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Unigel Demands Petrobras Pay for Losses on Cancelled Tolling Contract
July 23, 2024
Chemicals company Unigel, is demanding that Petrobras pays for damages on two leased fertilizer plants that have halted operations since the second half of last year. In December 2023, both Unigel and Petrobras had agreed on a “tolling” contract wherein the state-run petroleum company would supply natural gas in return for fertilizer from Unigel. This would have helped Unigel restart production without concern about fuel prices. However, last month, the deal fell through without taking effect after Brazil’s federal audit court said it could cause a loss of ~$87mn to Petrobras. Unigel’s lawyers have said that it is resulting in significant losses and that they must be “reimbursed in full” by Petrobras. Unigel said the total losses run into the “hundreds of millions” of reals.
Unigel’s 8.75% 2026s are at distressed levels of 28.8 cents on the dollar.
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