November 13, 2018 / 1:51 PM / a month ago

UPDATE 1-Odebrecht construction unit prepares $3 billion restructuring -paper

(Adds Odebrecht and Rothschild comments)

RIO DE JANEIRO, Nov 13 (Reuters) - Odebrecht Engenharia e Construcao (OEC), the construction unit of Brazilian conglomerate Odebrecht SA, is preparing to restructure $3 billion in bonds, newspaper Valor Economico reported on Tuesday.

A formal announcement is being planned for the end of November when $11.4 million of interest payments will be due, the paper added, without saying how it obtained the information.

OEC is being advised by Moelis & Co, while bondholders, who have started to form a centralized negotiating bloc, are being advised by Rothschild & Co SCA, the paper reported.

In a statement, OEC said it was using a 30-day grace period for an Oct. 25 payment on 2025 bonds to consider its financial options.

"During the grace period, OEC will analyze solutions for its short- and long-term financial situation within the challenging construction and engineering market," the company said.

Rothschild declined to comment. Moelis did not respond to a request for comment.

According to the paper, the most likely outcome will be a restricted restructuring, in which OEC suppliers and commercial counterparties will not be directly affected.

Parent company Odebrecht has been battered by revelations of a colossal graft scheme it orchestrated across Latin America. The OEC unit has been hit particularly hard by a downturn in government infrastructure spending.

OEC's construction backlog has shrunk some 50 percent since the end of 2014. In August, Odebrecht's chief executive said the company was open to bringing in a foreign partner for its construction unit. (Reporting by Gram Slattery Editing by Chizu Nomiyama and Bernadette Baum)

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