New Agreement with Banks Gives Odebrecht a Two-Year Relief

04/26/2017 - 12h22

An agreement signed by Odebrecht with major banks in Brazil will allow the company to receive an injection of money to maintain its business for another two years, the organization said on Tuesday (25).

The money will come from the sale of Odebrecht Ambiental. The R$ 2.5 billion (US$ 794 million) that Brookfield will pay to get 70% of the company would have to be destined to repay the company's debt with a group of banks. In exchange, Odebrecht would redeem shares of the petrochemical company Braskem that were pledged as collateral.

But with falling revenues, the group needs the money to bail out some of its companies, especially the construction business.

As a result, the banks agreed to release Odebrecht from the commitment to pay now part of the financing.

The group's debt is billionaire: it was R$ 93 billion (US$ 29 billion) at the end of 2016, when the cash was at R$ 17 billion (US$ 5.3 billion). The sale of Ambiental will help reduce indebtedness.

According to Odebrecht, the amount will be enough to maintain its operations while trying to sell other assets. The organization expects its construction company will begin again to win contracts in two years.

Targeted by Operation Lava Jato (Car Wash), with its former president Marcelo Odebrecht imprisoned since 2015, Odebrecht has reached an agreement with Brazilian, American and Swiss authorities, confessing to the practice of various crimes, such as political bribes.

Translated by MARINA DELLA VALLE

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