R1 - Financial creditors / bondholder steering committee

Cutoff: 18 August 2026. This is the bondholder steering committee position for The Braskem Room Run 3. It is formed from the common brief, the creditor mandate, the Brazil political overlay, and the 18 August Braskem S.A. 6-K on Braskem Idesa. Verified facts are labeled as such. Reported items and inferences are labeled as such.

Q2 EBITDA of US$1.043 billion is not a recapitalization. The Idesa prepack is not a parent deal. Idesa “got a deal done” is not a reason to take an equity-friendly parent outcome.

Objective and alternative

The committee’s objective is to maximize risk-adjusted recovery on the Braskem S.A. corporate stack, which at 30 June stood at US$10.3 billion of gross debt and US$9.5 billion of adjusted net debt, or 6.74x corporate leverage, already excluding Idesa project debt. Those figures are verified.

Cash and cash equivalents were R$3.931 billion at 30 June, with R$353 million inside Braskem Idesa. The June restructuring plan showed approximately US$795 million of unrestricted cash. That buffer is now a residual after Mexico, not a war chest.

The realistic alternative if negotiations fail is a Brazilian RJ, with Chapter 15 recognition, after the 24 August stay expires. It is not an unprotected scramble. It is not a hope that Q3 spreads will cash-convert in time to pay the December US$1.0 billion standby.

RJ may impose a 15 to 25 percent process discount and multi-year delay versus a going-concern extension. Liquidation is worse because integrated petrochemical assets have poor piecemeal value and large environmental, tax, labor and shutdown costs. RJ is still better than financing a Mexican equity option and a controller recovery option with unsecured parent paper.

Opening

The 18 August Idesa prepack closed Mexico contagion and opened a parent-liquidity hole. Senior debt at Idesa is to fall from approximately US$2.5 billion to approximately US$1.6 billion. Braskem Idesa commenced prepackaged Chapter 11 proceedings in the United States Bankruptcy Court for the Southern District of Texas, with completion expected in approximately 60 to 90 days.

Braskem, as controlling shareholder, will contribute US$476 million, of which approximately US$126 million had already been made available and approximately US$350 million remains. Upon completion, Braskem will continue to hold a majority stake. Grupo Idesa and affiliates will be the largest minority. The estate is separate. No parent guarantee of the remaining approximately US$1.6 billion is disclosed. Operations are to continue without interruption. Unsecured creditors and trade vendors at Idesa are to be paid in the ordinary course. All of that is verified from the 6-K and the company announcement.

The good news is therefore real and narrow. Mexico is no longer a first-order contagion risk to the parent mediation. The remaining Idesa senior book is not, on the disclosed record, a parent guarantee. Parent creditors will not be asked to underwrite a second Mexican default on the same facts. Idesa trade going unimpaired is a Mexican-estate fact. It is not a template for parent bondholders.

The bad news is larger, and it is the opening. Approximately US$350 million of scarce parent cash is going into a Mexican equity option six days before the reported 24 August stay expiry. The June hard ring-fence - no new parent cash, no keep-well, no leakage - was breached in a public filing.

Consolidated IFRS optics are not the US$10.3 billion corporate stack, not 6.74x, and not the December standby. Sponsors showed they will pay to keep assets rather than to recap parent bonds. The remaining cheque is treated as a live use of Braskem S.A. and Braskem Netherlands liquidity unless and until public documents prove it is only a restatement of the existing term loan or the US$82 million secured working-capital facility. The term-loan lender is listed as a separate supporting party. That fact forbids treating the US$126 million already made available as the term loan.

Q2 recurring EBITDA of US$1.043 billion does not repair a US$9.5 billion net-debt structure. The print included US$869 million from Brazil and South America, US$147 million from the United States and Europe, and US$57 million from Mexico at 43 percent utilization. Do not annualize the Mexico line. First-half recurring EBITDA was approximately US$1.235 billion.

Working capital consumed US$547 million in the quarter. Braskem attributed that to higher feedstock and product prices, higher inventory volumes, and reduced payment arrangements. The price and volume components are balance-sheet level changes, not a quarterly run rate if prices and inventory stabilize. The financing component is persistent. LC runoff, lost supplier finance and maturities remain separate structural constraints.

