The government and some of the largest banks operating in the country are discussing solutions to accelerate Novonor’s exit from control of Braskem, Latin America’s largest petrochemical company, people familiar with the negotiations said.
Novonor, formerly Odebrecht, has been trying to sell control of Braskem for years, without, however, being able to close an agreement.
The group has been pressured to divest because, at the height of the “Lava Jato” operation, it placed its Braskem shares as collateral for R$15 billion in bank debts, including money owed to the National Bank for Economic and Social Development, BNDES. Today, the shares offered as collateral are worth less than a third of the value of the debt.
Instead of a simple exchange of Novonor debt for Braskem shares, as initially proposed, the prevailing idea today among creditor banks is to consolidate these shares in a private participation fund (FIP) controlled by the banks.
The proposed FIP would be managed by an experienced executive with the capital and knowledge to make investments to grow the company and potentially increase its market value, said three people, who requested anonymity because the negotiations are private.
READ MORE: Braskem has third Roberto in four years and cools chances of sale
The Luiz Inácio Lula da Silva government, through BNDES, is leading some of these negotiations, the sources said, with the aim of maintaining influence in the company, through a shareholders’ agreement with Petrobras, Braskem’s second largest shareholder.
In an interview with Reuters, the president of BNDES, Aloizio Mercadante, confirmed his interest in resolving the Braskem impasse.
“There is indeed a solution that is being built, in fact, more than one,” said Mercadante. “All creditor banks are interested, as is Petrobras,” he added, without giving details or specifying a timetable for the negotiations.
Braskem’s other creditor banks, Bradesco, Itaú Unibanco, Banco do Brasil and Santander, declined to comment.
Novonor, which in May said in a statement that it was engaged in selling its stake in Braskem, also declined to comment.
Sources said Novonor would like to maintain a small stake in Braskem, but not all banks agree to this.
The engineering group holds 50.1% of Braskem’s voting shares and 38.3% of total capital.
Due to challenges in the petrochemical sector and a series of domestic problems, including environmental issues, Braskem’s market value fell to around R$12 billion, reducing the value of Novonor’s shares to less than R$5 billion.
“For this debt to be paid, Braskem shares have to appreciate in value,” said a source familiar with the discussions, calculating that the exit price of shares for banks would be around 60 reais, around four times the price current status of actions.
The sale of most of Novonor’s stake to a third party that would share control with Petrobras is not yet completely ruled out, despite a series of failed attempts, the sources said.
However, selling control of Braskem remains challenging given the shareholders’ agreement with Petrobras, according to analysts and people involved in the negotiations.
“Anyone who acquires Braskem will have to deal with a partner whose interests will not necessarily be aligned with theirs,” said Ricardo Schweitzer, an independent financial analyst.
READ MORE: Novonor and Petrobras propose that banks be part of Braskem’s controlling block
Braskem also continues to deal with the fallout from a 2018 disaster in Maceió, where authorities say the company’s extraction of rock salt destabilized the ground, causing cracks in buildings, forcing tens of thousands of residents to leave their homes.
Over the past six years, Novonor has been involved in unsuccessful negotiations with LyondellBasell, as well as Brazilian groups Unipar and J&F Investimentos.
A person familiar with the situation told Reuters that LyondellBasell pulled out of the deal due to uncertainty related to an investigation into the Maceió disaster.
In 2023, Abu Dhabi’s National Oil Co (Adnoc) and Apollo Global Management made a joint offer of up to R$37.5 billion to buy all of the company’s shares, before negotiations failed.
Adnoc continued negotiating alone, offering to buy only Novonor’s stake in the company, but also ended negotiations when the situation in Maceió became more dramatic, two sources said.
Two of the groups that were interested in buying Novonor’s shares in Braskem told Reuters, on condition of anonymity, that it would be difficult to buy such a large stake in a company jointly owned with state-owned Petrobras. The others declined to comment or did not respond to requests for comment.
(By Luciana Magalhaes and Marcela Ayres and Rodrigo Viga Gaier and with additional reporting by Paula Arend Laier)
