Ad Hoc Noteholder Group Proposes Debt Relief Package for Odebrecht Engenharia e Construção S.A.
NEW YORK, March 3, 2019 /PRNewswire/ -- The Ad Hoc Group of Odebrecht Engenharia e Construção S.A. Noteholders, holding in excess of $1 billion of the notes (the "Notes") guaranteed by Odebrecht Engenharia e Construção S.A. (collectively, with its subsidiaries and Odebrecht Finance Ltd., the "Company"), has proposed a restructuring transaction that will provide immediate and critical debt relief for the Company. This proposed solution will allow the Company to stabilize its finances, execute its business plan and re-establish itself as a market-leading engineering and construction firm in Latin America and around the world.
Key terms of the Ad Hoc Group's proposal include:
- Four-year maturity extension applied to all series of Notes;
- Ability to pay all interest on the Notes in kind through the end of 2021 at the Company's option, to preserve cash;
- No reduction of the principal amount of the Notes;
- No impairment of the equity interests of Odebrecht S.A. in the Company;
- Payment by Odebrecht S.A. of a portion of the intercompany debts and other payables owed to the Company, to provide additional liquidity;
- Enhanced covenant package, including prohibition on dividends and other restricted payments until the Notes have been fully repaid; and
- Guarantee from Odebrecht S.A. and liens on certain assets, including shares of Braskem S.A.
The Ad Hoc Group developed this proposal after careful review of the Company's now-public business plan, which shows substantial recoveries to backlog and robust cash flows in the coming years. Working within the near-term liquidity constraints outlined in the Company's forecast, the Ad Hoc Group believes its proposal fully addresses the Company's liquidity needs and allows the Company to pursue its business plan and achieve the robust recovery it projects.
The Ad Hoc Group also believes its proposal will result in an effective and timely restructuring of the Company. While the Company has yet to respond formally to the proposal, which was presented by the Ad Hoc Group on February 27, 2019, the Ad Hoc Group looks forward to engaging in further negotiations with the Company, its advisors and its other stakeholders to reach a definitive agreement as quickly as possible.
Both the Company's business plan and the Ad Hoc Group's proposal were recently made public through a cleansing process following the termination of confidentiality agreements between the Company and members of the Ad Hoc Group. The full proposal by the Ad Hoc Group can be downloaded here.
The Ad Hoc Group is advised by Davis Polk & Wardwell LLP, Pinheiro Neto Advogados and Rothschild & Co.
The Ad Hoc Group's proposal is non-binding, and the terms, conditions, form and structure of implementation of any proposals, plans or agreements will be subject to various customary conditions, including completion of due diligence, all internal and credit committee approvals, negotiation and agreement of acceptable documentation, structuring and implementation of the plans, adoption of regulatory changes and any related insolvency proceedings or other judicial process. The Ad Hoc Group does not have or assume any fiduciary or other duties to any party. This press release is not intended as a solicitation in connection with any securities transaction or restructuring plan. There can be no assurance that the Company or its other stakeholders will agree to the terms and conditions of the Ad Hoc Group's proposal or that the transactions contemplated thereby will be consummated.
SOURCE Ad Hoc Group
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