Unigel Participacoes, the troubled Brazilian fertilizer maker, has received more time to negotiate with global bondholders after missing an interest payment, according to a Bloomberg report on Oct. 31, citing people familiar with the matter. The company received an earlier reprieve in September (GM Sept. 8, p. 27).
Bondholders will continue negotiations even after the 30-day grace period for a $23.2 million interest payment on international bonds due Oct. 2 expires on Nov. 1, the people said, asking not to be identified because conversations are private. There is no agreement on a debt restructuring because the company is asking for more cash than bondholders are willing to deliver.
Unigel wants as much as $250 million to help finish building fertilizer plants, while bondholders aren’t willing to give more than $150 million, using shares as collateral, according to the people. The company has $530 million in outstanding dollar notes due in 2026. Unigel didn’t immediately reply to an email seeking comment.
The fertilizer maker already negotiated a standstill with local creditors and postponed the publication of its second-quarter financial results that are likely to show it breached a covenant on domestic notes, technically putting it into default. Unigel is required to maintain a ratio at or below 3.5 times net debt to adjusted EBITDA, according to the terms of its local notes. S&P Global Ratings has said this ratio could peak at nearly 10 times by year-end.
The fast deterioration in earnings reflects lower global fertilizer prices amid weak demand from farmers and rising prices for natural gas, a particular problem for nitrogen maker Unigel. The company is one of the main fertilizer producers in a country where agribusiness accounts for 25% of the economy.
Unigel was founded by Henri Slezynger, an 87-year-old Belgian naturalized Brazilian who studied chemical engineering at the Massachusetts Institute of Technology. The company announced in June that it had hired investment bank Moelis & Co to advise on debt talks.