Relevant Documents:Statement
Braskem has agreed to pay 410 million Brazilian reais ($101.4 million) in fines as part of negotiations with two executive branch entities in Brazil, the petrochemical company said in a statement released yesterday. The Brazilian petrochemical company’s board of directors approved the signing of a leniency agreement with the comptroller general’s office, CGU, and the attorney general’s office, AGU.
Braskem will make the payment in two installments, in 2024 and 2025, as part of the deal. The payment will be adjusted for inflation in accordance with Brazil’s inter-bank lending rate, SELIC. Braskem is awaiting ratification of the amounts agreed as part of the deal from a judge in the 13th federal court of Curitiba.
In December 2016, Braskem, along with construction conglomerate Odebrecht S.A.,
pleaded guilty and agreed to pay a total penalty of $3.5 billion as part of a deal with authorities in the U.S., Brazil, and Switzerland, in connection with the
Lava Jato bribery investigations. The CGU and AGU agreements “encompass the same facts” agreed in the deal signed in 2016, Braskem said.
The Attorney General’s Office, or AGU, is a cabinet-level entity that represents the executive branch in legal proceedings. The
CGU, also referred to as the Ministry for Transparency, is charged with assisting the executive branch with protecting the treasury and public assets as well as advising the government on transparency policies.
Odebrecht S.A. subsidiary OSP Investments owns 38.3% of Braskem total shares, and 50.1% of voting shares. The company’s shares were pledged as collateral on about BRL13 billion, according to a Feb. 8 presentation
released by the company. The debt was raised at various Odebrecht entities, including OSP Investments. As such, Odebrecht Finance bondholders - some of which are currently
negotiating with OEC, which guarantees the notes, after it missed debt payments last year - may have limited ability to recover proceeds from a Braskm asset sale, as
reported. Those bondholders told OEC on Feb. 27 that the pledge of Braskem shares in favor of the Odebrecht Finance bondholders “is an integral part of the Proposal.”
In June last year, Odebrecht
announced that it had entered into exclusive negotiations with LyondellBasell to sell Braskem to the Netherlands-incorporated company.
More recently, the company announced that a court in the city of Maceió had partially granted a preliminary injunction freezing up to 100 million Brazilian reais (about $25 million) in assets, in relation to potential damages linked to some of the company’s rock salt extraction activities.
Braskem’s $1.25 billion 4.5% bonds due 2028 are quoted at around 96/97, with a yield to maturity of about 5%, on Cbonds, compared with trades at 98 at the beginning of May.