November 29, 2018 / 9:43 PM / 19 days ago

Brazil's Odebrecht working to extend maturities on bank debt- sources

SAO PAULO, Nov 29 (Reuters) - Brazilian construction conglomerate Odebrecht SA is working with local restructuring firm RK Partners to renegotiate a portion of its banking debt, three sources with knowledge of the matter said on Thursday.

RK Partners is the second restructuring firm the corruption-ensnared conglomerate has hired recently.

Earlier this week, Odebrecht has announced it had mandated Moelis & Co and two law firms to restructure $3 billion in bonds issued by its Odebrecht Finance unit after missing a deadline to pay $11.5 million in interest due on the debt.

Odebrecht and affiliated company Braskem SA agreed in December 2016 to pay at least $3.5 billion, the largest penalty ever in a foreign bribery case, to resolve international charges involving payoffs to state oil company Petroleo Brasileiro SA and others.

Since then, it has been negotiating plea deals to settle corruption charges in Latin American countries such as Peru, Argentina and Mexico.

Its construction unit, which used to be the group’s cash cow, has struggled to win new contracts in Brazil and elsewhere in Latin America.

One of the people, who asked for anonymity because he was not authorized to discuss the matter publicly, said Odebrecht had hired RK Partners to discuss how the company could retain at least part of the proceeds of the sale of assets such as Peru’s Chaglia hydroelectric plant and a stake in Brazil’s Santo Antonio hydroelectric plant rather than surrendering the full amount to creditors.

Peru’s Justice Ministry said on Thursday it had reached an agreement with Odebrecht that allows the conglomerate to proceed with sale of the plant.

Moelis and the two law firms will solely be in charge of the discussions with bondholders, two of the sources added. RK is working with Odebrecht to push for extension of maturities in its debt with Brazilian lenders, who include Itau Unibanco Holding SA, Banco Bradesco SA and state-controlled Banco do Brasil SA.

Odebrecht does not have the power to force banks to negotiate, since a large chunk of its 70 billion reais ($18.17 billion) debt is collateralized with its stake in Braskem, a listed petrochemical company.

Odebrecht is in talks to sell its stake in Braskem to Lyondell Basell Industries NV or convert its stake into shares in a new combined company, but any such deal requires authorization from the banks. ($1 = 3.8526 reais) (Reporting by Tatiana Bautzer; Editing by David Gregorio)

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