Brazilian cement maker Cimento Tupi SA hired the investment bank Rothschild to advise it on a possible debt restructuring, according to three people with knowledge of the matter.
The company, based in Rio de Janeiro, is now seeking to hire legal advisers, according to the people, who asked not to be identified because they weren’t authorized to speak about the matter.
Tupi’s $185 million of overseas bonds have plummeted 60 percent this year to 35 cents on the dollar as the construction industry was roiled by accusations that some builders paid bribes to executives at the state-controlled oil company in return for contracts. Tupi hasn’t been accused of wrongdoing.
Cesar Lage, Tupi’s chief financial officer, didn’t return telephone or e-mail messages seeking comment on the hiring of Rothschild, the bond slump and whether the company will make its next interest payment due May 11. Tupi’s press office also didn’t respond to a call seeking comment. Daniel Yunger, a press official who represents Rothschild, declined to comment.
Tupi had 9.4 million reais ($3.18 million) of cash and equivalents as of December, according to data from the company. Fitch Ratings cut Tupi’s rating to CCC, eight levels into junk, on March 20, citing the company’s low cash levels.
Tupi’s case is emblematic of the collateral damage wrought by the investigation in Petrobras, the state oil company officially known as Petroleo Brasileiro SA. It comes at a time when Brazil’s economy is expected to face its biggest contraction in 25 years.
Construction and engineering companies Galvao Engenharia SA and OAS SA, as well as rig supplier Schahin Oil & Gas SA, have all filed for bankruptcy protection after the allegations cut their access to financing.