China's HNA nears deal to buy Odebrecht's Brazil airport stake: source

SAO PAULO (Reuters) - 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 headquarters of Odebrecht SA is pictured in Sao Paulo, Brazil, March 22, 2016. REUTERS/Paulo Whitaker/File photo

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 percent 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 ($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 percent of Galeão, with Brazil’s civil aviation infrastructure authority Infraero the remainder. The consortium failed to pay the licensing installment 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.

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, Reuters reported on March 28. The installment 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 percent stake in Brazil’s Santo Antônio hydropower dam could be finalized later this year, Reuters reported on Feb. 22, citing people directly involved in the plans.

Earlier, U.S. District Judge Raymond Dearie sentenced Odebrecht to pay $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.

($1 = 3.1032 reais)

Editing by Guillermo Parra-Bernal and Cynthia Osterman