Rounds 2-3 and neutral mediation - 18 August 2026 rerun
Archive note: this is the unmodified mediator output. The published website applies a documented review adjustment to warrants and RJ probability. See the publication review note.
Information cutoff: 18 August 2026. This mediation uses the 18 August common brief and the four independently formed round-one positions. Public-record items remain facts. Transaction terms, cash ranges outside the disclosed June plan and probabilities are mediator judgments.
Mediation objective and failure alternative
The common objective is still to preserve Braskem S.A. as a going concern and restore operating finance. The Idesa prepack changed the constraint, not the objective. Mexico is now a separate, in-court estate. The parent has a disclosed remaining cash use of about US$350 million. The US$10.3 billion corporate stack is unchanged.
The realistic failure alternative is an RJ of Braskem S.A. if the reported 24 August stay expires without a protected filing, committed liquidity or adhesion. Cure-and-continue is not a durable alternative. Paying about US$98 million of disclosed arrears does not fund the remaining Idesa contribution, the US$572 million Q3 LC runoff or the US$1.0 billion standby due 31 December.
Round 2 - where the four openings actually overlap
Areas of real agreement
All four parties now agree that:
- Idesa remains a separate Southern District of Texas estate;
- there is no disclosed parent guarantee of the remaining about US$1.6 billion of Idesa senior debt;
- the Idesa haircut is not parent deleveraging of the US$10.3 billion corporate stack;
- about US$350 million of the US$476 million contribution is treated as a live parent cash use unless later filings prove otherwise;
- no further parent cash, guarantee, keep-well or cross-collateralization is permitted after the disclosed US$476 million without creditor consent;
- the December standby must be extended or included in a restructuring, and Petrobras trade credit is not an acceptable takeout;
- commercially priced naphtha terms are liquidity, not loss-absorbing capital;
- a US$250 million Petrobras cap is too small after the Idesa use, and the US$950 million 180-day ceiling is not a prudent base commitment;
- Alagoas safety, compensation and remediation cash stays outside the financial compromise.
Gaps after round one
| Issue | Gap after round one | Mediator diagnosis |
|---|---|---|
| Remaining Idesa cash | All four treat US$350 million as a use. Petrobras and creditors want it delayed or proven not to be new cash. Braskem and IG4 treat it as the last authorised cheque. | The 6-K is a live commitment. The deal must size parent liquidity after that use, not pretend the money is still in Brazil. |
| IG4 parent cash | Opening US$200 million versus creditor opening US$500 million. Narrowest: IG4 US$250–350 million versus creditors US$350–400 million. | The Idesa cheque is company cash, not an IG4 fund cheque. Creditors still get a higher parent number than Run 2 because the buffer was spent. IG4’s authority cap is about US$350 million with a Petrobras match. |
| Petrobras instrument | Petrobras offers capped borrowing-base naphtha working capital. Creditors also demand US$500–600 million of Petrobras junior capital. | Law 13,303 and election-year optics make junior Petrobras equity or a guarantee the harder instrument after a Mexican cheque. Trade credit can clear. Junior Petrobras capital cannot be the base case. |
| Warrants | Sponsors land at 15% stepping to 22.5%. Creditors’ narrowest is 20% stepping to 25–30%. | The missing value is a modest initial grant plus a harder Mexico stop, not 75% conversion. |
| Collateral | Creditors want first liens and a legacy second lien. Petrobras and Braskem refuse a blanket plant lien. | New money primes only what it finances. Legacy creditors get a limited residual lien, not the crackers. |
| 24 August | Braskem, IG4 and Petrobras treat a plan-to-a-plan EJ as the filing path. Creditors assign 45% to RJ if Monday is empty. | An empty 90-day holiday is not a deal. A protected EJ with Mexico and cash-control covenants can still beat a disorderly stay expiry. |
Round-2 concessions
- Petrobras moves the working-capital cap from US$400 million to US$500 million, keeps SOFR-equivalent +400–450bp and borrowing-base collateral, and accepts 17.5% initial creditor warrants because the warrants are non-voting and do not raise Petrobras above 47.03% voting. It refuses the US$950 million ceiling and refuses any Mexico guarantee. First draw still requires a durable extension of near and intermediate maturities, including the standby.
- IG4 / Shine funds US$300 million of deeply subordinated parent capital at closing and backstops US$50 million of a rights amount, reaching its about-US$350 million authority cap. It accepts 17.5% initial warrants and a hard stop on further Mexico leakage. It will not recapitalize the US$10.3 billion stack dollar-for-dollar because of Idesa, and it will not treat the US$476 million as IG4 fund cash.
- Creditors drop immediate US$3.0 billion conversion and the US$1.5 billion sponsor-cash opening. They accept Petrobras support as trade credit rather than junior equity if IG4 funds at the authority cap, Mexico is covenanted, the US$82 million secured working-capital loan is preserved in the Idesa case, and initial warrants are 17.5% stepping to 25%. They still require a protected EJ, not an empty shell.
