Brazilian conglomerate Odebrecht SA's will use part of a 2.6 billion reais (US$709.96 million) bank loan to repay a loan in arrears with state-controlled bank Banco do Brasil SA, according to sources quoted by Reuters. Under the terms of an agreement announced on Friday, the engineering group, at the center of a corruption scandal, will repay a 100 million reais debt to Banco do Brasil.
Odebrecht said on Friday that Itaú Unibanco Holding SA and Banco Bradesco SA, Brazil's top two lenders, will give Odebrecht a joint loan of 2.6 billion reais. The money will be disbursed in two installments, the first 1.7 billion reais. One source said the company will pay 135 percent of inter-banking basic rates on new loans.
The loan agreement gives the engineering group a maximum two-year relief after being close to default. Odebrecht's net debt, excluding petrochemical company Braskem, totals 49 billion reais.
The conglomerate's debt refinancing also involved Banco do Brasil SA, Banco Santander Brasil SA and development bank BNDES, which had to agree on changes to collateral.
Shares of petrochemical company Braskem SA were given as collateral to new loans. Although Braskem's shares already served as collateral, its price increase in the recent months allowed Odebrecht to get more loans.
As part of loan approval, some former loans that were not guaranteed received new collateral. Banks may seize Braskem shares and sell them if not repaid by May 2020, according to one of the sources. Braskem said in a securities filing that Odebrecht's 38.3% stake is serving as collateral.
Odebrecht will also use part of the loans to pay leniency agreement fines, according to the statement. In December 2016, Odebrecht and its subsidiary Braskem agreed to pay at least US$3.5 billion to authorities in the United States, Brazil and Switzerland. At the time, it was the largest penalty in a foreign bribery case. In Brazil, the company has pledged to pay 3.8 billion reais (US$1.04 billion) to federal authorities and recently the company reportedly reached an agreement with Brazil's federal comptroller over the final fine value.