Brazils Braskem creditors, shareholders target Wednesday deadline for debt deal, sources say

SAO PAULO, Nov 9 (Reuters) - Shareholders and creditors of Brazilian petrochemical company Braskem are aiming to conclude out-of-court restructuring talks by Wednesday, two people close to the negotiations over the multibillion-dollar deal told Reuters on Monday.

Braskem faces a November 22 court deadline to present an approved restructuring plan for close to $11 billion in debt. If it misses that deadline, it will face a formal judicial recovery, a type of court-supervised bankruptcy protection that all parties want to avoid.

An attempt to reach an agreement with bondholders in New York failed last week after shareholders and bondholders disagreed on the scale of the deal, said the people, who spoke on condition of anonymity because discussions are private.

The planned recapitalization of the company controlled by private equity firm IG4 and oil producer Petrobras includes a capital injection by shareholders and a debt-to-equity conversion by creditors, they said.

One person said the group is now working toward a total capitalization agreement of around $4 billion, roughly $1 billion less than previously discussed.

The second person said bondholders rejected a $3.8 billion debt-to-equity conversion after Petrobras lowered its planned cash injection from $1.7 billion to $1.4 billion.

Petrobras and IG4, which became co-controllers of Braskem earlier this year, declined to comment.

In a statement, Braskem said "it maintains its market communications in compliance with applicable regulations" and that "relevant developments will be disclosed in due course through the company's official channels."

While Wednesday's deadline is not legally binding in court, it represents a flexible target agreed by both parties, the people said. The timeline has been pushed back from an original October deadline and could be revised again, the people added.

In late August, Braskem filed for an out-of-court restructuring involving close to $11 billion in debt. The financial filing did not affect obligations to suppliers or customers.

The company has faced years of severe cash pressure after an environmental disaster at one of its salt mines, compounded by a prolonged downturn in global petrochemical prices.

(Reporting by Luciana Magalhaes in Sao Paulo; Editing by William Schomberg and Matthew Lewis)

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