Braskem Eyes Bonds for Quattor Refi

Following last week’s acquisition, Braskem is considering reprofiling Quattor’s debt with a dollar bond issue later this year, CFO Carlos Fadigas tells LatinFinance. Braskem has a leverage ratio of 2.7x and its debt load, including dollar-denominated bonds and loans, has an average maturity of close to 7 years. By contrast, Unipar debt is exclusively held by local banks, with no bonds or debentures, and a leverage ratio of over 10x prior to acquisition, says Fadigas. Braskem is buying, along with other assets, Unipar’s 60% stake in Quattor for BRL870m and assuming BRL6.7bn in net debt. Added to Braskem’s obligations, the merged company’s net debt is BRL13.2bn says Fadigas. Estimated Ebitda is around BRL3bn, leaving the combined entity with a leverage ratio of 2.7x-3.0x. This assumes Braskem raises BRL4bn-BRL5bn in an upcoming capitalization from existing shareholders, including Petrobras and Odebrecht. The pair committed BRL3.5bn and minority holders may purchase up to an additional BRL1.5bn in Braskem stock. The equity capital raising process is likely to take up to 90 days, says the CFO. Fadigas says Braskem’s outstanding 10-year notes are trading to yield close to 6.6%, which he sees as attractive and a good target for a new bond. Still, he notes, with over BRL8bn in cash following the capitalizations, the combined entity will have plenty of breathing room to meet its obligations without issuing bonds. Moody’s affirmed Braskem’s Ba1 rating and stable outlook Friday, noting that the acquisition of Quattor is accretive. Moody’s spots initial leverage of the combined entity at 3.2x, dropping to 3.0x this year. Fadigas says Braskem plans to meet Quattor’s Brazilian lenders – many of them the same as Braskem’s banks, including Banco do Brasil and Bradesco – to discuss a debt re-profiling. For the acquisition, Braskem used Morgan Stanley and Bradesco BBI. Unipar hired Estater and Petrobras hired BTG Pactual.