Unigel Participacoes on Nov. 1 gave 30-day notice to employees of the Camaçari nitrogen plant in Bahia that it plans to suspend production if it is not able to negotiate a lower natural gas price with Petrobras. The plant has 384 workers.
According to Sindiquimica Bahia, the union representing the workers, it has been told by the Unigel subsidiary that operates the plant, Proquigel, that the facility has been running at a loss since the end of 2022.
At last report (GM Aug. 18, p. 28), Unigel’s Sergipe nitrogen plant was still in operation. The company has a ten-year lease for both the Sergipe and Bahia plants from Petrobras. While Unigel received another reprieve to negotiate with bondholders (GM Nov. 3, p. 30, Sept. 8, p. 27), rating agencies have in the meantime downgraded the company.
Fitch downgraded Unigel to RD from C after the company failed to cure the missed interest payment due on Oct. 2 on its senior unsecured notes as part of the company’s ongoing negotiations with creditors, according to Bloomberg, citing a statement from the ratings firm.
Fitch said that the engagement of Moelis, which has been an adviser for several companies that have restructured debt in Brazil, materially reduces the creditors’ willingness to provide new financing to Unigel to cover its 2023 and 2024 funding needs.
Unigel was cut to default by S&P Global Ratings after the fertilizer maker said it failed to pay a coupon on its dollar bonds as a 30-day grace period expired. S&P downgraded Unigel’s rating to D from CCC- on Nov. 2, citing the missed interest payment.
The Brazilian company, which has $530 million in outstanding dollar notes due in 2026, has been at odds with bondholders over the amount of cash it is asking them to deliver amid restructuring talks. However, the company is confident in building a “positive solution” for all its stakeholders, according to a filing.
Unigel earlier postponed the release of its second-quarter financial results that are likely to show it breached a covenant on domestic notes.