(Bloomberg) -- Unigel Participacoes, a Brazilian fertilizer maker, has days to hammer out an agreement with creditors it has stopped paying, or else it could find itself on the road to bankruptcy protection. 

On Dec. 6, holders of notes denominated in local currency are scheduled to vote whether to give the company more time to negotiate or to demand immediate repayment. Unigel missed an interest payment that was due in October, and has yet to release results for the second and third quarters. If investors don’t grant the company an extension, they’ll trigger a provision that forces early repayment of its other obligations, including $530 million of US dollar bonds. 

The Brazilian real-denominated debt is just one obligation that Unigel needs to restructure as falling global fertilizer prices and high interest rates at home squeeze its revenue. Local debt creditors had agreed in September to refrain from requiring payment on the 500 million real ($102 million) debt for 90 days.

If an agreement is not reached, Unigel could seek a temporary court protection against creditors, Bloomberg News reported in October. That can be a step before a company effectively files for bankruptcy protection. 

A representative for Unigel declined to comment.

The company is in separate negotiations with holders of the US dollar denominated bonds, after it skipped a payment on the notes in early October. Holders of the bonds had the right to demand immediate repayment after a 30 day grace period that ended Nov. 1, but have so far refrained from doing so. Unigel has hired an additional legal adviser, and remains in talks with both global and local creditors, according to people familiar with the matter, asking not to be identified because conversations are private.

Read more: Chemicals Maker Unigel Hires New Legal Adviser Amid Debt Talks

These risks are a key reason why the dollar-denominated notes have sunk to around 32 cents on the dollar, a 62% loss this year. It’s a quick reversal of fortunes for securities that traded above par in January, and are now the worst performers in a basket of developing-nation peers in 2023, according to data compiled by Bloomberg. 

Without additional funds from creditors, “the company will need some combination of asset sales, an equity injection from its shareholder or a renegotiation of its natural gas supply contracts” to cover its 2023 and 2024 financing needs, Fitch Ratings wrote in a note before withdrawing its credit score on Unigel. 

There’s hope for Unigel. It is controlled by the Slezynger family, which has a fortune valued at around $2 billion, according to calculations by the Bloomberg Billionaires Index. The owners could inject more capital, or sell a stake, or take some other step to satisfy creditors.

“I think it will come down to the willingness from the controlling shareholders to concede to demands or even divest a larger chunk of the business or a combination of both,” said Eduardo Ordonez, a debt portfolio manager at BI Asset Management in Copenhagen. “The fact that the standstill agreement with local creditors hasn’t yielded a resolution is not a good sign.” 

Unigel is proposing to swap the global bonds due in October 2026 for new notes that would be paid in 10 years and in installments, Bloomberg reported last month. S&P Global Ratings rated the company as being in default after it failed to make the $23.2 million interest payment on the dollar bonds, even after a grace period.  

The company must post quarterly results to show that it’s met the terms of its debt, known as covenants, including keeping its debt levels low enough relative to a measure of earnings. Breaking a covenant like that could force it to repay debt early.   

Unigel has been advised by investment bank Moelis & Co on its restructuring talks. 

Fertilizer prices have fallen globally as prices for natural gas, a key input, have been dropping. On top of that, farmers have been delaying buying fertilizer after bumper crops for soybeans and corn have pushed prices for the agricultural commodities lower.  

--With assistance from Cristiane Lucchesi, Daniel Cancel, Clarice Couto and Marina Cavalcante.

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