Odebrecht Introduces New Judicial Reorganization Plan

RIO DE JANEIRO, BRAZIL – Odebrecht introduced a new version of its judicial reorganization plan during a meeting held with creditors on Tuesday, December 10th, in São Paulo.

The group from Bahia is undergoing one of the largest judicial reorganizations in the history of Brazil, with debts of up to R$98.5 billion (US$24.6 billion).

The new version includes amounts and deadlines to begin paying the debts to the company’s creditors. An attorney interviewed by Folha de S. Paulo says the plan is balanced and realistic. It respects the creditors’ contracts and guarantees and Odebrecht’s financial standing.

Nevertheless, the proposed repayment period could be as long as 50 years. However, the company claims that the time limit in the plan is only formal and payment will be based on the cash flow that will be generated by the profits resulting from the company’s operations and by the sale of its assets.

The group petitioned for judicial recovery in the 1st Circuit Court of Bankruptcy and Judicial Recoveries of the São Paulo Court of Justice last June, with debts that amount to R$100 billion. Approximately R$51 billion of this total was included in the judicial reorganization.

The company is proposing different forms of payment, depending on the class of creditors. Workers, for instance, are to be paid in full in the 12th month after ratification.

In the case of financial creditors, mainly banks, the company suggests two forms of payment: receiving up to R$150,000 in cash while waiving payment of the outstanding balance; or receiving full payment with 100 percent under the plan.

The payment term for these securities will be 25 years, renewable for a further 25. There is no discount to the par value.

The plan’s adjustments and details are still under negotiation. The company is involved in daily meetings with creditors who, for the most part, were aware of the content submitted at the meeting on Tuesday.

After the introduction, the meeting was suspended. The next meeting will be held on December 19th. The company expects the new proposal to be approved later this year.