SAO PAULO, Nov 4 (Reuters) - Odebrecht Agroindustrial SA, the sugar and ethanol unit of engineering conglomerate Grupo Odebrecht SA, has hired Rothschild and Virtus BR Partners to advise on the refinancing of 9 billion reais ($2.4 billion) in bank loans, according to two sources with direct knowledge of the plans.
Rothschild and Virtus, a São Paulo-based financial advisory boutique specializing in advising distressed firms, have already contacted all banks involved in the process and obtained a standstill on payments, said one of the sources, who requested anonymity since the plan remains private.
The refinancing, which will seek to stretch out maturities on outstanding loans, is conditional on a planned capital injection of 836 million reais that Grupo Odebrecht will put into the unit that was announced last month, Odebrecht Agroindustrial said in a statement to Reuters.
Odebrecht Agroindustrial, Brazil’s third-largest sugarcane milling group, declined comment on the hiring of financing advisers. Rothschild and Virtus also declined to comment.
The plan comes as parent Grupo Odebrecht grapples with a probe into corruption at state-controlled firms. Prosecutors allege that Grupo Odebrecht and more than a dozen peers paid bribes to members of Brazil’s ruling coalition in exchange for contracts with oil producer Petróleo Brasileiro SA and other state companies.
Formerly known as ETH Bioenergia SA, Odebrecht Agroindustrial was founded in 2007 to take advantage of rising government incentives for cleaner energy producers. However, erratic biofuel market rules and a policy shift towards offshore oil exploration in recent years has hampered the sector, which is now struggling with its large size and high leverage.
Still, improved returns from sales at home and abroad this year are unleashing the first major flurry of investment in Brazil’s struggling ethanol industry in nearly a decade, with at least nine companies, including Odebrecht Agroindustrial, expanding or building new capacity.
The company, which owns nine ethanol mills in Brazil, had a net loss of 1.2 billion reais during the 2013-2014 crop.
$1 = 3.7691 Brazilian reais Editing by Guillermo Parra-Bernal and Bill Rigby