Atvos nearing sale process
The third-largest producer of sugar and ethanol in Brazil, Atvos, is likely to be offered for sale in the near term, as soon as the company and parent Odebrecht win approval for their judicial restructuring plans. The conglomerate believes the business is worth R$7.3 billion to R$13 billion, considering its current production capacity and the maximum it can achieve, sources say. Atvos supplies 7% of the ethanol in the country, operating at 70% of its capacity.
Talks about the fate of Atvos experienced a shift early this year, and the conglomerate is nearing a deal with creditor banks - of the group and the sugar-and-ethanol concern. Reaching consensus on the matter also means a broad agreement has been attained for the conglomerate's entire liability of R$98 billion.
Odebrecht hoped to count on four to five years to sell the business, which was created in 2007 with the name ETH Bioenergia. However, after the Brazilian Development Bank (BNDES) made some demands, creditor banks may push for a sale at any point after the judicial restructuring plan is certified.
The financial restructuring design had to be changed in a little over a month. Just as everything was nearing a definition in the first half of January, the development bank introduced some questions that had not been raised but which were present throughout debt-restructuring talks before the bankruptcy protection filing, about a year ago.
BNDES argues that selling Atvos before restructuring the debt or swapping management is critical, as it would remove Odebrecht from the business if ensuring a divestment were not possible.
Atvos stated R$11 billion in debts to third parties. The creditors understood that selling before the judicial restructuring would be impossible. No buyer will take over debts in arrears without a solution. Odebrecht yielded to banks' anxiety of getting paid as early as possible.
The final plan will likely state that half of Atvos's debt will receive an extension while the rest becomes a hybrid tool - neither shares nor traditional debt. Such commitments have no maturity and function as a profit-sharing debenture (DPL).
The company will receive 2.5 years of grace on the debt's interest, meaning it will not have to service the debt, which will be added to the overall commitment upon maturity. The debt will only be converted into DPLs during a sale or whether an equity investment fund (FIP) is structured to manage Atvos. Odebrecht will keep 10% of equity in both...
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