- Braskem accepts the 4% cash floor, 17.5% initial warrants, restricted payments, a restructuring director, weekly liquidity reporting and a Mexico leakage covenant. It receives no principal haircut at closing and keeps operational control absent a genuine performance failure. The remaining Idesa contribution stays inside the disclosed US$476 million and is scheduled so that interim parent liquidity still meets the floor after the use.
Round 2 produces a zone. It is not yet stable. The remaining Idesa cheque could still starve the Brazilian borrowing base. Petrobras trade credit and LC capacity could still be double-counted. Creditors can still walk if Monday arrives with no filing.
Round 3 - make the Idesa use and the parent bridge coexist
The final round makes three linked trades.
First, the remaining Idesa contribution is treated as a known closing use, not as optional colour. Sources and uses at the interim filing must show the about-US$350 million, the US$572 million LC rollover, IG4 funding, first Petrobras availability and a minimum unrestricted parent liquidity of US$750 million after those uses. If the remaining contribution cannot be funded without breaching that floor, the Idesa cheque is delayed inside the 60-to-90-day prepack window until parent liquidity is restored. Petrobras proceeds cannot fund it.
Second, Petrobras trade credit and LC capacity remain additive. Naphtha terms substitute only for the cash-in-advance purchases they actually finance. They do not replace performance LCs, bank reimbursement obligations or the scheduled LC runoff. After two quarters of at least 70% EBITDA-to-operating-cash conversion and unrestricted liquidity above US$1.0 billion, up to US$100 million of undrawn incremental LC capacity may be reduced dollar-for-dollar against an equal, then-available increase in committed Petrobras exposure.
Third, creditors accept no immediate debt conversion in exchange for a warrant and Mexico ladder. Initial non-voting warrants equal 17.5% of fully diluted equity. They step to 25% if any two-quarter cash-conversion test is missed, unrestricted liquidity is below US$750 million, PIK does not end after 24 months, further Mexico leakage occurs, or the agreed leverage milestone is missed. At year-end 2028, debt sufficient to reduce net leverage to 5.0x, capped at US$1.0 billion, converts at an independently determined reorganized equity value if net leverage remains above 5.0x.
Stress test: September cash after Idesa
The June plan is the only verified cash architecture. Remaining Idesa cash of about US$350 million is a use in every case.
| Q3 EBITDA case | September cash before remaining Idesa and before Petrobras | After remaining Idesa use | US$500M Petrobras cap | December standby |
|---|---|---|---|---|
| US$586M June plan | ~US$337M | ~−US$13M | ~US$487M | Cannot pay. Extend or include. |
| US$750M sensitivity | US$250M–US$500M | −US$100M to +US$150M | US$400M–US$650M | Cannot pay. Extend or include. |
| US$1.0B upside | ~US$500M–US$750M | US$150M–US$400M | US$650M–US$900M | Cannot prudently pay after other Q4 uses. Extend, with optional later prepayment. |
These figures are gross liquidity timing, not free cash. A drawn supplier payable is a future claim. US$500 million is the minimum stable Petrobras commitment after Idesa. US$250 million fails the June-plan case. US$950 million is still a ceiling, not a base offer, and is politically harder after a Mexican cheque.
Narrowest stable clearing package
| Term | Final mediated term |
|---|---|
| Process | File a protected 90-day plan-to-a-plan EJ before the reported 24 August stay expiry, with at least one-third support, weekly liquidity reporting and hard milestones for the RSA, Petrobras approvals, LC rollover, IG4 funding, Idesa remaining contribution and a definitive plan. Missed milestones terminate forbearance after a short remedy period. An empty holiday is not this package. |
| Maturities | Extend the standby and near/intermediate funded debt five years; no mandatory principal amortization for 24 months. Preserve 2041/2050 maturities. |
| Interest | 4% cash plus residual contractual coupon PIK for 24 months; existing weighted coupon plus 150bp in cash afterward. A 1.5% PIK consent fee and documented committee expenses are capitalized. |
| Petrobras | US$500M committed revolving naphtha trade facility, invoices up to 180 days, 18-month availability plus 12-month runoff, SOFR-equivalent +400bp and up to 1% undrawn fee. First lien only on financed inventory, eligible receivables and proceeds. Independent related-party approval. No legacy-principal use, no Mexico use, no Alagoas claim. An independently approved US$100M accordion only after the 70% conversion test. |
| LC / creditor liquidity | Roll/refinance the US$572M Q3 LC runoff and provide US$300M incremental LC/RCF capacity for at least 24 months. Additive to Petrobras support at closing. |
| IG4 / Shine | US$300M funded at closing as deeply subordinated, unsecured, PIK-only parent capital, plus a US$50M rights backstop. No cash service, fees, security or repayment while affected debt is impaired. The Idesa US$476 million does not count as this contribution. |
