Odebrecht Bondholders Propose Debt Relief for Brazilian Company

(Bloomberg) -- Odebrecht SA creditors holding more than $1 billion of the Brazilian company’s bonds said they have proposed a debt restructuring including a four-year extension of maturity.

Odebrecht hasn’t responded yet to the proposal, which was presented on Wednesday, the creditor group said in a statement.

The company was said in December to be running out of collateral it can pledge to creditors of its scandal-plagued construction unit. The subsidiary, Odebrecht Engenharia e Construcao SA, said in November that it will restructure debt after missing a coupon payment.

Key terms of the proposal include:

• a four-year maturity extension, along with the ability to pay all interest through 2021 at the company’s option in order to preserve cash
• No reduction in principal amount, no impairment of the equity interests of Odebrecht
• Other terms include an enhanced covenant package, including prohibition on dividends and other restricted payments until notes have been fully repaid, and a guarantee from Odebrecht and liens on certain assets, including shares of Braskem

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