Defaults of R$507 million, or US$98 million, under certain financial instruments were disclosed after July cure periods. No public acceleration is on the record as of this cutoff. Public bond terms generally give a 30-day interest cure and allow holders of at least 25 percent of an affected series to accelerate after an uncured event of default. A majority can generally rescind acceleration before judgment if overdue amounts, expenses and other defaults are cured. Cross-default terms vary by instrument.

The Brazilian court granted 60 days of protection on 26 June to support mediation. The stay is reported to expire on 24 August 2026. Chapter 15 provisional protection was also obtained in New York. The stay covers invited financial creditors in the Wind Chamber mediation. It does not stay trade, suppliers or customers.

The June creditor framework rejected Braskem’s initial five-year extension and coupon reduction. Creditors required positive-NPV treatment, shareholder burden-sharing, cash controls, information rights and direct Petrobras participation. They expressed conditional support for a temporary plan-to-a-plan EJ with protections.

Q2 filings continued to describe creditor proposals as indicative and nonbinding, including possible capitalization and collateral. No signed term sheet, sufficient adhesion or committed sponsor funding was publicly disclosed for Braskem S.A. by this cutoff. The original five-year extension, 100 percent PIK through 2028, 200 basis point coupon cut, no collateral, no shareholder funding and no equity compensation remains rejected. Idesa makes that rejection cheaper to hold, not more expensive. A company that can find US$476 million for Mexico can find money for the parent, or it can explain in RJ why it chose the other sequence.

Mexico

Q2 filings disclosed Idesa borrowings of about R$14.156 billion, or about US$2.74 billion, as non-recourse project debt in a separate default. That separate default is now being composed in Texas.

Parent creditors will take the ring-fence they asked for, and they will take it as a prohibition on the next cheque, not as a congratulation for the last one. Majority retention is a sponsor preference disclosed in the Material Fact. It is not evidence that parent unsecured claims should subsidize that preference a second time.

Q3 cash cases, with the remaining Idesa cheque as a use

EBITDA is not cash. The remaining approximately US$350 million is a use, not a source. The December US$1.0 billion standby still matures on 31 December 2026. The June plan showed US$2.349 billion of second-half contractual debt service, including LC runoff and that standby. None of the cases below pays the standby from September cash. Petrobras naphtha terms, if they appear, are a separate line and are not baked into these ranges.

June-plan case, Q3 EBITDA approximately US$586 million. The June plan projected approximately US$337 million of unrestricted cash at 30 September under the status quo, after approximately US$878 million of Q3 contractual debt service including US$572 million of LC runoff.

Subtract the remaining Idesa contribution and September unrestricted cash is approximately negative US$13 million if the cheque clears in the quarter, or de minimis if any residual cash is trapped or reserved. This case cannot cure, cannot refinance December, and cannot support a naked 90-day holiday. Inference: if the remaining US$350 million is funded before 24 August, the company arrives at the stay expiry with a thinner pile than the June plan advertised.

Sensitivity case, Q3 EBITDA US$750 million. This is a user-specified sensitivity, not a reported result. Relative to the June plan it adds US$164 million of EBITDA. Estimated September unrestricted cash after scheduled Q3 requirements, before any new Petrobras facility and before the remaining Idesa cheque, is approximately US$250 million to US$500 million, depending on operational working capital.

After the remaining Idesa use, the range is approximately negative US$100 million to US$150 million. The high end is still far below a US$1.0 billion to US$1.25 billion liquidity floor. The low end is a hole. Cash conversion, not the EBITDA print, is the constraint. Q2 already showed that a US$1.043 billion EBITDA quarter can coexist with a US$547 million working-capital drain.

Upside case, Q3 EBITDA US$1.0 billion. This is a persistent-spread case, not a filing. Incremental EBITDA versus the June plan is approximately US$414 million. Do not convert that 1:1. Applying a 40 to 70 percent cash-conversion band after working capital produces September unrestricted cash, before Petrobras and before the remaining Idesa cheque, of roughly US$400 million to US$700 million.

