Brazil’s Unigel applies for mediation process in ‘decisive phase’ of talks with creditors

SAO PAULO (ICIS)–Unigel has requested a so-called Emergency Precautionary Protection to allow it 60 more days of talks with creditors as it aims to stay afloat, the Brazilian chemicals and fertilizers producer said on Monday.

Unigel missed a coupon payment in one of its bonds in October, which could have potentially triggered the producer filing for bankruptcy, according to credit rating agencies at the time.

However, no creditor decided to pull the trigger demanding the payment, and the company seems to be advancing towards a solution which allows it to remain operational.

“[On Monday] Unigel initiated a mediation process in order to negotiate payment conditions for certain existing credits,” it said.

“As a result of the mediation, the company filed a case for Emergency Precautionary Protection before the district of the capital of Sao Paulo, seeking to guarantee the continuity of negotiations and suspend any actions and acts of execution that may be adopted by creditors for a period of up to 60 days.”

Unigel’s CEO, Roberto Noronha, said the 60-day period would be key to create “new agreements” regarding the company’s capital structure readjustment plan, which is involving the “sale of specific assets” as well as more negotiations with its main creditors.

FERTILIZERS PLANTS BACK, SALE IN MEXICO
In the past two months, Unigel has gone from announcing the closure of its large-scale fertilizers plant in Camacari, state of Bahia, blaming Petrobras’ “unbearable” natural gas prices – the key feedstock for the plant – to reverting the decision only two weeks later.

Along the way, it announced the sale of its subsidiary Plastigas de Mexico for an undisclosed amount and confirmed it was in conversations with Petrobras to find a solution for its fertilizers plants, which are a lease from the Brazilian state-owned energy major.

“Negotiations with main creditors continue constructively, and we hope to reach an agreement within the period of up to 60 days granted by the mediation,” said Noronha on Monday.

“The mediation process guarantees an organized environment so that we can continue negotiations with other creditors in a structured manner, aiming for a negotiated solution, which we believe to be the best alternative for all parties involved.”

Front page picture: Unigel’s facilities in Sao Jose de Campos, state of Sao Paulo
Source: Unigel