May 22, 2018 / 2:18 PM / 5 months ago

Brazil's Odebrecht makes progress in bank talks as bond deadline nears

SAO PAULO, May 21 (Reuters) - Brazilian engineering conglomerate Odebrecht SA is making progress in talks with leading bank creditors about a potential loan package days before the due date to repay $144 million its construction unit owes to bondholders, three sources with knowledge of the matter told Reuters.

An agreement may be reached as soon as this Tuesday, the sources added, asking for anonymity because the negotiations are private.

Brazil's two top lenders, Itaú Unibanco Holding SA and Banco Bradesco SA, are discussing a joint 2.6 billion reais ($710.7 million) loan.

State-controlled Banco do Brasil SA has agreed to the outlines of the loan and how the collateral would be divided among the banks, but Bradesco and Itaú still need to agree on the terms, two of the sources added.

Banco do Brasil, Bradesco and Itaú declined to comment. Odebrecht said it is still in negotiations with banks.

Friday is the last day of a 30-day grace period for the repayment of a 500 million-real Odebrecht Engenharia e Construção bond that matured on April 25.

If the bond is not repaid, bondholders may declare a default and could trigger early repayment of almost $3 billion of dollar-denominated bonds issued by the Brazilian company.

Also on Tuesday, newspaper Valor Economico reported that Odebrecht, which has been implicated in one of Latin America's largest corruption scandals, had reached a preliminary agreement to pay 2.7 billion reais in damages to federal authorities in Brazil. ($1 = 3.6584 reais) (Reporting by Carolina Mandl and Tatiana Bautzer; editing by Jonathan Oatis)

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