Braskem's Tanure Deal: Risky Gamble or Petrochemical Turnaround?

The Brazilian petrochemical giant Braskem (NYSE:BAK) is at a crossroads. A proposed acquisition by billionaire investor Nelson Tanure's fund has ignited speculation about whether the deal could finally unlock value from one of Latin America's most troubled industrial assets—or if it will stumble over legal, financial, and regulatory hurdles. Let's dissect the risks and rewards for investors.

The Deal's Financial Tightrope

Tanure's non-binding offer to acquire Novonor's 50.1% stake in Braskem avoids triggering a mandatory tender offer (OPA) by targeting shares in NSP Inv., Novonor's holding company. This structure sidesteps Brazil's corporate governance rules requiring a public bid to minority shareholders—a move critics argue exploits loopholes in Braskem's bylaws.

The financial stakes are staggering. Braskem carries $6.6 billion in net debt, with $4.7 billion tied to a catastrophic 2018 environmental disaster in Maceió. Meanwhile, Novonor's R$15 billion debt to banks like Bradesco (NYSE:BDC) and Itaú (NYSE:ITUB) has left Braskem's shares collateralized at just one-third of their face value. Tanure's $100 million investment is a drop in the bucket, but his plan hinges on renegotiating this debt into equity—a strategy he's deployed successfully with utility Light and oil firm Prio.

Creditors' Veto Power: A Major Hurdle

The banks holding Novonor's debt are skeptical. They prefer a gradual sale of Braskem's shares rather than a sudden buyout, fearing a rushed deal could leave them undercompensated. Their leverage is immense: without their approval, Tanure's bid collapses. The banks' preferred path—converting debt to equity and extending repayment terms—could take years, prolonging Braskem's stagnation.

Worse, Petrobras (NYSE:PBR), Braskem's 47%-voting shareholder, retains a right of first refusal. If it intervenes to match Tanure's offer, the deal could unravel entirely. Petrobras has shown no urgency to buy, but its passive stance leaves minority shareholders exposed.

Legal Landmines: The Tender Offer Loophole

Braskem's bylaws stipulate tag-along rights for minority shareholders in a “change of control.” Tanure's lawyers argue this doesn't apply because the deal doesn't directly involve Braskem's shares—only NSP Inv. However, Brazilian courts have historically interpreted such clauses broadly. A lawsuit by minority shareholders could force an OPA, triggering a bidding war or sinking the deal.

Strategic Upside: A Petrochemical Reboot?

The optimist's case is Tanure's track record. His Petroquímica Verde fund specializes in distressed assets, and Braskem's potential is undeniable. Shifting production from naphtha to Brazil's abundant pre-salt natural gas could slash costs and position Braskem as a leader in renewable petrochemicals.

Tanure also promises to resolve the Maceió liability through a “deleveraging plan,” potentially unlocking $1.65 billion in untapped value tied to Braskem's market cap. If executed, this could make Braskem a magnet for global investors like ADNOC or Unipar, who've shown interest but balked at its debt burden.

Implications for Investors

• Minority Shareholders: Risk missing a premium in a non-tender deal, but long-term gains are possible if Tanure's restructuring succeeds.
• Creditors: Their approval is a double-edged sword. A forced debt-for-equity swap could dilute their claims but stabilize Braskem's balance sheet.
• Sector Impact: A successful Braskem turnaround could reignite investor confidence in Brazil's industrial sector, from fertilizer giants like Mosaic (NYSE:MOS) to petrochemical players like Dow Chemical (NYSE:DOW).

Verdict: A High-Risk, High-Reward Gamble

This deal is a roll of the dice. The upside—repositioning Braskem as a low-cost renewable producer with a cleaned-up balance sheet—is compelling. But the risks—legal challenges, creditor pushback, and Petrobras' veto—could leave investors stranded.

Action Items for Investors:
1. Monitor Petrobras' stance on its preemptive rights. A waiver would clear a major hurdle.
2. Track creditor negotiations. Look for signs of debt-equity swaps or extended repayment terms.
3. Watch Braskem's EBITDA trends. A rebound to pre-pandemic levels ($2.8 billion in 2019) would validate Tanure's strategy.

For now, Braskem's shares—up 6-8% since the deal leaked—are pricing in partial optimism. But with $2.65 billion in debt and a regulatory minefield ahead, this is a speculative bet suited only to investors with a long-term horizon and a stomach for volatility.

Final Note: The Braskem-Tanure deal is a microcosm of Brazil's economic challenges—restructuring debt, leveraging natural resources, and navigating regulatory thickets. For those willing to bet on resilience, the reward could be transformative. For the risk-averse, look elsewhere.