| Cure | Simultaneous with standstill, standby treatment, first Petrobras availability, LC rollover and IG4 funding. Isolated coupon cure is prohibited. |
| Liquidity floors | US$750M unrestricted parent liquidity at interim closing and US$1.0B at definitive closing, in each case after the remaining Idesa contribution. |
| Warrants / equity | 17.5% fully diluted non-voting warrants at closing, stepping to 25% on objective misses, including further Mexico leakage. No principal haircut at closing. Year-end 2028 contingent conversion sized to 5.0x net leverage, capped at US$1.0B. |
| Collateral | Separate first liens for Petrobras and genuine creditor new money over assets each finances. Legacy debt gets a limited second lien over residual eligible working capital, selected non-core assets and legally available foreign-subsidiary shares. No blanket lien on Brazilian crackers. |
| Mexico | Separate SDTX prepack. Parent contribution capped at the disclosed US$476 million. Remaining about US$350 million is a scheduled use that cannot breach the liquidity floor and cannot be funded with Petrobras proceeds. No further parent cash, guarantee, keep-well or cross-collateralization without creditor consent. Preserve and prosecute the US$82 million secured working-capital loan and the disclosed term loan in the Idesa case. No credit for the Idesa haircut as parent deleveraging. Majority retention is existing equity, not a reason for a second parent cheque. |
| Alagoas | Safety, relocation, compensation, monitoring and remediation unimpaired, separately budgeted and reported. Restricted resources excluded from collateral, liquidity tests and sweeps. |
| Cash controls | No dividends or buybacks while PIK remains or until net leverage is below 3.5x for two quarters. 50% excess-cash sweep above US$1.0B. 75% qualifying net asset-sale sweep. Independent restructuring director, board observer and consent rights for extraordinary transactions, including any Idesa funding. |
Dilution
At closing, legacy holders collectively retain 82.5% of fully diluted equity and creditors hold 17.5% through non-voting warrants. On a trigger step-up, legacy holders retain 75.0% and creditors hold 25.0%, before any 2028 conversion. Controller voting is preserved at closing because the warrants are non-voting, but can be diluted in a genuine debt-cancellation event.
Outcome probabilities
| Mutually exclusive outcome | Probability |
|---|---|
| Plan-to-a-plan EJ followed by the debt-plus-warrants package above | 42% |
| Standalone cure-and-continue with an external standby refinancing | 5% |
| Creditor-favorable consensual recapitalization with greater collateral, 20%+ warrants or limited conversion | 25% |
| RJ after failed commitment, adhesion, cure or acceleration | 28% |
| Total | 100% |
The Idesa prepack cuts both ways. Closing a separate Mexican deal supports the claim that Braskem can finish a prepack and file a parent EJ before Monday. Spending about US$350 million of parent cash six days before the stay expires raises the cost of showing up empty. The base EJ is therefore lower, and RJ is higher, than in the 17 August rerun.
Conditional probability sensitivities
Each row sums to 100%.
| Condition | Base EJ | Standalone cure | Creditor-favorable deal | RJ |
|---|---|---|---|---|
| Remaining Idesa US$350M is proven not to be new cash | 52% | 7% | 23% | 18% |
| Remaining Idesa US$350M funds before 24 August and September cash is near the June-plan hole | 32% | 3% | 25% | 40% |
| Q3 EBITDA US$586M, Petrobras cap US$500M, weak conversion | 34% | 3% | 26% | 37% |
| Q3 EBITDA US$750M, Petrobras cap US$500M, midpoint conversion | 44% | 5% | 25% | 26% |
| Q3 EBITDA US$1.0B, Petrobras cap US$500M, conversion at least 70% | 54% | 8% | 22% | 16% |
| Petrobras cap only US$250M, Q3 US$750M case | 28% | 3% | 27% | 42% |
| No parent filing by 24 August | 15% | 4% | 16% | 65% |
Political economy
The 4 October election still punishes both a Petrobras-only bailout and a disruptive RJ. After Idesa, the bailout narrative is sharper: public-company capital must not be described as cleaning up a Mexican cheque. That is why the clearing Petrobras instrument remains capped, commercially priced naphtha working capital, not common equity or a guarantee.
REIQ, PRESIQ and trade defense still support going-concern value. They still do not guarantee legacy equity. Alagoas still bars any package that subordinates safety, compensation or remediation. A foreign-led creditor takeover still has political and labor execution cost. That cost supports a debt-plus-warrants EJ. It is not a legal veto and is not a reason to extend unsecured risk for free.
Single fact that would most change this package
Public proof that the remaining approximately US$350 million is a restatement of already-disbursed parent loans, rather than a new cash claim, would restore the 17 August cash architecture, lower initial warrants toward 15%, and cut RJ. The opposite fact - a parent guarantee, keep-well or cross-collateralization of the remaining Idesa senior debt - would collapse the ring-fence and push the case toward RJ or a much larger equitization.