IG4 / Shine I - independent negotiation position

Public-information cutoff: 17 August 2026
Role: IG4 Capital's economic and governance position through Shine I FIP
Units: US dollars unless stated otherwise

Executive position

IG4's objective is to preserve Braskem as a going concern and preserve Petrobras/Shine joint control while buying enough time for operating cash generation to repair leverage. That objective is worth real sponsor capital and dilution, but not an attempt to protect today's equity percentage at creditor expense. Shine should offer US$300M of junior risk capital, accept 15% creditor warrants at closing plus a 7.5% performance step-up, and accept strict cash controls. In exchange, all material maturities-including the US$1.0B standby facility due 31 December 2026-must be extended, near-term cash interest must be partly PIK, LC capacity must be rolled, and Petrobras must commit a commercially priced, capped trade facility.

The realistic alternative if this cannot be agreed is a court-led RJ, not a solvent run-off. IG4 would support an orderly RJ plan that preserves operations, Mexico's ring-fence, and Alagoas remediation, while seeking to exchange control only for at least US$2.5-3.0B of actual debt cancellation. A threat to let liquidity run out merely to defend Shine's percentage is not credible.

What is fact, what is reported, and what is inferred

• Verified fact: At 30 June, gross debt was US$10.3B, adjusted net debt was US$9.5B, adjusted corporate net leverage was 6.74x, and cash and cash equivalents were R$3.931B, including R$353M at Braskem Idesa. The June plan showed about US$795M unrestricted cash.
• Verified fact: The June plan projected Q3 EBITDA of US$586M, Q3 contractual debt service of US$878M (including US$572M LC runoff), and roughly US$337M unrestricted cash at 30 September under the status quo. H2 contractual debt service was US$2.349B, including the December standby maturity.
• Verified fact: Braskem disclosed US$98M equivalent of defaults after cure periods expired, but had not publicly disclosed acceleration by the cutoff. Holders of at least 25% of an affected public bond series can generally accelerate following an uncured default; exact cross-default mechanics vary.
• Reported fact, not confirmed by the parties: Valor reported that Petrobras was considering up to six-month terms for naphtha purchases, with cap, price, duration and format unresolved; parties remained far apart and aimed for one-third support and an EJ filing before 24 August.
• Inference: EBITDA is not cash. Q2 working capital consumed US$547M; some price/inventory effects may reverse or stabilize, but reduced payment arrangements are persistent. Consequently, the balance sheet cannot be underwritten on an EBITDA sensitivity alone.
• Verified political fact: Petrobras is state-controlled but subject to Law 13,303 governance, risk-control and related-party standards. Brazil is in an active 2026 election campaign, industrial policy supports the chemical chain, and Alagoas proceedings and obligations remain live.
• Political inference: The most defensible election-year outcome is a capped, arm's-length Petrobras commercial facility matched by IG4 junior capital and creditor concessions. Neither industrial policy nor political interest constitutes a guarantee for Braskem or legacy equity.

Required operating cases and December test

The June plan implies approximately US$1.471B of Q4 contractual debt service: US$2.349B H2 less US$878M Q3. About US$1.0B is the standby maturity, leaving approximately US$471M of other Q4 contractual requirements. This arithmetic does not include ordinary operating liquidity needs or assume Q4 EBITDA conversion.

The US$250M cap is a short bridge, not a restructuring solution. US$500M is the minimum useful base-case commitment. US$950M is the mathematical ceiling from expanding roughly nine-day terms to 180 days, not an assumed commitment; it also creates excessive supplier concentration unless tightly governed.

Does Petrobras trade credit satisfy shareholder burden-sharing?

No, not by itself. Commercially priced supplier credit supplies liquidity but does not absorb losses and should not be called Petrobras shareholder capital. It satisfies Petrobras's part of a shared rescue package only when paired with IG4 junior capital, creditor maturity relief/new money and Petrobras's own commercial exposure being at risk on arm's-length terms.

IG4's requested Petrobras terms are:

• US$500M committed exposure cap as the base case; US$250M is insufficient, while capacity above US$500M up to US$950M should be an uncommitted accordion available only after independent Petrobras approvals and demonstrable inventory/receivable coverage.
• Naphtha payment terms of up to 180 days, available for 18 months, then a 12-month amortizing wind-down unless renewed.
• A market price benchmarked at approximately SOFR-equivalent + 450 bps, with a 1% undrawn commitment fee; Petrobras may instead use a documented BRL/CDI-equivalent price. Final pricing must pass Petrobras's independent related-party and credit approvals.
• Security limited to identifiable financed inventory and related receivables, with no guarantee from Alagoas-remediation resources and no blanket lien over core Brazilian assets.
• Pari passu information access with new-money creditors, a borrowing-base test, and suspension of new draws-not automatic enterprise control-after a breach.

At US$500M, Petrobras provides meaningful liquidity and commercial risk while IG4 provides US$300M of structurally junior, loss-absorbing money. That is politically and economically defensible. Political inference: a market-based, capped facility is easier to defend than public-company equity used to protect a private sponsor option. Scenario assumption: Petrobras obtains all independent approvals; without them, no value should be assigned to the facility.

Cure-and-continue is not a standalone plan

Paying the disclosed US$98M defaults before acceleration could prevent a disorderly trigger and preserve optionality. But it leaves the US$572M Q3 LC runoff, later interest, approximately US$337M plan-case September cash, the US$1.0B December standby maturity, and other Q4 requirements unresolved. Using scarce unrestricted cash to cure without signed maturity and liquidity commitments could simply improve creditor leverage weeks before another default.

