Brazil banks to extend Sete Brasil $3.6 bln repayment deadline -report

RIO DE JANEIRO, Oct 20 (Reuters) - The five Brazilian banks owed $3.6 billion from Sete Brasil, a company set up to build offshore drill-rigs for state-led oil company Petroleo Brasileiro SA, will extend a repayment deadline into next year, the Estado de S.Paulo newspaper reported on Tuesday.

The debt, owed to state-led Banco do Brasil SA and state-owned Caixa Economica Federal as well as Itau Unibanco Holding SA, Banco Santander Brasil SA and Banco Bradesco SA, was supposed to have been repaid on Monday, Estado said.

The loan repayment deadline has already been extended twice before and talks about repayment over the last two months have intensified in recent days, the paper reported, adding that the Banks are counting on new money being available to Sete Brasil next year to pay the loans and reduce their losses.

“It is not an advantage for the banks to execute repayment,” a source close to discussions told Estado. “An accord should be signed by the beginning of the year.”

Sete Brasil, set up to build and lease as many as 28 oil platforms for Petrobras, as the state-led oil company is known, has had its ambitions scaled back drastically in the last year in the face of a Petrobras corruption scandal, a plunge in oil prices and a contraction in investments.

After protracted negotiations and increasing Petrobras demands for cost reductions, the Sete Brasil rig construction plan has been cut to 18 with 14 of those rigs being built and owned by Sete Brasil and the remaining four being sold, Estado said.

Sete Brasil press officials were not immediately available, when called by Reuters.

Bradesco and Santander declined to comment.

Itau Unibanco, Caixa Economica Federal and Banco do Brasil did not immediately respond to a requests for comment. (Reporting by Jeb Blount Editing by W Simon)