Ad Hoc Group of Bondholders in Unigel’s Restructuring

Cleary Gottlieb represented an ad hoc group of creditors of Unigel Participações S.A. (Unigel) and certain of its subsidiaries in the restructuring of approximately $869.6 million of indebtedness.

The ad hoc group was comprised of nine leading financial institutions.

Unigel is one of the largest chemical companies in Brazil, holding a leading position in the production of styrenics, acrylics, and nitrogen fertilizers in Latin America.

The closing of the restructuring was consummated on January 30, 2025, and follows the confirmation of two extrajudicial reorganization (recuperação extrajudicial) plans filed with the 2nd Bankruptcy State Court for the São Paulo District of the State of São Paulo (the EJ plans). The U.S. Bankruptcy Court for the Southern District of New York granted recognition of the EJ plans under chapter 15 of the U.S. Bankruptcy Code.

Under the EJ plans, Unigel’s creditors elected among various consideration options, including the option to contribute new money in exchange for a combination of first-lien 13.5%/15.% senior secured PIK toggle notes due 2027, depositary receipts representing equity in Unigel’s parent company (HoldCo), second-lien 11%/12% senior secured PIK toggle notes due 2028, and junior 15% participating titles due 2044. The new money notes and second-lien notes are secured by liens over substantially all assets of the Unigel group, including shares, equipment, plants, buildings, receivables, and land, with springing junior liens over spare parts and inventory. The participating titles may convert into 95% of the fully diluted equity of HoldCo upon the occurrence of certain conversion events, including failure to fully amortize or refinance the participating Tttles by December 31, 2029, subject to a one-year extension.

The ad hoc group and other creditors committed to backstop up to $100 million of the new money notes.

Creditors providing new money received 50% of the equity in HoldCo, while the existing shareholder of Unigel retained the remaining 50%, thereby sharing economics and governance rights. According to the new governance structure, creditors appointed three directors, the existing shareholder appointed three directors, and a jointly appointed independent director will serve as chair of the board.