After the remaining Idesa use, the range is roughly US$50 million to US$350 million. That still does not pay the standby. It still does not fund LC reconstruction. It still leaves the parent inside a restructuring, not a cure.

Across all three cases, the remaining Idesa cheque reduces September cash by approximately US$350 million and makes Petrobras naphtha terms a liquidity patch on a thinner buffer, not a substitute for sponsor capital. Alagoas safety and remediation cash is not available debt-service liquidity in any case.

Persistent July and August spreads matter only if they produce durable cash after the working-capital reset. They do not authorize treating the Idesa haircut as parent deleveraging, and they do not refill a cheque that has already left.

Petrobras naphtha terms are liquidity, not burden-sharing

Valor Economico reported on 17 August, citing unnamed sources, that Petrobras put commercial support on the table: longer terms on naphtha currently paid in cash, for as long as six months, not a loan and not new financial debt. Format, duration, pricing and the exposure cap remained under discussion. Petrobras, IG4 and Braskem did not comment. No 18 August filing confirmed that the concept is signed, capped or accepted.

Valor also reported that the objective is to obtain one-third creditor support and file an EJ before 24 August, and that the first filing could be a generic plan-to-a-plan EJ providing another 90 days. Nothing was final and positions remained far apart. That report is not a commitment.

Verified related-party flow: Braskem purchased R$5.098 billion of raw materials, finished goods, services and utilities from Petrobras and subsidiaries in the first half of 2026. Annualized flow is approximately R$10.2 billion, or about US$2.0 billion. The June parent-company payable to Petrobras was R$257 million, roughly nine days of that run-rate. The mathematical ceiling from moving approximately nine-day terms to 180 days is roughly US$950 million of incremental trade liquidity. Exposure will be capped, so do not assume the ceiling.

At a US$250 million cap, the facility is helpful and insufficient. At a US$500 million cap, it is material liquidity and still not loss-absorbing capital. At the US$950 million ceiling, it is a large working-capital swing and still ordinary trade credit. If commercially priced, subsidy value is small even when liquidity value is substantial.

Supplier credit is not shareholder burden-sharing at any of those caps. It does not absorb losses. It does not replace IG4 cash. It does not take the December standby out.

The remaining US$350 million parent cheque to Mexico makes Petrobras less willing, not more willing, to extend unsecured naphtha terms. Inference: Law 13,303 and election-year bailout optics already constrain an uneconomic related-party rescue; a parent that just spent scarce cash on a Mexican majority stake is a worse credit to which to extend uncapped feedstock terms.

The same cheque strengthens, rather than weakens, the creditor demand that IG4 and Petrobras put real junior capital into the parent. Naphtha terms may be accepted as one component of a US$1.0 billion to US$1.2 billion working-capital and LC package. They do not reduce the cash, subordinated, or warrant demand. They do not count toward the US$1.5 billion opening sponsor cheque.

REIQ reduces PIS/Cofins costs. Law 15,294/2025 created PRESIQ for feedstocks including naphtha, ethane and propane. Brazil has also used trade-defense measures in polyethylene. Those facts support going-concern value and may support lower immediate equitization if cash conversion is demonstrated. They do not protect today’s ownership percentages. Temporary or reversible benefits will be haircut in valuation. They will not be capitalized as if they were permanent law.

Cure-and-continue is not credible

A cure-and-continue path would require paying overdue interest of approximately US$98 million before acceleration, then still addressing LC runoff, the December standby, and the remaining Idesa contribution. After the remaining cheque, that path is a transfer from parent creditors to Mexican equity.

Paying the defaulted coupons while writing US$350 million to Idesa and arriving at 30 September with approximately zero to US$350 million of unrestricted cash, depending on the EBITDA case, is not a going-concern refinancing plan. It is a stay-expiry problem. The US$1.0 billion standby still sits on 31 December. Second-half contractual debt service of US$2.349 billion still sits behind it.

