By Brazil Stock Guide – Petrobras (PETR4.SA) is weighing a proposal from private equity firm IG4 Capital to take control of Braskem (BRKM5.SA), Latin America’s largest petrochemical producer, according to a report from Reuters citing people familiar with the talks.
The plan, which has been advancing in recent weeks, would see IG4 assume a large portion of Novonor’s debt — estimated at nearly 20 billion reais ($4 billion) — in exchange for equity in Braskem. IG4 secured an exclusivity agreement last week to negotiate with Novonor, the former Odebrecht, and Petrobras, both key shareholders in the petrochemical company.
Debt-for-equity swap under discussion
The exclusivity deal grants IG4 the right to negotiate a debt-for-equity swap with Novonor and Petrobras. The move could pave the way for a new controlling shareholder and an injection of fresh capital into Braskem, which has struggled with tight petrochemical margins and long-standing liabilities linked to geological damage caused by rock salt mining in Maceió.
President Luiz Inácio Lula da Silva has urged ministers to find a solution that secures Braskem’s future while protecting Petrobras’ interests. He asked Petrobras Chief Executive Magda Chambriard to be directly involved in negotiations, according to sources close to the government.
Longstanding debt pressures
Novonor has been attempting to divest its controlling stake in Braskem for years. Its debt load swelled during Brazil’s Lava Jato corruption probe, when it pledged its shares in the petrochemical group as collateral for roughly 15 billion reais in loans. That figure has since climbed to nearly 20 billion reais, more than double Braskem’s current market value.
Talks with Brazilian investor Nelson Tanure collapsed last week after his exclusivity period expired, clearing the way for IG4’s proposal. People close to Petrobras said Tanure could still re-enter negotiations, but underscored that the state-controlled oil producer ultimately aims to strengthen its influence over Braskem’s governance once Novonor exits.
Shareholding structure in flux
Novonor currently holds 50.1% of Braskem’s voting shares and 38.3% of its total equity. Petrobras owns 47% of voting stock and 36.1% of total shares, along with a right of first refusal over Novonor’s stake under the shareholder agreement.
A person familiar with the matter told Reuters that Novonor remains open to “building a solution” as long as all parties benefit. The company may seek to retain a minority position in Braskem, given that dividend income supports its court-approved restructuring plan.
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