Brazil’s Odebrecht mulls sale of Braskem’s majority stake: Reuters

Grupo Odebrecht SA, Latin America’s largest engineering conglomerate, is considering selling the majority stake it has in petrochemical producer Braskem SA, according to three sources with direct knowledge of the situation.

Odebrecht, controlled by the namesake millionaire Brazilian family, could exit Braskem in a joint transaction with state-controlled oil producer Petroleo Brasileiro SA, said the sources, who requested anonymity because the plan remains under study.

Odebrecht denied in an e-mailed statement to Reuters any intention to sell the stake in Braskem. Petrobras did not return requests for comment.

Petrobras decided to sell a 36-percent stake in Braskem in January and is being advised by investment banking firm Banco Bradesco BBI, the sources said. Since then, at least three companies have shown interest on the stake: Canada’s Brookfield Asset Management Inc, Saudi Arabian Oil Co, known as Saudi Aramco, and an unidentified Chinese petrochemical firm, according to the first two sources.

Still, the Petrobras process has stalled as acquirers wait for a decision by Odebrecht about a possible sale of the 38 percent it owns. A sale of the majority of the company would be easier and could fetch a higher price, because both firms could get a premium for their stake, the same sources added.

At current market prices, the combined value of the stake that Petrobras and Odebrecht have in Braskem, Latin America’s largest maker of resins, is worth 11.1 billion reais (US$3.05 billion), according to Thomson Reuters Data.

A precondition for the Petrobras stake sale is that Odebrecht accepts the buyer as partner in Braskem. Odebrecht’s indecision has the Petrobras process paralyzed, the two sources added.

Salvador, Brazil-based Odebrecht is currently under investigation in Brazil for its involvement in a graft and influence-peddling scandal known as “Operation Car Wash.” Family member Marcelo Bahia Odebrecht, who ran the company since 2008 until recent months, was sentenced on Tuesday to about 19 years in prison in connection to the scandal.

The scandal has undercut Odebrecht’s access to financing, and the group – which has more than a dozen business units from rig leading to ethanol production and construction – is currently seeking to ease a swelling debt burden.

Although there are no U.S. companies currently interested in the deal, some of the possible acquirers of Petrobras’ stake in Braskem in a wider sale process could be worried about possible impacts of an association with Odebrecht considering the Foreign Corrupt Practices Act (FCPA), according to one of the sources.

Folha de Sao Paulo newspaper reported this Friday that Odebrecht’s stake in Braskem is being targeted by banks as collateral for Odebrecht Agroindustrial‘s US$2.5 billion debt renegotiation, without saying how it got the information.

Update: Last month, Reuters reported Petrobras was considering the sale of a natural gas pipeline in Brazil. The potential bidders were said by local media to include Brookfield and Canada Pension Plan Investment Board.

By Tatiana Bautzer and Guillermo Parra-Bernal

(Editing by Nick Zieminski)

(This story has been edited by Kirk Falconer, editor of PE Hub Canada)

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