Braskem Plays Down Mooted Sale Plans

30.08.2021 - Brazilian petrochemical producer Braskem has sought to play down reports that its shareholders are close to selling it. The Bloomberg news agency said last week that the company’s two major shareholders, Novonor (formerly known as Odebrecht), and Petrobras are both actively planning to divest their stakes.

Braskem said it is “not aware of the information referred to in the news and, as mentioned in other opportunities, it is not part of any discussions by its shareholders about the sale of its equity stake.”

According to Bloomberg’s sources, an option considered in 2019, calling for the two principal owners (Novoner 38% and Braskem 36%) to launch a coordinated public share sale and divest their stakes bit by bit on the market, is back on the table – the same procedure Petrobras used to sell its fuel distribution unit.

The public share sale option is thought to present some complications, however, as the Novonor-Petrobras shareholder pact would need to be overhauled, the share classes unified and corporate governance improved for a possible listing on the Novo Mercado segment of the Sao Paulo exchange, the news agency said.

Earlier strategies reportedly still under consideration are said to include divestment through private transactions, although Bloomberg noted that this is “becoming pricey” for would-be buyers, as Braskem’s market value has more than doubled this year to $7.8 billion.

An alternative plan would be to break up the chemical producer into chunks that could appeal to appeal to buyers not interested in the entire business. The danger is of this, however, is that the owners could be left with some hard-to-sell assets.

Novonor and Petrobras remarks noncommittal

Saying it was surprised by the news reports, Braskem solicited comments from the two shareholders. In its statement, Novonor acknowledged that it is considering “a potential transaction involving its stake in Braskem and is evaluating potential structures for such. transaction.” However, it added that “there are not enough elements to ensure the completion of any transaction, nor has any structure been defined for this purpose.”

In a statement of its own, Petrobras said, “there is no definition or decision on the form of divestment of the company’s participation” in Braskem, though it did confirm it had engaged investment banker JP Morgan to provide financial advice “on the eventual and future transaction related to its participation in the company.” Bloomberg reported that Novonor had hired Morgan Stanley to sell its stake.

Selling its Braskem shares could provide a way out of the morass for the former Odebrecht, as it struggles to pay fines racked up in Brazil’s wide-reaching Carwash corruption scandal. As collateral for the loans it received from Brazilian banks, reports said the construction group has pledged shares in the chemical producer.

Author: Dede Williams, Freelance Journalist