Brazil’s Unigel files reorganization plans with noteholder support

By Sarah Lizee

Olympia, Wash., Feb. 21 – Unigel Participacoes SA, some of its subsidiaries and holders of unsecured senior notes due 2026 issued by Unigel Luxembourg SA filed two consensual extrajudicial reorganization plans in a bankruptcy court in Sao Paulo, Brazil, according to a Wednesday press release.

One plan is proposed by Unigel (the HoldCo EJ plan), and one is proposed by Unigel Luxembourg, Proquigel Quimica SA, Companhia Brasileira de Estireno and Plastiglas de Mexico SA de CV (the OpCo EJ plan).

The plans currently contemplate that only certain creditors will have their claims against the companies restructured.

The companies and original signatory creditors will have 90 days to demonstrate the approval of the EJ plans by a majority of the claims held against each of the companies to be restructured, as required under Brazilian bankruptcy law.

The EJ Plans will then be considered by the EJ Court without a general meeting of creditors and, after confirmed, will require recognition by the U.S. Bankruptcy Court for the Southern District of New York.

Under the terms of the EJ plans, about R$3.9 billion in existing claims against the companies will be restructured into new notes and newly issued convertible participating titles in exchange for cancelation of their existing claims.

The final amounts of reinstated securities issued under each plan will depend on the participation of the impaired creditors in the new-money notes below.

The plans provide that that the companies will issue at least $100 million of new money notes due December 2027.

Claimholders will be entitled to participate in the issuance of new money notes, and creditors effectively participating in the new money notes will receive in total an equity interest in Unigel of 50%.

“This consensual solution is a result of intense negotiations carried out in the past months and reinforces both Unigel’s and the original signatory creditors' commitment to improving Unigel's capital structure, enhancing its liquidity and deleveraging the company parties, for the benefit of all stakeholders,” the company said in the release.

Unigel is a Brazilian commodity chemical producer.

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