Partners Novonor, Petrobras are in no hurry to negotiate due to worsening economic scenario
07/15/2022
The process of selling the petrochemical company Braskem, whose shareholders are the Novonor group (formerly Odebrecht) and Petrobras, is stuck again. Sources familiar with the matter told Valor the two partners have made little effort to move the negotiation forward, largely because the market is not favorable to a stock offering.
However, internal issues at Petrobras, including the change of the CEO, and uncertainties about the state-owned company’s strategy have removed the sale of Braskem from the priority agenda, at least for now. At Novonor, which is advised by Morgan Stanley, there has been no definition of a new timeline after the suspension of the preferred stock offering in January.
A source connected to the company’s creditors said that the current price of the shares is well below what is necessary to pay off debts and below the interest of Novonor to get rid of its participation in the business. The total debt of the banks that have shares in guarantee is about R$15 billion. A good part of Braskem’s dividends has been assigned to reduce debts and interests on this debt.
The petrochemical company is also waiting for market conditions to improve in order to go ahead with the secondary offering. Since the second half of last year, the capital market has been closed to offerings. Thursday the stock price closed the day at R$33.02 on B3, the Brazilian stock exchange. This year, the shares aggregated a fall of 40.39%, according to a Valor Data survey. The petrochemical company’s market capitalization is R$26.7 billion.
According to a source close to Braskem, the company is practically ready to go to the Novo Mercado — the strictest governance segment of B3. However, the operation has not yet materialized because the plan is to conduct the secondary offering together with the migration.
As the interest rates are on the rise, the stock exchange is no longer an interesting option for the sale of the petrochemical company. A merger and acquisition process would make more sense and would bring more value to the company, said another source.
The company’s shares have been falling since last year. The strongest pressure came from the energy crisis in the world, which reduced the margins of the Brazilian petrochemical company. The higher prices of natural gas and oil, and consequently of naphtha and is expected to continue to weigh on the company’s results.
Earlier this month, Bank of America (BofA) reduced its estimates for the company between 2022 and 2024, resulting in a new target price of R$55 per share, much lower than the previous R$80. However, the bank maintained its recommendation to buy the shares, given the potential for appreciation and expectations regarding the Novo Mercado. Today, the stocks are traded at B3 at low multiples, with an enterprise value (EV) of around 4.3 times the EBTIDA projected for 2022.
Braskem, J&F, Novonor, Petrobras, Ultrapar and Unipar declined to comment on the matter.
*By Mônica Scaramuzzo, Stella Fontes — São Paulo
Source: Valor International