Cure-and-continue is rejected unless the remaining Idesa outlay is proven not to be incremental cash and a committed takeout of the standby is in hand before any cure is funded.

Opening package, first concession, narrowest acceptable

Opening, aggressive. Permanent parent-level shareholder capital of US$1.5 billion, incremental to the Idesa US$476 million, which does not count: Petrobras US$850 million, IG4/Shine US$500 million, minorities up to US$150 million with a sponsor backstop. Creditor new money of US$750 million at SOFR plus 700 basis points, 3 percent OID and a 5 percent backstop fee, first lien on A/R, inventory, accounts and proceeds.

Convert US$3.0 billion of claims into 75 percent of reorganized equity, or, if controllers insist on retaining majority, 30 percent low-strike warrants stepping to 40 percent on missed milestones plus the full US$1.5 billion cash. Extend remaining near and intermediate debt five years; 4 percent cash and 4 percent PIK through 2028 and 9 percent cash thereafter; do not extend 2041 and 2050 principal. Limited second lien for reinstated legacy debt.

Cash sweeps of 50 percent of excess cash above US$1.0 billion of liquidity and 75 percent of asset-sale proceeds. Four creditor directors, a finance observer, and veto rights on leakage, liens, related-party transactions, Mexico funding, and dividends. Minimum liquidity of US$1.25 billion after the remaining Idesa cheque. No dividends until leverage is below 3x. Monthly reporting and an independent restructuring officer. This is an anchor, not the economic minimum, and it is higher on warrants and IG4 cash than the pre-Idesa opening because the parent buffer was just spent.

First concession. Drop immediate conversion of US$3.0 billion if sponsors fund at least US$1.2 billion of permanent parent-level capital, incremental to Idesa, of which IG4/Shine funds at least US$400 million in cash or deeply subordinated convertible paper that cannot be repaid while creditor debt is impaired. Creditor new money can fall to US$500 million on the same senior-secured terms.

Petrobras naphtha terms may count toward liquidity, not toward capital, at a hard cap of US$500 million, duration of at most six months unless extended with AHG consent, commercially priced, and not used to prime existing bonds. Warrants of 22.5 percent, stepping to 30 percent if cash conversion, EBITDA, liquidity or PIK milestones fail. Coupon path can move to 4 percent cash plus residual PIK for no more than two years, then existing weighted coupon plus 150 to 200 basis points. A 2 percent PIK consent fee and advisor expenses remain. Five-year extension remains limited to near and intermediate maturities.

Narrowest acceptable package, indivisible. Five-year extension for near and intermediate maturities only. Four percent cash plus residual PIK for no more than two years, then existing weighted coupon plus 150 to 200 basis points. Two percent PIK consent fee and advisor expenses. Approximately US$1.0 billion to US$1.2 billion of total incremental working-capital and LC support, of which Petrobras naphtha is liquidity only and is not credited as burden-sharing.

Real parent burden-sharing: Petrobras US$500 million to US$600 million of junior, subordinated or convertible support, and IG4/Shine US$350 million to US$400 million of cash or deeply subordinated paper - higher than the pre-Idesa IG4 range of US$250 million to US$300 million because the parent buffer was just spent in Mexico. Creditor new money of US$200 million to US$300 million, first lien. Creditor warrants of 20 percent, stepping to 25 to 30 percent on missed liquidity, cash-conversion, EBITDA or PIK milestones - higher than the pre-Idesa 15 to 17.5 percent band because the remaining US$350 million thinned the September cash range.

First lien for new money over A/R, inventory, accounts and proceeds; limited second lien for legacy debt. Fifty percent excess-cash sweep above US$1.0 billion of liquidity; 75 percent asset-sale sweep. No initial principal haircut or conversion. No further Mexico cash, guarantee, keep-well or intercompany leakage without AHG consent. Preserve and prosecute the US$82 million secured working-capital loan in the Idesa case. Do not credit the Idesa haircut as parent deleveraging.

