Petrobras open to IG4 plan to take control of Braskem, sources say

By Luciana Magalhaes, Lisandra Paraguassu and Rodrigo Viga Gaier

SAO PAULO, Aug 29 (Reuters) - Brazil's state-run oil firm Petrobras has been receptive to a proposal by IG4 Capital to take over engineering group Novonor's controlling stake in Latin America's largest petrochemical company, Braskem BRKM3.SA, four people familiar with the talks told Reuters.

Petrobras, Braskem's second-largest shareholder, holds a right of first refusal for Novonor's stake under a shareholder agreement, so its approval is vital for the deal to go ahead.

Two of those sources and three others, speaking on condition of anonymity, said IG4's conversations with key stakeholders have made progress since the firm last week signed exclusive rights to acquire billions of reais of Novonor debt from Brazil's largest banks, including state development bank BNDES.

The accord gave private equity firm IG4 the sole right to negotiate with Novonor and Petrobras to then swap that debt for Braskem shares, sources said.

Three sources said the deal could be finalized within a few months if talks continue at the current pace, leading to a complete overhaul of Braskem's management, although they emphasized the uncertainty about any timeline for negotiations.

A new controlling shareholder - and a potential injection of fresh capital - could breathe new life into Braskem, which has struggled with tight margins in the petrochemical business and lingering liabilities from neighborhoods damaged by its salt mining operations under the northeastern city of Maceio.

Brazilian President Luiz Inacio Lula da Silva has made clear to ministers that he wants to see Braskem in good health and asked Petrobras CEO Magda Chambriard to help find a solution that does not compromise the oil firm's interests, according to two people close to the presidential palace.

The presidential press office did not immediately respond to a request for comment. IG4, Novonor, Petrobras and Braskem declined to comment.

Reuters first reported in November that Brazil's government and major commercial banks were working on a plan to transfer Novonor's Braskem stake to a private equity fund.

The deal could resolve the outstanding debt hanging over Novonor, formerly known as Odebrecht, which ballooned during the Car Wash corruption scandal about a decade ago, when the group pledged its Braskem shares as collateral for 15 billion reais ($2.8 billion) in bank loans.

The debt has since grown to close to 20 billion reais — more than twice Braskem's current market value.

Novonor has explored selling its controlling interest in Braskem for years, but has failed repeatedly to clinch a deal, including in recent negotiations with Brazilian businessman Nelson Tanure, whose period for exclusive talks with Novonor expired last week.

Two people close to Petrobras confirmed discussions with IG4 are underway, but one of them added that a deal with Tanure has not been completely ruled out. Both sources said Petrobras is aiming for more influence in Braskem's management once Novonor relinquishes control.

One of the sources said Novonor is open to "building a solution", as long as all parties involved end up gaining. Novonor may also want to retain a small stake in Braskem, as the revenue coming from the company helps meet its obligations under the judicial recovery plan, the person added.

Novonor currently holds 50.1% of Braskem's voting shares and 38.3% of total shares. Petrobras owns 47.0% of voting shares and 36.1% of total shares.

($1 = 5.42 reais)