EM LATAM CREDIT: Braskem: Hires Advisors - Negative
(BRASKM; B2neg/B+neg/BB-*-)
Troubled Brazil based chemical company Braskem has hired advisors to help it optimize its capital structure which we take to mean lower the debt burden more in line with its EBITDA run rate and also try to reduce cash burn; i.e., restructure.
Braskem bonds were down yesterday a couple of points, except the low dollar 50s which were actually up in price which reflected the higher probability of a distressed scenario unfolding. Braskem 34s were last quoted 54.59, or 18.53%.
There were reports already yesterday that the company was trying to negotiate a renewal of its revolving credit facility and that its lenders were demanding collateral which would reduce recovery value and subordinate existing bondholders.
Though the company has bought back more than half of its subordinated 2081 hybrid bonds, there is still USD231mn and they have an interest deferral feature which could be invoked, though interest is cumulative and will eventually need to be paid.
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