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Odebrecht seeks to accelerate agreements in Latin America to sell assets

Odebrecht wants to negotiate fines and leniency agreements related to corruption investigations with several Latin American countries by June, which would help the Brazilian engineering conglomerate avoid a mid-term negotiations throughout the region that could delay the planned sales of assets, two sources familiar with the matter said.

According to these sources, Odebrecht expects to sell about 6.5 billion reais in investments, exploration licenses in the region and in Angola by the end of the year. Odebrecht has already sold about 5 billion reais in assets from a target set last year of 12 billion reais.

The evolution of asset sales still pending will depend on how quickly regional governments decide fines and penalties for Odebrecht, which has admitted paying bribes to win projects in recent years. Prosecutors from 10 Latin American countries have created a task force to share evidence on how the scheme works.

Several planned divestments, such as the Catoca mining project in Angola, and a 28 percent stake in the Santo Antônio hydroelectric plant may be finalized later this year, sources said. The sale of the Peruvian Gasoducto Sur will take longer after the Peruvian government’s decision to resume the gas pipeline concession and hold a new auction.

Dispute solutions in these countries is essential for Odebrecht to accelerate the sale of assets and avoid coincidental discussions with the electoral campaigns in the region. Of the 10 countries investigating Odebrecht, eight will have at least one presidential, congressional or statewide election in the 18 months to December 2018.

In addition to Brazil; Argentina, Chile, Colombia, Ecuador, Mexico, Peru, the Dominican Republic, Venezuela and Panama are investigating the Odebrecht scheme.

The conglomerate based in Salvador declined to comment. The sources asked for anonymity because of the sensitivity of the subject.

Odebrecht is the largest Brazilian contractor accused of paying bribes to win contracts from Petrobras and other state-owned companies, and then use part of the bribes in donations and kickbacks to domestic and overseas political allies.

CREDIT LINE

The corruption scandal has sparked political turmoil in countries such as Peru, where authorities are seeking the arrest of former President Alejandro Toledo, or in Colombia, where the company is being accused of funding the campaign of President Juan Manuel Santos.

A quick solution of legal issues in the region is also key for Odebrecht to conquer new projects and raise funds to reduce the Group’s consolidated net debt by 76 billion reais.

In December, the company and its petrochemical subsidiary Braskem, reached an agreement with authorities in Brazil, the United States and Switzerland, with a fine of 3.5 billion dollars. Under the terms of the deal, Odebrecht admitted paying bribes to officials in 12 countries, mostly in Latin America, to help secure lucrative contracts.

Rapid agreement with the authorities in those countries is already paying off. This week, the Odebrecht-led subway project in Panama obtained a US $ 1.8 billion credit line with two European banks, which decided to grant the funds after the signing of the leniency agreements in the United States, Switzerland and Brazil, said a source close to the subject. According to another informed source of the subject, one of the banks is the Swiss UBS AG. The bank based in Zurich did not comment on the matter.

To address the consequences of the scandal and an economic slowdown across Latin America, Odebrecht also reduced costs and renegotiated its debt in some subsidiaries.

According to one source, talks with creditors to restructure the debts of the Odebrecht Oil & Gas unit can be completed as early as next month.

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