Shares of Braskem, one of Brazil's largest petrochemical companies, closed down 6.71% on Monday (24) at R$ 4.73, the day the company filed for an out-of-court restructuring (recuperação extrajudicial, a court-supervised debt renegotiation that avoids formal bankruptcy) to rework roughly US$ 10.9 billion (R$ 56 billion) in debt. B3, the São Paulo stock exchange, announced that Braskem's shares will be removed from 18 of its indices, including the benchmark Ibovespa.
The exclusion covers both common (BRKM3) and preferred (BRKM5) shares and takes effect after the close of regular trading on Tuesday (25), at the closing price. According to B3, the move follows the reclassification of the shares under the "extrajudicial recovery" designation. Besides the Ibovespa, Braskem will leave the theoretical portfolios of IGCX, ICO2, IBXX, IMAT, IGCT, IBRA, INDX, ISEE, ITAG, IBHB, IBEP, IBEW, IBBE, IBBC, SMLL, IBBR and SCSR, with its weight redistributed proportionally among the remaining assets in each index.
Shares keep trading, but index funds must sell
Braskem's shares will continue to be listed and traded normally on B3. What changes is that they leave the indices' theoretical portfolios, which forces index and pension funds that track those baskets to sell the stock. "When B3 removes a company from that basket, everyone who follows the index has to sell the paper, not because they assessed the company, but because the fund's rulebook requires it," Matheus Matos, partner at MA7 Capital, told G1.
Analysts interviewed by G1 said the index exclusion is a side effect of the restructuring itself. "Although this move is negative, its impact tends to be secondary given the complex and delicate scenario the company faces," said Rodrigo Boselli, equity manager at Rio Bravo Investimentos. For Gustavo Assis, CEO of Asset Wealth Management, "the index exclusion is a consequence of this scenario, not the origin of the problem."
The petition was filed with the 2nd Bankruptcy and Judicial Recovery Court of São Paulo, backed by creditors representing 39.6% of the claims covered by the restructuring, above the one-third minimum required by Brazilian law. The filing opens a 90-day protection period during which Braskem will negotiate with creditors to reach the simple majority needed to approve the plan.
"Braskem clarifies that the out-of-court recovery has a limited, strictly financial scope and does not cover any obligations of the company with its suppliers, clients and other stakeholders, which remain in force and continue to be honored as usual," the company said in a statement.
According to InfoMoney, the plan provides for an extension of debt maturities, the capitalization of interest during a financial relief period and the possible conversion of part of the claims into shares. The move has the support of Braskem's main shareholders, Novonor (through the Shine fund) and state-controlled Petrobras. The restructuring runs in parallel with that of Mexican subsidiary Braskem Idesa, which sought Chapter 11 protection in the United States.