May 22, 2018 / 10:09 PM / a year ago

UPDATE 2-Brazil's Odebrecht creditors agree to $710 mln new loan -sources

(Updates with details of agreement)

By Carolina Mandl and Rodrigo Viga Gaier

SAO PAULO/RIO DE JANEIRO, May 22 (Reuters) - Leading bank creditors of Brazilian engineering conglomerate Odebrecht SA have reached an agreement to extend a new loan package that will allow the repayment of $144 million its construction unit owes to bondholders, three sources with knowledge of the matter told Reuters.

Brazil’s two top lenders, Itaú Unibanco Holding SA and Banco Bradesco SA, have committed to lending 2.6 billion reais ($710.7 million), the sources added, asking for anonymity because talks are still private.

Loan contracts are being revised by banks and company lawyers but have not yet been signed, according to the sources.

Although all banks have already approved loan terms within their credit committees, last-minute disagreements could still derail the transaction, the sources added.

State-controlled Banco do Brasil SA, development bank BNDES and Banco Santander Brasil SA have also agreed to the outlines of the loan and how the collateral would be divided among the banks, according to the sources.

To approve new loans to Odebrecht, some former loans that were not guaranteed received new collateral, as is the case of BNDES, two sources said.

Around 10 billion reais worth of shares in petrochemical company Braskem, currently owned by Odebrecht, will serve as collateral to cover around 10 billion reais in bank loans.

Banks may seize Braskem shares and sell them if not repaid by May 2020, according to one of the sources.

If the agreement goes through, Odebrecht will get an additional year to repay some loans, one of the sources added.

Banco do Brasil, Bradesco, Itaú and Santander did not immediately comment. Odebrecht said it is still in negotiations with banks.

Friday is the last day of a 30-day grace period for the repayment of a 500 million-real Odebrecht Engenharia e Construção bond that matured on April 25.

If the bond is not repaid, bondholders may declare a default and could trigger early repayment of almost $3 billion of dollar-denominated bonds issued by the Brazilian company.

Newspaper Valor Economico reported on Tuesday that Odebrecht, which has been implicated in one of Latin America’s largest corruption scandals, had reached a preliminary agreement to pay 2.7 billion reais in damages to federal authorities in Brazil. ($1 = 3.6584 reais) (Additional reporting by Tatiana Bautzer; editing by Cynthia Osterman and Lisa Shumaker)

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