Odebrecht to Use Peru Proceeds to Pay Project Creditors

Bondholders of Odebrecht SA’s builder unit won’t see any of the money the troubled company is getting from a long-delayed sale in Peru, one person with direct knowledge of the matter said. Of the $1.4 billion price tag of the Chaglla hydroelectric plant in 2017, Odebrecht will likely get about $640 million, Bloomberg News reported. Half of that will go to pay damages to the Peruvian government, Justice Minister Vicente Zeballos said last week. Almost all the rest will go to creditors of the project itself, the person said, asking not to be named because the matter isn’t public. While proceeds from the Chaglla sale won’t go directly to bondholders who are already in informal talks with the company for a debt restructuring, the agreement with the Peru government will reduce Odebrecht’s future debt payments, helping to preserve cash, the person said. It also allows Odebrecht to sell other projects in the country and bid for new ones, contributing to revenue generation, according to the person. Read more