Brazilian court to approve loan for engineering firm OAS -sources

Fri Jun 5, 2015 11:11am EDT
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By Guillermo Parra-Bernal

SAO PAULO, June 5 (Reuters) - A Brazilian court is expected to approve a debtor-in-possession loan to engineering firm OAS SA, which has filed for bankruptcy protection, as early as next week, two sources with knowledge of the deal said on Friday.

The judge overseeing the bankruptcy process could free up the so-called DIP loan of 800 million reais ($252 million) after court-appointed administrator Alvarez & Marsal Holdings LLC said OAS is ready to obtain the financing, the first source said.

Canada's Brookfield Asset Management is extending the loan to OAS, which will set aside a 24.4 percent stake in infrastructure company Invepar as collateral, said both sources, who spoke on condition of anonymity.

The DIP loan, a lending facility that creditors extend to distressed companies during their judicial recovery process, was announced in May.

A spokeswoman for OAS declined to comment. Efforts to reach both Alvarez & Marsal and the judge in charge of the process were unsuccessful.

OAS has struggled to tap capital markets in the wake of accusations it was among the companies that participated in a corruption scheme at state-run oil producer and key client Petroleo Brasileiro SA. OAS has denied any wrongdoing.

The company filed for bankruptcy protection in a São Paulo court in March to facilitate the restructuring of 8 billion reais in debt owed by nine subsidiaries.

The first source said the judge is expected to endorse the loan, although he noted that some creditors could ask for the financing to be rejected. OAS has until June 22 to present a restructuring plan, which also needs to be approved by the court.   Continued...