Alagoas safety and remediation budgets ring-fenced, transparent, and outside the creditor compromise. Minimum liquidity of US$1.0 billion after the remaining Idesa cheque. No dividends until leverage is below 3x. If sponsor money is ordinary senior or pari passu debt, warrants rise to at least 25 percent. Accept 20 percent only if Petrobras and IG4 paper is deeply subordinated, PIK-only or convertible and cannot be repaid while creditor debt is impaired.

A protected plan-to-a-plan extrajudicial reorganization is still preferred to a disorderly stay expiry, provided it is not a naked 90-day holiday. The first filing may be generic. The protections may not be. Cash controls, information rights, a Mexico leakage veto, expense reimbursement, and a milestone to a fully documented term sheet are conditions of any AHG support for an EJ.

One-third adhesion to an empty shell that lets the remaining US$350 million leave the building is not support. If they spent the cash and show up empty on 24 August, RJ is the more credible path.

Walk-away. Prefer RJ if shareholders provide no meaningful risk-bearing support at the parent, coupons remain negative-NPV, collateral and cash controls are inadequate, further Mexico leakage is requested, or persistent spreads fail to translate into operating cash after the Idesa use. “National interest” is not a free option for legacy equity.

The October election raises the government’s incentive to avoid layoffs, supply disruption and loss of Brazilian influence. It also makes an overt Petrobras bailout politically costly. Inference, not a verified instruction: use the window to demand a shared commercial package. Credit only signed, approved and funded commitments.

Instrument treatment

Maturity. Extend near and intermediate maturities five years. Leave 2041 and 2050 principal in place. Include the 31 December 2026 US$1.0 billion standby in the restructuring unless a committed takeout is signed. It cannot be paid from any of the September cash cases above after the Idesa use. An extension that leaves the standby unaddressed is not a deal.

Interest. Opening asks 4 percent cash and 4 percent PIK through 2028, then 9 percent cash. Narrowest acceptable is 4 percent cash plus residual PIK for at most two years, then existing weighted coupon plus 150 to 200 basis points. Negative-NPV coupon cuts remain rejected. Higher coupons, not lower coupons, remain the June committee demand.

LC and trade facilities. Reconstruct LC capacity inside the US$1.0 billion to US$1.2 billion working-capital package. Q3 LC runoff of US$572 million in the June plan is a structural use, not a one-time curiosity. Trade other than a capped Petrobras naphtha facility stays unimpaired and outside the stay narrative. The existing stay already does not cover suppliers.

Petrobras. Naphtha term extension is liquidity. Junior capital of US$500 million to US$600 million at the parent is burden-sharing. Law 13,303 is a reason to document, cap, and price support, not a reason to treat a political preference as a guarantee. Lula’s May remarks that Petrobras must consider Brazil’s priorities, while also saying the government does not command the company, are verified as political color. They are not a funding commitment. Election-year optics cut both ways: disruption is costly, and a Petrobras-only rescue of IG4’s option is also costly. Inference: the commercially defensible path is capped, shared, and junior.

IG4. The Idesa cheque is evidence of willingness to fund an equity option. It is therefore evidence that IG4 cash at the parent must be real, not trade credit alone. Opening IG4 cash is US$500 million. Narrowest acceptable is US$350 million to US$400 million, up from the pre-Idesa US$250 million to US$300 million range. A private turnaround partner that keeps Mexican majority while asking parent bondholders to extend is not sharing the burden.

Creditor new money. Opening US$750 million. First concession US$500 million. Narrowest US$200 million to US$300 million. Senior, first lien, SOFR plus 700 basis points at the opening, with OID and backstop economics that can compress as size compresses.

Warrants and equity. Opening is 75 percent via conversion of US$3.0 billion, or 30 percent warrants stepping to 40 percent if control is retained beside a US$1.5 billion cheque. Narrowest is 20 percent stepping to 25 to 30 percent. Immediate 70 to 90 percent equitization remains an anchor, not the clearing path, because a foreign-led creditor takeover of a listed Brazilian petrochemical group carries political, labor, tax and regulatory execution cost. That cost is an inference from the political overlay. It is not a legal prohibition and is not a free option for legacy equity.

