Braskem negotiation rerun: executive summary (Run 4)
Cutoff: 18 August 2026, evening.
This run asked four stakeholder roles to negotiate from a harder brief: Petrobras and IG4 will not put new equity into Braskem, and Elliott / Contrarian will not support a filing unless Petrobras promises extra cash if the company misses financial tests. A mediator then ran two more rounds. The original mediator memo is saved separately. The numbers below include a small editorial review, explained in the publication note.
Short glossary
- Out-of-court filing (EJ): a Brazilian recuperação extrajudicial. With more than one-third of each affected creditor group, the company can file a placeholder case and get about 90 more days. Court approval of a finished plan later needs more than half of each group.
- Court restructuring (RJ): a Brazilian recuperação judicial. Broader court protection if the out-of-court path fails.
- Stopgap filing: an out-of-court case that buys time. Interest rates, warrants and new money are still open.
- Finished deal: a complete out-of-court plan the court can approve. No new shareholder cash in this run.
- Petrobras backstop: creditors’ ask that Petrobras put money in if leverage or liquidity misses a test. Petrobras has not agreed.
- If nothing is filed by Monday: the current São Paulo stay ends on 24 August 2026.
What changed from Run 3
Run 3 still assumed IG4 would put in about US$300 million and that one creditor committee would take 15% warrants. Tuesday and Wednesday reporting does not support that.
- Pipeline: neither Petrobras nor IG4 is willing to inject capital. Bondholders asked for the Petrobras backstop as the price of supporting a filing.
- Elliott is still opposed (debt-for-control financing in July, or liens on substantially all assets; the backstop on Tuesday). Contrarian is named with him. Capital, AllianceBernstein and PGIM are named as longer-term holders. Brazilian banks want an out-of-court filing.
- O Globo: the company is preparing an out-of-court filing next week. That is a placeholder, not a recapitalization.
- Fitch already has Braskem at RD. An out-of-court or court filing is expected to take the rating to D.
Most likely next step: a placeholder filing
| Term | What this run expects |
|---|---|
| Filing | Out-of-court case next week if the company can show more than one-third of each affected group. Limits: no more Mexico cash after US$476 million, no dividends, information rights, a 90-day deadline to produce a term sheet. No asset sales in the first filing. |
| Economics in the first filing | Still open. The company is still asking for five extra years, a payment holiday and no cut to principal. That is not a finished, court-approved plan. |
| Petrobras | Later payment terms on naphtha, still unsigned. Working figure US$500 million. No equity, no backstop, no guarantee, and none of that cash for Mexico. |
| IG4 / Shine | US$0 from the fund. The Idesa US$476 million is Braskem’s own cash, not an IG4 recapitalization. |
| Elliott / Contrarian | No unless Petrobras gives the backstop. If a case is filed, it is because longer-term bondholders and local banks supplied the one-third, not because Elliott signed. |
| Fitch | RD now. D if either kind of filing happens. |
If the extra 90 days produce a finished deal
This is not what next week’s filing would settle. It is what a complete plan could look like if one is written and approved in the extra 90 days.
| Term | Finished-deal case |
|---|---|
| Extra years | Near-dated debt and the standby facility would come due five years later |
| Cash interest for two years | 4% paid in cash. The rest of the contractual interest is added to the amount owed, so the debt grows (this is PIK) |
| Coupon after those two years | Current weighted coupon plus 1.50 to 2.00 percentage points |
| Principal | No cut at closing |
| Warrants | 17.5% of the company, rising to 25% if cash conversion, liquidity, interest or extra Mexico cash miss agreed tests |
| Letters of credit | Refinance the US$572 million due in the third quarter, plus US$200–300 million of extra capacity if relationship banks will provide it |
| Collateral | Liens only on working capital that new money finances. No blanket lien on the crackers |
| Mexico | Separate Texas case. Parent cash capped at the disclosed US$476 million. The remaining about US$350 million cannot leave the parent with less than US$750 million of unrestricted cash |
| Court approval | More than half of each group. Elliott can still block a finished bond plan |
Outcome probabilities
| Outcome | Probability |
|---|---|
| Placeholder out-of-court filing; terms still open | 38% |
| Finished out-of-court deal, no shareholder cash | 14% |
| Pay the arrears and refinance without a filing | 3% |
| Debt converts to control, or Petrobras gives the backstop | 6% |
| Court restructuring | 39% |
What moves the numbers
No third-quarter result is assumed. US$586 million is the company’s June planning case. The remaining Idesa cash of about US$350 million is treated as money the parent still has to spend.
| If this happens | Placeholder filing | Finished deal | Pay arrears | Equity swap / backstop | Court case |
|---|---|---|---|---|---|
| Longer-term holders publicly show more than US$2.35 billion of notes | 52% | 16% | 3% | 5% | 24% |
| The remaining Idesa US$350 million turns out not to be new cash | 44% | 18% | 5% | 6% | 27% |
| Third-quarter EBITDA US$586 million, cash still poor, Idesa cash still due | 32% | 10% | 2% | 6% | 50% |
| Third-quarter EBITDA US$750 million and US$500 million of naphtha terms are signed | 42% | 18% | 4% | 6% | 30% |
| No parent filing by 24 August | 8% | 6% | 4% | 7% | 75% |
Bottom line
Petrobras and IG4 will not recapitalize US$10.3 billion of debt. Elliott will not sign a maturity stretch that leaves shareholders in control and puts in no new money.
The realistic overlap is a placeholder filing that Brazilian banks and longer-term bondholders can support, and that Elliott can later fight. If those bondholders do not show up, the next statute is a court restructuring. Equity can still be worth something in that case, unless letters of credit and naphtha supply are pulled.
Run 3’s 48% finished deal, built on a US$300 million IG4 cheque, is retired.