By Rogerio Jelmayer
SÃO PAULO--Brazilian construction conglomerate Engevix is in
advanced talks to sell its stake in renewable-energy company
Desenvix, as it scrambles to raise cash following allegations
linking it to a corruption scandal with state-controlled energy
giant Petroleo Brasileiro SA, or Petrobras.
Engevix is negotiating to sell its stake to its existing
partner, Norway's state-owned energy company Statkraft, said a
person close to the Brazilian company, who declined to be
named.
Engevix and Statkraft each own a 40.65% share of São Paulo-based
Desenvix. The remainder is held by Funcef, the pension fund of
Brazil's state-run bank Caixa Economica Federal.
"The sale of the Desenvix stake is likely to yield 500 million
reais ($185 million) for Engevix and it is likely to be completed
in the next few weeks," said the person, who is involved in the
talks.
Desenvix is involved in the generation and transmission of
hydroelectric, wind and biomass energy in Brazil. It holds stakes
in 15 power plants with a total installed capacity of 349
megawatts.
Officials from Statkraft declined to comment on the talks.
"Statkraft does not comment on rumors or speculation regarding
specific assets or ongoing processes in the market," said Lars
Magnus Günther, the Norwegian company's communication adviser, in
an email sent to The Wall Street Journal.
Engevix is struggling to fund its operations following its
alleged involvement in one of the biggest corruption scandals in
Brazil's history.
An Engevix spokeswoman confirmed that the company is considering
selling some of its holdings, but declined to specify the assets to
be sold.
Engevix ended 2013, the most recent figure available, with
revenue of 3.34 billion reais, up 56% from 2012. The company's net
debt at that time totaled 835 million reais.
Engevix said that it is cooperating with authorities in the
continuing investigation. But the swirling allegations have made it
difficult for the firm to obtain short-term financing from
commercial banks, according to the same person, who said Engevix is
looking to sell additional assets as well.
"After this process, Engevix will be a much smaller company,
maybe half the company's size currently," said the same person.
"Right now, the company is facing a difficult situation, because
with the continuing investigation, banks are very restrictive about
any kind of financing."
In December, Brazilian prosecutors filed charges related to
corruption, money-laundering and organized crime against 36
suspects. Among those charged were 23 executives from six of the
largest construction companies in Brazil, including Engevix. Some
of the companies and attorneys of the people involved have denied
wrongdoing while others have said they are cooperating with
investigators.
Authorities allege that construction companies formed a cartel
that systematically overbilled Petrobras for contracts, then kicked
back a portion of the allegedly ill-gotten gains to public
officials.
Engevix ended 2013, the most recent annual figure available,
with revenue of 3.34 billion reais, up 56% from 2012. The company's
net debt at that time totaled 835 million reais.
Earlier this week, São Paulo-based construction firm OAS, which
prosecutors also have accused of participating in the alleged
Petrobras corruption scam, failed to make two interest payment
regarding outstanding debts--one a local bond called a debenture
and another linked with an overseas bond due in 2021.
OAS said it is cooperating with the investigation and providing
all the information demanded by authorities.
The company has 30 days until it is considered in default by
credit-rating firms. OAS reiterated that it is amid a restructuring
of its debt and is planning to sell certain assets. It hired G5
Evercore as financial adviser and Mattos Filho Advogados and White
& Case LLP, as legal advisers for its restructuring.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com
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