April 24, 2018 / 7:05 PM / in 6 months

UPDATE 2-Brazil's Odebrecht to miss Wednesday bond payment -source

(Adds OEC not expecting to restructure bonds)

By Tatiana Bautzer and Carolina Mandl

SAO PAULO, April 24 (Reuters) - Brazilian engineering company Odebrecht SA will not repay a bond worth 500 million reais ($144 million) due on Wednesday and is counting on bank loans to make the payment during a 30-day grace period, a person with direct knowledge of the matter said on Tuesday.

Construction unit Odebrecht Engenharia e Construção (OEC) is waiting for its parent to conclude an agreement with Brazilian lenders that will allow the unit to repay the bond, the source added, requesting anonymity since talks were still private.

In a statement earlier on Tuesday, OEC said it expected to pay within the grace period. The source said the unit does not intend to take the full 30 days. The company also owes other interest payments totaling $11 million later this month.

Odebrecht SA has been in talks to secure new loans for months, but has not yet reached an agreement with Brazilian lenders, four sources with knowledge of the matter said on Tuesday.

Banks are in talks to extend new loans worth 2.2 billion reais to 2.6 billion reais, lower than Odebrecht’s initial request of 3 billion reais, two of the sources said.

In a statement sent to Reuters, Odebrecht said it is in talks for a “financial transaction” with lenders, but declined to elaborate on value and details on the loans.

Reuters reported on Thursday that the main problem in negotiations with lenders was accommodating their divergent views regarding collateral.

State-run Banco do Brasil SA has resisted giving private-sector banks privileged access to collateral as they requested, four sources said.

State development bank BNDES is also deciding whether to waive some guarantees if private-sector banks Banco Bradesco SA and Itaú Unibanco Holding SA extend new loans.

Banks say Odebrecht’s asset sale program is running behind schedule. So far, the conglomerate has sold 12 billion reais in assets, but only received about 7 billion reais, as legal problems have snagged payments, one source said.

Reuters reported in April that Odebrecht agreed to sell a real estate project in Sao Paulo for 400 million reais. But the proceeds will only be available by June, according to a fifth source with knowledge of the matter.

Odebrecht is also trying to sell its stake in Brazilian suburban rail operator Supervia, but has not reached a deal with potential buyers, a sixth source with knowledge of the talks said.

Although the construction unit has engaged financial advisors such as Moelis & Co, OEC does not intend to propose a restructuring of the bonds, and still expects to pay the full amounts even if late, one of the sources said. ($1 = 3.48 Brazilian reais) (Reporting by Tatiana Bautzer and Carolina Mandl; additional reporting by Paul Kilby; editing by Tom Brownd, David Gregorio and Jonathan Oatis)

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