After the failed attempt to sell Braskem and the suspension of a secondary offering of shares in the Brazilian stock exchange B3, Novonor (formerly Odebrecht) is again studying alternatives to sell its stake in the petrochemical company.

BTG Pactual is said to be interested in buying the holding’s debts from creditor banks, which have Braskem shares as collateral. At the same time, talks with investment funds and rival companies for the sale or some of its assets have resumed, sources say.

BTG Pactual and funds focused on distressed debts once again spoke with Novonor, which seeks to generate liquidity for its securities. The “special situation” team of André Esteves’s bank is interested in buying debts in hands of Banco do Brasil, Bradesco, Itaú and Santander, as long as the financial firms agree to grant a hefty discount, a source familiar with the matter said.

According to a source, BTG’s most recent proposal was presented indirectly to Novonor through Braskem’s executives. There is no formal offer on the table yet. For the negotiations to move forward, it is necessary to have an alignment of the company’s shareholders with the banks. None of these players could sell their shares individually.

It is not the first time that funds and banks specialized in “special situations” have tried to purchase debt from Novonor, which owns 38.3% of the petrochemical company’s total capital. Braskem currently has a market capitalization of R$35 billion and is the main business of the group, which went into judicial reorganization in June 2019, with R$100 billion in debt.

The challenge in this transaction is to convince the banks to negotiate discounts. Novonor’s debts with Banco do Brasil, Bradesco, Itaú, Santander and the Brazilian Development Bank (BNDES) totals nearly R$15 billion. These banks have Braskem shares as collateral. “The value of the shares no longer covers that debt,” a person familiar with the matter said, justifying the request for a discount on the debts.

People familiar with the creditors told Valor that this proposal has not yet reached the banks and that there is no willingness of financial firms to grant discounts.

On another front, Novonor is said to be in talks with rival companies and investment funds to discuss the sale of Braskem again. Groups such as Unipar and the holding company J&F Investimentos, which owns JBS, were sought for talks. U.S-based fund Apollo was also approached, another person familiar with the matter said.

There is no firm proposal so far, but interested parties are said to have presented different structures for a potential deal. In 2018, LyondellBasell came very close to buying the petrochemical company before giving up due to environmental problems in Alagoas.

In January, the petrochemical company tried to tap the market through a secondary offering of shares held by Novonor and Petrobras, without success. Although there was demand for the shares, investors were asking for a discount.

Given the uncertainties in the market, worsened in recent weeks by the war in Ukraine, analysts believe that this is not the time for the company to resume the secondary offering.

Braskem has been preparing to migrate to the Novo Mercado, a section of the B3 exchange with stricter governance rules, which should bring gains for the shares. The original idea is to sell common shares held by Novonor after the migration. Two weeks ago, shareholders holding PNB shares in the company rejected the conversion of these shares into PNAs, a step that is preparatory to the unification of the different classes of shares into common stocks.

Apollo, BB, BTG, BNDES, Bradesco, Braskem, Novonor, J&F, Santander and Unipar declined to comment. Itaú and Petrobras did not immediately reply to a request for comment.

Source: Valor International

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