Petrobras restructures Petrochemical Segment

27-Jan-2010 - Brazil

Petróleo Brasileiro S.A – Petrobras and its wholly-owned subsidiary Petrobras Química S.A. – Petroquisa (jointly, Petrobras), together with Odebrecht S.A and Braskem S.A announced the Investment Agreement executed by the companies which set the conditions pursuant to which Petrobras will consolidate its investment in the petrochemical segment.

The Investment Agreement resulted from the opportunity that was identified to implement a new structure for Petrobras´ and Odebrecht´s participation in the petrochemical sector which will result from the following stages: (i) the incorporation of a holding company, BRK Investimentos Petroquímicos S.A. (BRK), which will hold 100% of Braskem common stock which are currently held by Petrobras and Odebrecht; (ii) capital contribution in BRK, to be paid in cash by Petrobras and Odebrecht in the amount of R$ 2.5 billion and R$ 1.0 billion, respectively ; (iii) capital increase at Braskem through a private subscription by its shareholders in the amount between R$ 4.5 billion and R$ 5.0 billion, considering that BRK will subscribe up to R$ 3.5 billion; (iv) the acquisition by Braskem of the stock in Quattor held by Unipar; (v) the acquisition by Braskem of 100% of the stock in Unipar Comercial e Distribuidora S.A and 33% of the stock in Polibutenos S.A. Indústrias Químicas; (vi) the merger by Braskem of Petrobras stake at Quattor; and (vii) the stock tender offer for the indirect sale of the controlling interest in Quattor Petroquímica S.A.

The asset and cash contribution will lead to an increase in Petrobras´ participation in Braskem, which will become the biggest petrochemical company in the Americas in terms of thermoplastic resin production capacity, with 26 petrochemical plants in its assets. As such, Petrobras will concentrate its petrochemical investments, including its stakes in Quattor, on a company that will have greater competitive advantages to perform on the global economy.

According to the Shareholder´s Agreement, Petrobras and Odebrecht will share Braskem´s decisions, with Odebrecht holding 50.1% of Braskem´s voting capital. In the total capital, the difference between Petrobras and Odebrecht direct and indirect holdings will be 2.33%. The Shareholders Agreement will reflect the commitment of Baskem´s controller shareholders to the corporate governance best practices and the creation of value to all shareholders basis.

Petrobras will nominate four members to the Braskem´s Board of Directors, which will also have six members nominated by Odebrecht and one member representing the minority shareholders.

Braskem´s Fiscal Council will have five members, with Petrobras and Odebrecht each nominating two members. The Executive Board will consist of 7 statutory members. Odebrecht will nominate the Chief Executive Officer and the Chief Financial Officer, while Petrobras will nominate the Chief Investments and Portfolio Officer. The other Executive Officers will be selected by the Chief Executive Officer and submitted to the Board of Directors for approval.

Petrobras, Odebrecht and Braskem also entered into a partnership agreement (“Partnership Agreement”) to regulate their commercial and corporate relationship with the Petrochemical Complex of the State of Rio de Janeiro (“COMPERJ”) and with the Suape Petrochemical Complex (“Suape Complex”). Under the Partnership Agreement, Braskem will take on the companies operating COMPERJ’s petrochemical first and second generation, as well as, gradually acquire equity interests in companies operating in the Suape Complex, in accordance with the terms and conditions agreed in the Association Agreement.

The transaction is in line with Petrobras´ 2009-2013 Business Plan, which foresees investments in the order of $5.6 billion to the petrochemical segment aiming to operate in the industry in an integrated manner and adding value to the crude oil produced. However, it considers a new model of investments in this segment but in line with the Company´s objectives to approve long-term sustainable investments that offer high returns to its shareholders.

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