Braskem S.A. (NYSE:BAK), a leading chemical company, announced on Thursday the sale of its majority stake in Cetrel S.A., an environmental solutions provider. The transaction involves the transfer of Braskem's 63.7% shareholding to GRI - Gestão de Resíduos Industriais S.A., in a deal valued at approximately R$ 284 million ($53.6 million).
According to the investment agreement signed today, Braskem will sell up to 498,436 common shares and subscribe to new shares in GRI, contributing an additional 771,592 Cetrel shares. Post-transaction, Braskem and Solví Essencis Ambiental S.A. will own 49.9% and 50.1% of GRI, respectively.
The deal is structured to enhance Cetrel's leadership in industrial environmental solutions, such as water and effluent treatment and environmental consulting. Moreover, it positions GRI for national expansion, focusing on operational excellence and environmental sustainability.
Braskem will receive R$ 199 million ($37.6 million) at the closing of the share transfer, with the remaining amount to be paid by November 2025. This transaction is subject to customary closing conditions, including regulatory approvals.
This strategic move is part of Braskem's broader effort to optimize its portfolio and strengthen its focus on sustainability. The company has committed to keeping stakeholders updated on material developments related to this transaction.
The information disclosed in this article is based on a press release statement from Braskem S.A.
In other recent news, Braskem, a prominent figure in the global chemical and petrochemical industry, faced a challenging year due to industry supply and demand imbalances. The company reported a loss of $935 million for 2023 and a recurring cash consumption of $375 million. Despite these financial hurdles, Braskem managed to maintain a strong liquidity position with $3.6 billion in cash. The company's recurring EBITDA for the fourth quarter was $211 million, contributing to a total of $743 million for the year.
Braskem's credit rating was downgraded by both Fitch and S&P to BB+. However, the company has implemented initiatives that positively impacted EBITDA by $319 million and cash generation by $525 million. In terms of future plans, Braskem's growth strategy focuses on traditional decarbonization, bio products, and recycling, aiming for a potential value creation of $1 billion by 2030. Priorities for 2024 include the Mazela agreement, asset optimization, cost discipline, and financial preservation. These are the recent developments for Braskem.
InvestingPro Insights
As Braskem S.A. (NYSE:BAK) navigates the sale of its stake in Cetrel S.A., investors may consider the financial health and market performance of the company. With a current market capitalization of $2.74 billion, Braskem's position as a significant player in the Chemicals industry is notable. Yet, the company faces challenges, reflected in a negative P/E ratio of -2.44 for the last twelve months as of Q1 2024, which further declined to -3.25 when adjusted, indicating that the company has not been profitable during this period.
InvestingPro Tips highlight several areas of concern, including Braskem's significant debt burden and the analysts' anticipation that the company will not be profitable this year. Moreover, the company's revenue has seen a decline of -22.63% over the last twelve months as of Q1 2024, with gross profit margins standing at a low 4.7%. These factors, combined with a high Price/Book multiple of 4.79, suggest that investors should tread with caution.
For those interested in a deeper analysis, InvestingPro provides additional tips on Braskem's financial metrics and future outlook. Subscribers can unlock these insights and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With several more InvestingPro Tips available, investors can make more informed decisions regarding their interest in Braskem's evolving business strategies and market performance.
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