Novonor, formerly known as Odebrecht, is trying to move forward with potential sale of control of petrochemical company
Unipar has conditioned the due diligence process at Braskem on exclusivity in talks to buy the petrochemical company, but is unlikely to have the OK of all creditor banks to support the transaction, Valor found. Sources linked to the lenders that hold shares in the petrochemical company as collateral said there is a consensus to discuss the two formal proposals on the table.
Apollo and the Abu Dhabi National Petroleum Company (ADNOC) placed a formal bid for the petrochemical company in May. In the view of one creditor bank, Unipar’s has a lower capacity to take debt in the long run to consolidate the petrochemical sector than the U.S. asset manager and the Arab oil company.
According to this source, Petrobras is aligned with the creditors in discussing what is already on the table and keep the process more competitive.
Unipar’s proposal is the one that Novonor (ex-Odebrecht) likes the most, since the group would keep a 4% stake in the petrochemical company. Novonor, which is under a court-supervised reorganization, wants to keep a minority stake in Braskem, a business seen as the group’s crown jewel. Without exclusivity, however, Unipar is unwilling to move forward with the talks. The company also has no plans to consolidate the sector and, according to a source, intends to focus on reducing leverage after the potential acquisition.
According to Braskem and Unipar, Novonor invited Mr. Geyer’s company to carry out “due diligence” on the petrochemical company. However, in order to carry out this audit, the company would have to spend at least R$70 million – a large part of which would be used to thoroughly analyze the environmental problem in Alagoas. “It is still not clear what the liability is,” said a person close to the talks.
The invitation to Unipar comes a few days before the end of the 30-day period of the offer made by the Brazilian company. The bid expires on Sunday and Unipar has already indicated that it does not intend to renew it if there is no clear indication of interest from the parent company and its creditors.
Unipar intends to acquire 34.4% of Braskem at a price of R$36.5 per share, leaving Novonor as a minority shareholder with a 4% stake. The proposal includes a discount of about 40% on Novonor’s debt with the banks and has as a condition that Petrobras does not exercise its tag-along right.
For the company’s exclusivity agreement to take effect, all of the creditor banks must agree. At the moment, the banks are more united in keeping bids on the table. In addition to the two already placed, J&F has also been talking to banks about making a new formal offer for the company.
Valor found that the Batista family has not yet approached the Brazilian Development Bank (BNDES) to discuss a new bid. These talks have been more frequent with other creditors, especially Bradesco, according to two sources familiar with the matter.
A third source, also linked to the creditors, said the banks have been more constructive in getting a deal done, but that there is no “deadline” on the table yet.
“Now the process depends on the banks sitting down with Novonor and reaching an agreement,” said a source close to the buyers, adding that there was no interest in competing for the petrochemical company in price.
The state-owned company holds 36.1% of Braskem, with 47% of common shares. Novonor owns 50.1% of common shares and 38.3% of the total capital of the petrochemical company.
According to two sources close to the negotiations, Petrobras has indicated that it will not sell its stake in Braskem and does not intend to take 100% of Novonor’s position. But it could take control of the company by buying only part of the partner’s shares and have a private-sector partner in the petrochemical company, in a transaction that also depends on the creditors’ greenlight.
Apollo and ADNOC placed a bid for 100% of Braskem at a price of R$47 each share. Of this amount, R$20 would be paid in cash, R$20 in perpetual bonds issued by the buyers at a rate of 4% per year, and R$7 in warrants. At present value, however, analysts calculate that the price offered is between R$27 and R$40, depending on the assumptions used in the calculation.
In a note, Unipar said that with the formalization of Novonor’s interest, its advisors will begin the necessary analyses and remaining negotiations to present a possible binding proposal. “In a statement to Unipar, Novonor signaled that the terms presented meet its interests as well as those of the parties involved. Unipar’s proposal strikes a balance between the needs of Novonor, Petrobras, minority shareholders, and Braskem’s creditor banks,” it said.
As Valor reported on Friday, Unipar has already secured up to R$10 billion in letters of intent from Itaú BBA and Citi to finance the acquisition of control of Braskem. Itaú BBA’s proposal includes the issuance by the company of up to R$5 billion in bonds with a firm placement guarantee, taking into account a “final hold” value of the bank of R$2.5 billion, with the possibility of discussing an additional volume with a firm guarantee. Citi is willing to provide financing up to R$5 billion.
Novonor, BNDES, and Bradesco declined to comment. In a note, Unipar said it “will analyze with Novonor the signing of an exclusivity contract to start the audit, as usual in operations of this size.” Petrobras did not reply to a request for comment.
*Por Mônica Scaramuzzo, Stella Fontes — São Paulo
Source: Valor International