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Unigel creditors sign NDA, bondholders make counterproposal

Creditors of Unigel (C/CCC-) have started signing a non-disclosure agreement (NDA), as debt restructuring talks move forward, three sources close to the matter said.

Bondholders signed the NDA two weeks ago, according to the first source, and have already presented a counterproposal to the Brazilian petrochemical producer, the first source and the second source said, without elaborating.

Holders of Unigel’s BRL 500m (USD 98.95m) in domestic bonds signed the NDA last week, according to the third source.

A spokesperson at Unigel declined to comment.

Unigel presented an initial version of a proposal to creditors seeking a grace period and a debt maturity extension, “but with no haircut to the principal — the principal is preserved,” the first source said.

The company will also need new money for capex, as reported.

“Everything has been discussed, the parties will have to reach a reasonable term that fits into the business plan,” the first source said.

Unigel and its creditors “are still far away from an agreement,” the second source said.

The company has been facing deteriorating market conditions in both the chemical and agro segments, and the reversal of this downward cycle may begin to occur in 2025, according to the first source.

Unigel has mandated Citi to seek funding solutions for a green hydrogen production project and has also hired an advisor focused on the chemical sector to sell its operation in Mexico, as reported.

For its debt restructuring, Unigel hired Moelis & Company as financial advisor, with Felsberg Advogados and Simpson Thacher & Bartlett as legal advisors. The ad hoc group of Unigel international bondholders hired Houlihan Lokey as a financial advisor, and Munhoz Advogados and Cleary Gottlieb as legal advisors. The group of domestic bondholders has hired Valuation Consultoria Empresarial as financial advisor, and Lefosse Advogados as legal advisor.

Unigel had a net debt of BRL 3.3bn as of 1Q23, according to its most recent published results.

The petrochemical producer did not pay the coupon on its USD 530m 8.75% 2026 bond due 1 October and entered a 30-day grace period.

Its 2026 bonds last traded at 35 on 20 October, according to MarketAxess.