Debt plus warrants still beats a 70 to 90 percent equity grab at US$2.5 billion-plus normalized EBITDA, because reinstated debt can recover par while warrants preserve upside, yield and priority are retained, and creditors are not forced to operate Braskem. Central going-concern EV is roughly 5.0x normalized EBITDA, with 4x to 6x sensitivity, after reserving approximately US$1 billion ahead of existing unsecured claims for DIP, administrative costs, restructuring expenses and protected liquidity.

Illustrative recoveries on US$9.5 billion of claims: about 68 cents at US$1.5 billion of EBITDA, about 95 cents at US$2.0 billion, and par plus equity at US$2.5 billion and above. Those figures are a recovery framework, not a forecast of Q3.

Collateral and covenants. First lien for new money. Limited second lien for reinstated debt. Minimum liquidity US$1.0 billion to US$1.25 billion after the Idesa remaining funding. No dividends until leverage is below 3x. No material acquisitions, unrestricted investments, new liens, new debt or related-party leakage. Monthly reporting, independent oversight, and a creditor board observer or finance seat while leverage exceeds 4x. Net-leverage milestones trigger warrant step-ups.

Mexico. Separate estate, yes. Further leakage, no. US$82 million secured claim, preserve and prosecute. Consolidated cut, no credit. Majority, sponsor option, not a parent-creditor obligation.

Alagoas. Safety, remediation and victim-related cash stay outside the compromise, budgeted and reported. In June 2026, Braskem and former executives became defendants in a federal proceeding related to the Maceio mining disaster. That is a verified live constraint. No party will sell a national-champion narrative that subordinates Maceio. Alagoas also limits the value assigned to unencumbered cash and makes a blanket Petrobras guarantee politically toxic. That last clause is inference.

Outcome probabilities

These probabilities are as of 18 August 2026 and sum to 100 percent. They assume the remaining approximately US$350 million is incremental parent cash.

Protected plan-to-a-plan EJ, with Petrobras trade credit as liquidity and continued negotiation under cash controls: 30 percent. This is still the preferred landing if the filing is protected rather than empty. Valor’s report that the objective is one-third support for a generic EJ before 24 August is noted and is not adhesion.

Creditor-favorable consensual restructuring, with collateral, 20 percent-plus warrants, and real IG4 and Petrobras parent capital incremental to Idesa: 15 percent. Possible inside an EJ window. Not the base case six days out, with no signed parent term sheet on the public record.

Cure-and-continue, paying the approximately US$98 million and hoping spreads fund December: 5 percent. Not credible after the remaining Idesa cheque.

RJ, if the stay expires, acceleration begins, or liquidity support cannot be committed, including the case in which the company spends the remaining Mexico cash and arrives on 24 August with no filing and a thinner pile: 45 percent. RJ is no longer a scarecrow. A 15 to 25 percent process discount and delay versus a going-concern extension are real. Those recoveries deteriorate in a disorderly filing. They deteriorate more if parent cash is first donated to Mexico.

The committee will still file or support RJ rather than extend unsecured risk for free.

Unprotected stay expiry and acceleration scramble without a Brazilian filing: 5 percent. Inferior to a controlled RJ. Not the committee’s aim. Not a reason to accept an equity-friendly EJ.

If Monday arrives with no filing, the remaining Idesa cash still due or just spent, and no signed sponsor cheque at the parent, the 45 percent RJ case is the working case, not a tail.

Single fact that would most change this position

Binding public evidence that the remaining approximately US$350 million Idesa contribution is not incremental Braskem S.A. or Braskem Netherlands cash - specifically, that it is only a restatement of the existing term loan and, or, the US$82 million secured working-capital facility, with no further parent outlay before 24 August or 30 September.

If that is true, September cash is not gutted by US$350 million, the ring-fence breach shrinks, Petrobras naphtha terms become easier to underwrite as liquidity, and warrant and IG4 cash demands recede toward the pre-Idesa clearing range of 15 to 17.5 percent warrants and IG4 of US$250 million to US$300 million. Until that evidence exists, the working assumption is the opposite, and the parent liquidity buffer just got thinner on purpose.