Galvao Engenharia Files for Bankruptcy Protection Amid Probe
By Julia Leite
8:35 PM BRT
March 25, 2015
(Bloomberg) — Galvao Engenharia SA, a Brazilian builder being investigated in a probe of alleged kickbacks at Petroleo Brasileiro SA, filed for bankruptcy protection in Rio de Janeiro.
The company said in an e-mailed statement Wednesday that its finances deteriorated as clients including Petrobras stopped payments. The builder also filed a request for protection for a related company, Galvao Participacoes, according to the statement.
Galvao Engenharia is among builders targeted in the probe into an alleged cartel to win contracts at the state-run oil company in exchange for bribes. Prosecutors are seeking 4.47 billion reais ($1.4 billion) in compensation, and have called for the companies to be banned from new state contracts, according to a Feb. 20 e-mailed statement. The investigation has all but shut Brazilian debt markets, with no companies selling offshore bonds since November.
“There were recurring delays in payments owed by Petrobras in several contracts since the end of 2013,” the builder said in the statement. “In addition to that, there’s been a contraction in the credit market for infrastructure companies.”
The company denies it was part of a cartel.
In May 2014, Galvao won an auction for the contract to expand and operate BR-153 highway. The builder has halted work on that project and fired more than 350 people because it doesn’t have the financing to continue the work as it awaits the disbursement of an 800 million-real bridge loan from the state development bank BNDES, a person familiar with the matter said this month, asking not to be identified because the situation is private.
In December, Petrobras banned 23 builders allegedly involved in the case, including Galvao Engenharia, from bidding for contracts.