China’s HNA closing in on buying stake in Brazil’s second busiest international airport

PUBLISHED : Tuesday, 18 April, 2017, 2:23am
UPDATED : Tuesday, 18 April, 2017, 2:23am

China’s HNA Airport Holding Group Co Ltd is close to buying out the stake that engineering conglomerate Odebrecht SA has in Brazil’s second-busiest international airport, a person briefed on the matter said on Monday, partly solving an impasse with a government agency over licensing rights.

The Chinese company, which is part of HNA Group Co Ltd, is currently conducting due diligence proceedings that could lead to the purchase of the approximately 30 per cent stake that Odebrecht has in the Rio de Janeiro international airport, commonly known as Galeão, said the person.

As a condition to a deal, Odebrecht and partner Changi Airports International Pte Ltd of Singapore will pour 900 million reais (US$290 million) into the investment vehicle managing Galeão, representing payment of past-due operating licensing fees, the person said. The payment is expected to take place as early as this week, the person added.

Odebrecht and Changi have a combined 51 per cent of Galeão, with Brazil’s civil aviation infrastructure authority Infraero the remainder. The consortium failed to pay the licensing instalment last year, citing a cash crunch amid Brazil’s harshest recession on record.

Odebrecht declined to comment. HNA and Changi press representatives did not immediately respond to e-mails seeking comment.

The person, who requested anonymity because terms of the transaction remain private, declined to elaborate on a potential timetable or a value for the deal.

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The move underscores how Odebrecht, the largest Latin American infrastructure conglomerate, is disposing of assets to stay current on about 76 billion reais of net debt and weather the impact of its involvement in Brazil’s worst corruption scandal. The scandal has almost fully shut Odebrecht’s access to credit and new contracts in Brazil and almost a dozen countries.

Brazil’s government wants Odebrecht’s exit from the consortium to settle the airport’s licensing problems. The instalment in arrears totaled 800 million reais, and another 1 billion reais is coming due in coming months.

The fate of pending asset sales outside Brazil is increasingly dependent on how quickly governments across Latin America and Africa decide penalties for Odebrecht, which admitted to paying bribes to win projects in recent years.

Several planned divestitures like the Galeão stake, Angola’s Catoca mining project and a 28 per cent stake in Brazil’s Santo Antônio hydropower dam could be finalised later this year, according to people directly involved in the plans.

Earlier, US District Judge Raymond Dearie sentenced Odebrecht to pay US$2.6 billion in fines related to the corruption case. Dearie’s decision is seen as helping Odebrecht resolve legal problems related to the scandal, accelerating a thorough restructuring taking place at the Brazilian conglomerate.