IG4 will support a cure only if it closes simultaneously with: (1) a binding standby extension or standstill through an EJ; (2) committed Petrobras availability of at least US$500M; (3) LC rollover; and (4) a minimum-liquidity covenant. On those conditions it is a useful bridge. As an independent solvent path, its probability is only 5%.

Negotiating packages

Opening package

1. Extend affected funded-debt maturities, including the standby, by five years, with no principal haircut and an excess-cash-flow prepayment mechanism beginning in 2029.
2. PIK all contractual interest through 31 December 2028 at the existing coupon plus a 100 bp PIK premium; return to cash interest afterward.
3. Shine funds a US$200M deeply subordinated shareholder/hybrid facility, convertible only through a properly approved rights offering or at Shine's option on non-punitive terms.
4. Petrobras commits US$400M of 180-day supplier terms on the pricing/governance framework above.
5. Existing LC providers roll the US$572M Q3 runoff and other required LCs; creditors provide US$200M of incremental new-money/LC capacity.
6. Creditors receive warrants for 10% of fully diluted equity, plus 5% more if agreed cash-conversion and liquidity milestones are missed.
7. Collateral is restricted to financed working capital and agreed non-core assets; no blanket core-asset lien.

First concession

Shine increases to US$250M; Petrobras's committed cap rises to US$500M; creditor new-money/LC capacity rises to US$250M. Creditors receive 15% warrants at closing plus a 5% milestone step-up. PIK lasts through 31 December 2027, followed in 2028 by 50% cash/50% PIK if unrestricted liquidity remains below US$750M. Accept limited liens over non-core assets, foreign subsidiary shares where legally permitted, and financed working capital, plus a 1.5% extension fee paid in kind.

Narrowest acceptable package

This is IG4's authority limit short of an RJ valuation fight:

• Shine commits US$300M at closing and up to US$50M as a rights-offering backstop, for a US$350M maximum, deeply junior to funded debt. Petrobras must provide at least US$500M of committed supplier capacity and creditors at least US$300M of rolled/incremental LC or new-money capacity.
• The standby and affected funded-debt principal receive at least a four-year extension from existing maturity, with no mandatory principal amortization before 2029 except a 50% excess-cash-flow sweep above US$750M unrestricted liquidity.
• Interest is 100% PIK through June 2027, then no more than 50% cash through December 2028, subject to the US$750M liquidity gate. PIK accrues at existing coupons plus at most 200 bps. No retroactive default-rate interest once the deal closes.
• Creditors receive 20% warrants at closing, plus 7.5% if two consecutive quarters miss agreed EBITDA-to-operating-cash conversion or the liquidity covenant. Strike price is set at a fair reorganized equity value, not a nominal/trough price. Total creditor equity may not exceed 27.5% absent principal cancellation.
• Limited collateral may cover creditor new money, financed working capital, non-core assets and selected foreign-subsidiary shares. No blanket lien on all core Brazilian operating assets, no automatic DIP conversion after a technical default, and no collateral over ring-fenced Alagoas resources.
• Existing holders preserve class economics and receive pro-rata, transferable participation where legally practical. BRKM5 rights must be subscribable or saleable; BAK ADS participation requires a depositary/registration route or sale of rights for holders' benefit. Non-participants may be diluted.

Shine does not accept falling below approximately 35% of voting capital or controllers falling below 50% unless creditors cancel at least US$2.5-3.0B of debt. Creditor equity above 35% similarly requires debt cancellation of that order and a fair governance reset.

Instrument and issue treatment

Alternatives and decision rule

1. Consensual or plan-to-a-plan EJ with Petrobras trade credit: preferred. A generic 90-day EJ is acceptable only with interim liquidity, LC continuity, cash controls, no acceleration and milestones toward a binding plan. Filing without committed bridge support merely delays the cliff.
2. Cure-and-continue: acceptable only as the simultaneous bridge described above; not credible alone.
3. Creditor-favorable consensual restructuring: accept up to 27.5% contingent dilution, tighter covenants and limited collateral under the narrow package. If creditors demand control, require US$2.5-3.0B of debt cancellation and fair minority treatment.
4. RJ: realistic fallback if the stay expires, acceleration begins or sponsor/Petrobras support cannot be committed. Seek operational continuity, protected new money, class fairness, Mexico ring-fencing and Alagoas protection. Political friction from foreign-led creditor control is an execution cost, not a legal veto.

Outcome probabilities as of 17 August 2026

Political scenario overlay: election pressure modestly raises the chance of an interim pre-election framework because both a Petrobras bailout narrative and a disruptive foreign-creditor/RJ narrative are unattractive. That is an inference, not a commitment. Strong spread and cash-conversion evidence moves probability toward the first outcome and warrant dilution toward 15-20%; weak conversion or new Alagoas uncertainty moves probability toward RJ and creditor control.

Single position-changing fact

The fact that would most change IG4's position is verified Q3 unrestricted free cash flow after working capital, interest and LC movements-not Q3 EBITDA. Sustained positive cash conversion that leaves at least US$750M unrestricted liquidity before new support would justify a shorter PIK period and lower warrant dilution. Cash below US$250M, or another large unexplained working-capital outflow, would make the narrow package too optimistic and push IG4 toward a creditor-led equitization/RJ valuation negotiation.

Source basis

This position uses the rerun common brief dated 17 August 2026, the IG4/Shine I agent input, and the Brazil political-economy context supplied for the rerun. No prior negotiation output or other stakeholder result was consulted.