Cleary Gottlieb Steen & Hamilton LLP

01/21/2021 | News release | Distributed by Public on 01/21/2021 11:56

Odebrecht in Complex Debt Restructuring

Cleary Gottlieb represented Odebrecht Engenharia e Construção S.A. (OEC) in a complex restructuring of the company's approximate $3.4 billion aggregate principal amount of notes.

The restructuring had the support of more than 73% of the principal amount of the existing notes and was implemented through a Brazilian extrajudicial restructuring plan (the EJ plan). This is the third time an EJ plan has been used to restructure bonds issued in the international markets. Cleary worked in the prior EJ plan for Odebrecht Oil and Gas - the oil and gas services subsidiary of the Odebrecht Group.

Pursuant to the terms of the restructuring, the existing notes were cancelled for a combination of the issuance of new series of senior unsecured notes, each representing 45% of the sum of principal and unpaid interest of the corresponding existing notes and a participatory debt instrument issued by a new holding company that entitles holders thereof to a share of future distributions to be made by OEC, with an initial face amount representing 55% of the sum of principal and accrued and unpaid interest of the existing notes.

In addition to being one of the largest restructurings of a Brazilian company, the restructuring involved a number of novel structures, particularly with respect to the mechanics for the solicitation of votes for the EJ plan, the mechanics and structure of the instrument, and the PIK interest provisions applicable under the new senior unsecured notes.

Cleary's work on the restructuring started in December 2018 and culminated with a closing in January 2021. Cleary also represented the company in the Chapter 15 proceedings to seek recognition of the EJ plan in the United States.

OEC is the construction services arm of the Odebrecht Group and Latin America's second-largest engineering and construction company. Over the past few years, the company has been suffering liquidity constraints as a result of, among other factors, the implications and fines arising from the Car Wash Operation (Operação Lava-Jato) and the ongoing crisis related to the infrastructure, engineering, and construction industries in the company's key markets.