt for equity instruments: statement

[SAO PAULO] Brazilian conglomerate Odebrecht SA, which has been in bankruptcy protection since June, has proposed to creditors a swap of their debt for instruments similar to equity, according to a statement issued on Monday.

The instruments would give creditors the rights to receive proceeds of the asset sales and future profits of the companies controlled by the conglomerate.

The plan, which the statement said Odebrecht filed with the court late on Monday, has no explicit discount on the 51 billion reais (S$17.2 billion) debt that is being restructured. But it is unclear how much creditors could receive of the debt or within what time frame they could receive even a fraction of the debt.

Creditors will be able to receive proceeds of sales of assets owned by the conglomerate or one of its 21 subsidiaries that filed for bankruptcy, which include companies that own power as well as infrastructure assets and real estate.

Creditors could also receive potential future profits of the companies. As the conglomerate has no recurring revenue, the instruments similar to equity were the only solution devised by the restructuring advisors, two people with knowledge of the matter said.

REUTERS