J&F Investimentos (from the same group as meat giant JBS) is appealing to the Supreme Court to suspend the sale of Eldorado, one of the largest pulp manufacturers in Brazil, to Indonesian firm Paper Excellence (PE).
J&F group’s proprietors, brothers Joesley and Wesley Batista filed with Justice Dias Toffoli last Monday a request to suspend the payment of fines and also deals arising from the leniency agreement that they signed in 2017 as part of Operation Car Wash. They say they were coerced into entering into the leniency agreement at the time and that one of PE’s consultants, Josmar Verillo, was in dialogue with a federal prosecutor who was part of the task force investigating the corruption scandals.
In 2021, the Supreme Court quashed all of President Luiz Inácio Lula da Silva’s convictions within the Car Wash investigations on the understanding that the court in the southern city of Curitiba — where the operation was headquartered, did not have jurisdiction to try the case and that then-judge Sergio Moro (now a senator) was biased in his trial rulings. Other evidence from the task force has also been annulled, which led several of those targeted by the operation to ask for their agreements and convictions to be reformed. The Batista brothers are just the latest to do so.
PE, in turn, said in a press release that, when signing the leniency agreement in 2017, Mr. Verillo did not provide services to the multinational and did not even know its shareholders. “Verillo’s hiring as a consultant took place in 2018, only after J&F had breached the Eldorado sales contract,” says the company.
According to PE’s CEO, Cláudio Cotrim, “when deciding to sell Eldorado, J&F began negotiating with the Chilean Arauco Celulose, which made an offer for the business. Paper Excellence arrived in the negotiation much later. With two proposals on the table, J&F could perfectly choose to sell to Arauco,” he states.
The appeal is the latest move in a four-year dispute over the deal.
The conflict began in 2019, when J&F gave up on selling its 51 percent stake in Eldorado to PE’s subsidiary CA Investments, claiming that the buyer failed to comply with the terms of the deal after it first acquired a 49 percent stake.
PE, in turn, argues that it was not the one that missed the deadline to conclude the acquisition of Eldorado but that, as “proven in court and arbitration,” it was J&F that “maliciously prevented PE from closing the transaction because they regretted making the deal.”
In February 2021, the International Chamber of Commerce (ICC Brasil) court decided that the J&F group would have to sell its remaining share of Eldorado to PE. However, J&F disagreed with the ruling and requested its annulment. Since then, the dispute has unfolded into several cases in more than one legal instance.
The case is being processed under judicial secrecy.
In Q2 2023, Eldorado posted net profits of BRL 988 million, up 40 percent from last year. In its latest assessment of the company in March, Fitch said, “the shareholder litigation process has limited impact on Eldorado’s financial flexibility.”
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