BTG Pactual has become Odebrecht Engenharia e Construcao’s (OEC) largest bondholder, after having purchased Gramercy’s position, and is planning to contribute up to USD 100m in new money, as the Brazilian construction firm enters bankruptcy protection, two sources close to the matter said.

A spokesperson at BTG declined to comment on the matter. A representative from Gramercy did not respond to a request for comment.

OEC filed for bankruptcy protection today, seeking to restructure BRL 24.89bn (USD 4.5bn) in debt, according to a court document. Judge Paulo Furtado de Oliveira Filho will handle the case, in the Second Bankruptcy Court of Sao Paulo.

The Brazilian construction company and Novonor subsidiary completed a previous debt restructuring in January 2021, but the extrajudicial proceeding “was not able to generate sufficient funds to pay its debts,” it said in the petition filed today.

The notes issued by OEC Finance and a profit-sharing debt instrument issued by a “HoldCo” during the previous restructuring contributed to “substantially” increase the company’s debt, according to the same petition.

The OEC debt restructuring completed in 2021 involved seven series of bonds, replaced by new USD-denominated bonds, at 45% of face value.

The remaining 55% was exchanged for USD-denominated perpetual profit-sharing bonds due September 2058. The profit-sharing bond gave holders the right to 50% of future dividend distributions to be made by OEC, including part of the proceeds in the event of a potential sale of the construction company, as reported.

OEC’s bondholders hired Moelis & Company as financial advisor, and Brazilian law firm Padis Mattar Advogados and White & Case to represent their interests, while OEC retained E.Munhoz Advogados as legal counsel, Lazard as a financial advisor, and Cleary Gottlieb as international legal counsel, according to the first source.