Unigel Participacoes reached an agreement with creditors led by Pacific Investment Management Co. to kick off an out-of-court restructuring, capping months of talks after the fertilizer maker missed bond payments.
Unigel and a group of its subsidiaries have filed two plans with a Sao Paulo court, according to a statement released on Feb. 20, Bloomberg reported. Only certain financial creditors will have their claims restructured under the plans, it said.
The Brazilian company is seeking to restructure about 3.9 billion reais ($792 million) in existing debt into new bonds and convertible notes. Unigel said it will issue at least $100 million of new notes maturing in December 2027, and those who inject money will receive a total equity stake of 50%.
The chemicals maker got the support of more than a third of its debt holders to kick off the restructuring, and it now has 90 days to convince holders of more than 50% of the debt to sign off for the settlement to take effect.
In addition to Pimco, the plans have the backing of DoubleLine Capital, Amundi SA, Banco BTG Pactual SA’s asset-management unit, Moneda, Verde Asset Management and Vontobel Asset Management, according to a separate filing. Unigel had rushed to pitch the creditors a deal last week to avoid filing for bankruptcy protection (GM Feb. 16, p. 32).
The agreement marks a turnaround for Unigel, which skipped coupon payments on its dollar and Brazilian real-denominated notes in the past few months as losses piled up due to a global downturn in fertilizer prices. It has failed to keep up with some of the terms of covenants, including maintaining debt levels low enough relative to a measure of earnings.
Unigel’s dollar bonds due in 2026 gained as much as 6.3 cents to 31.5 cents on Feb. 21 according to Trace data.