Obstacles for Braskem to move forward with out-of-court restructuring

After months of evaluating alternatives to reorganize its capital structure, Braskem has entered the decisive phase of its financial crisis. The petrochemical company is working to obtain creditor support for an out-of-court restructuring that will allow it to extend debt maturities and alleviate pressure on its cash flow.

Sources familiar with the negotiations told NeoFeed that complexity has increased in recent weeks with the entry of some of the most aggressive investors in the global credit market.

Distressed funds, such as Elliott Investment Management and Strategic Value Partners (SVP), have begun buying significant positions in Braskem's debt.

The entry of investors known as vulture funds occurs precisely when the petrochemical company is seeking to convince creditors to accept significant changes to its debt structure.

According to information published by Broadcast and confirmed by NeoFeed , the proposal under discussion includes extending maturities by five years, reducing the coupon (interest) rate of the bonds by 2 percentage points, and postponing the payment of part of these coupons.

At the end of the first quarter of 2026, the company had accumulated a gross debt of US$9.4 billion - approximately R$48.6 billion.

Of that total, 91% is denominated in foreign currency, which concentrates the power to approve or reject any restructuring plan in the hands of international investors.

In the first quarter's balance sheet, of the gross debt of R$ 62.4 billion, approximately 17% matures by the end of 2027.

Among the most sensitive international bonds are US$1.25 billion with a 6.45% coupon, maturing in 2028; US$750 million at 5.875%, in 2030; and US$500 million at 4.5%, in 2032.

In interest payments on these instruments alone, the company has approximately US$150 million to disburse between July and September of this year.

The consolidated cash position at the end of March was R$ 12.7 billion - equivalent to only 0.9 times the short-term debt, a narrow margin for any unforeseen event.

The problem is that the company's main creditors haven't seen sufficient incentives to accept the terms proposed by Braskem. "They asked for everything and gave nothing to the bondholders ," said an investor involved in the negotiations.

While banks represent a minority share of the capital structure, international investors hold the largest portion of the company's liabilities, which has a leverage of 17x (approximately 75% of Braskem's corporate debt is held by international bondholders ).

"Negotiating with the banks is the easiest part. They hold between 10% and 15% of the debt, but these conditions are unlikely to be accepted by the bondholders ," says another source.

"Those who say [the deal] is closed are just trying to pressure other debtors into accepting the terms," he added.

Although the company needs limited initial support to file for out-of-court restructuring, approval requires majority support within the affected creditor classes.

In practice, this means that organized opposition from major bondholders could significantly hinder the plan's approval.

There is growing market speculation that Braskem may resort to a precautionary measure to temporarily suspend payments on its obligations while it negotiates – the company has given a deadline of July 5th to avoid bankruptcy protection.

The move would signal to creditors that the risk of a formal default is closer than the company's official statements suggest. For this reason, bondholders are not simply buying positions.

NeoFeed 's investigation confirms that creditors have already formed an ad hoc committee to coordinate their position in the negotiations, bringing together large asset managers such as Capital Group and AllianceBernstein.

The organization of bondholders , which includes Elliott and SVP, two funds that have built a global reputation working on complex restructurings and tough negotiations with companies in financial distress, increases bargaining power and signals that Braskem will hardly be able to approve a plan without significant concessions.

"For now, it's an extremely disproportionate proposal, with all the benefits for the shareholder and all the costs for the debtholders ," says another source.

Market conditions

Creditors' concerns increased as Braskem's operating environment deteriorated. The company had been betting on a recovery in petrochemical margins driven by a more favorable international environment – the company was "buying" the prolonged Iran-US war and the rise in the price of oil and its derivatives.

But the normalization of energy markets and the weakening of spreads have once again compressed the sector's profitability. At the same time, the need to preserve liquidity has gained importance given the financial commitments expected in the coming months.

Signs of stress are also appearing in the secondary market. The company's bonds have begun trading at levels typically associated with restructuring processes, reflecting the perception of increasing risk among specialized investors.

This deterioration has created a divergence between the credit and equity markets. While some stock market investors continue to bet on an operational recovery for Braskem, the debt market is already pricing in a much more challenging scenario.

With a market value of R$ 5.6 billion, BRKM5 shares have been trading near R$ 7.50. Year-to-date, the stock is down 2%. Over the past 12 months, the decline is 21.6%.

In the coming weeks, the main question for the company may no longer be the need for an out-of-court restructuring, which is becoming increasingly inevitable, but rather what the bondholders want for the company's future.