EM LATAM CREDIT: Brazil's Petrobras, Reaction to Tanure's Bid For Braskem
Braskem (BRASKM; Ba3 /BB+ neg /BB+ neg)
“Petrobras wants more power to appoint Braskem board members and directors, sources say” – Reuters
Neutral Take
• Brazil government-controlled energy company Petrobras is one of the majority owners in Brazil based chemical company Braskem and has responded to news of investor Nelson Tanure’s proposal to buy out the other majority stakeholder Odebrecht that has 50.1% of voting shares.
• Petrobras CEO Magda Chambriard made some supportive comments as quoted by Brazil news outlet Valor. The company has sought to divest its stake in Braskem for years, as have the banks who hold Braskem shares as collateral for defaulted loans made to the bankrupt entity formerly known as Odebrecht. Tanure is proposing to buy an interest in a fund which holds the bank’s Braskem shares.
• Petrobras is more interested in increasing its Board of Director participation as it currently only has appointed four out of eleven board members and one director out of seven according to Valor. The company does not appear interested in buying out the Odebrecht stake even though it does have that preference right.
• The market has been skeptical of this transaction as well as the impact it might have on Braskem, which operationally has underperformed for years as well as being burdened with environmental liabilities. Several suitors have come and gone with ultimately no deal being consummated.
• Braskem stock has fallen almost 50% in the past year and much more over the past five years so it might be hard for the banks to stop themselves out.
• Tanure has a track record of getting involved in distressed situations, restructurings and repairing of companies so maybe he can help fix Braskem, which has been struggling for years not just with the environmental liabilities but persistent operational losses.
• Please see our Braskem 1Q 2025 earnings post and our previous post on the Tanure proposal for more information:
https://mni.marketnews.com/4kxCk2I
• The deal structure reportedly would leave Petrobras and the fund holding Braskem shares as controlling Braskem while Odebrecht would retain 5% of the chemical company.
• BRASKM 2034 bonds were last quoted T+515bps, 71bps wider QTD and 100bps wider YTD. We don’t observe any reaction in the bonds since the news was reported.
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