The governor of Alagoas state, Paulo Dantas, has asked the Federal Accounts Court to suspend the possible sale of Braskem, Latin America’s largest petrochemical group, until displaced residents are compensated for damages caused by the company.
Braskem’s abusive salt mining practices led to tremors in the Alagoas state capital of Maceió. The shocks damaged entire neighborhoods and forced tens of thousands to leave their homes. The Brazilian Report produced an award-winning story on the case.
Last week, the company announced a BRL 1.7 billion agreement with the city government of Maceió. “The agreement establishes the compensation and full refund of the municipality of Maceió in relation to any and all pecuniary and nonpecuniary damages incurred, and is subject to court approval,” Braskem told investors.
Mr. Dantas argues that the agreement does not adequately compensate the 60,000 displaced people and does not include neighboring cities, where several of them have moved. The state government, he added, also suffered losses because schools and health centers in the area were also closed.
Deal or no deal?
In June, Unipar, a São Paulo-based chemical producer, made a BRL 10 billion (USD 2.1 billion) offer for Braskem, which is currently owned by Novonor (formerly Odebrecht). Earlier this month, state-controlled oil giant Petrobras announced that it had started a due diligence process to decide whether to acquire a controlling stake or exercise tag-along rights in a potential sale of Braskem, but did not announce a decision either way.
As a minority owner of approximately 36 percent of Braskem’s shares, Petrobras is entitled to tag-along rights — the option to participate in the sale planned by the majority. Alternatively, Petrobras could decide to buy Novonor’s stock instead and become the majority shareholder.
Back when it was known as Odebrecht, Novonor fell from grace after Operation Car Wash, an anti-corruption investigation that revealed how the company systematically bribed politicians. It now desperately needs to raise money to pay off some of its massive debt.
According to Braskem’s recent Q2 sales report, performance in Brazil was a negative outlier compared to results from its operations in Mexico, the U.S., and Europe. Resin sales in Brazil were down 10 percent in the yearly comparison, and resin exports dropped by 26 percent.
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