Light SA expects to reach an agreement with an ad hoc group of USD 600m 4.375% 2026 bondholders by the end of January, according to two sources close to the matter.

For the power transmission subsidiary Light Energia, the energy provider is proposing a plan which includes a reverse auction and the exchange of bonds for new notes, the two sources said.

The release of the blowout materials about the latest negotiations between Light and the ad hoc bondholder group expires on 31 January, according to the second source. As a result, the idea is to reach an agreement before this date, the same source said.

The idea of removing Light Energia from the effects of the bankruptcy has been abandoned, the first source said.

The negotiations gained traction in the last few weeks, the first source said. A draft proposal reflecting the latest negotiations with Light Energia is already circulating among creditors, the second source said.

According to the two sources, Light is expecting to obtain approval of the new proposal from holders representing 60%-65% of its bonds.

The reverse auction and the repayment with new notes would be offered only to bondholders, and not banks or domestic noteholders, the second source said.

Light’s 2026 bonds were issued by both Light Energia (accounting for one-third) and Light SESA (for two-thirds), as reported.

Talks with international bondholders have progressed also with regard to the debt of Light SESA, the power distribution subsidiary, after the holders started signing NDAs at the beginning of this month.

The company has increased the interest rate offered to IPCA inflation benchmark plus 4% and reduced maturity to five years with a three-year grace period, for the portion of the Light SESA debt to be repaid with new bonds under the restructuring plan, according to the latest proposal. The improvements are only valid for creditors who convert 40% of their debt into equity.

On 12 May, Light requested bankruptcy protection, limited to the Light SA holding company, in a maneuver to circumvent rules forbidding concessionaires from requesting bankruptcy, as reported. At the same time, it asked the court to extend the effects of the stay period to Light SESA and Light Energia.

Light’s creditor meeting is scheduled for 21 March, with a second date of 28 March.

The Brazilian energy provider reported BRL 11bn (USD 2.2bn) in debt subject to the restructuring.

A spokesperson for the company declined to comment on the matter.

Light’s USD 600m 4.375% 2026 bonds last traded at 46.625 today, according to MarketAxess.