Unigel creditors demand early debt repayment, complicating struggles for chemical giant

Unigel Participações, a major player in the Brazilian fertilizer industry, has been dealt a significant blow by its creditors. In a recent development, creditors declared the early maturity of the company’s local bonds, following a failure to reach an agreement. This decision came to light after a meeting on Wednesday, where bondholders chose not to extend a 90-day standstill agreement that had just expired, as per the meeting minutes obtained by Bloomberg News.

The financial challenges for Unigel have been escalating in recent months. The company has missed payments on its bonds denominated in both U.S. dollars and Brazilian real. This situation has been exacerbated by declining global fertilizer prices, which have adversely affected the company’s earnings. Additionally, Unigel is grappling with the impact of high interest rates, further intensifying its cost pressures.

Amidst these financial difficulties, Unigel has faced downgrades from ratings firms, being labeled in default. The company has not yet disclosed its financial results for the second and third quarters of the year, and there is a growing concern over its ability to meet its financing needs for 2023 and 2024.

In response to these challenges, Unigel, which declined to comment on the recent developments, has enlisted the services of Moelis & Co and two legal advisers to negotiate a restructuring deal with its creditors.

Founded by Henri Slezynger, a Belgian-born Brazilian who studied chemical engineering at MIT, Unigel has been a prominent name in the chemical industry. The Slezynger family, whose fortune is valued at approximately $2 billion according to the Bloomberg Billionaires Index, owns the company through a holding entity.

The company’s dollar bonds, which were trading above par in January, have experienced a drastic decline, being valued at around 34 cents on the dollar as of Wednesday. This represents one of the most substantial losses this year in percentage terms among emerging-market companies.

Adding to Unigel’s woes, S&P Global Ratings has rated the company in default following its failure to make a $23.2 million interest payment on the dollar bonds, even after the expiration of a grace period. Additionally, Fitch Ratings has withdrawn its credit score for Unigel, reflecting the mounting concerns over the company’s financial stability and future prospects.