Paper Excellence may be closer to taking over Eldorado Brasil

At the end of January, the judge of the Court of Justice of São Paulo (TJ-SP) José Carlos da Costa Netto made official the withdrawal of Paper Excellence (PE) from an appeal that, indirectly, prevented the transfer of control of Eldorado to the company. Following the procedural rite, now the case rapporteur needs to give the green light for the trio of arbitrators to effectively resume the procedures.

Even two years after PE’s victory over J&F Investimentos in the arbitration, the possibility of a new window for the transfer of the pulp producer to the minority partner is only now opening up.

In this way, the resumption of the operation oversees a communication from the Justice to the arbitral tribunal, in order to proceed with the exchange of the 50.59% in shares still held by the Batista holding for more than R$ 5 billion in PE resources which are deposited in court in the bank.

Despite this, it is not concrete that the sale of 100% of Eldorado will happen or that the transaction will be immediate, as there is some previous bureaucracy to be fulfilled. It is also not the first time that Paper has been close to taking control of the company and has not done so. It’s been more than four years and R$15 billion related to the litigation.

In October of last year, Justice had reopened the way to carry out the transfer, however, J&F managed to suspend the procedures, through arbitration and annulment action, which ended up being suspended. Therefore, as happened on that occasion, the holding company may seek other judicial means to avoid the conclusion of the case.

According to the purchase and sale agreement signed in September 2017, PE had 12 months to buy all of Eldorado’s shares, but would have to meet certain conditions, the most relevant being the release of guarantees provided by J&F on debts of cellulose producer.

However, Paper Excellence claimed that the holding made it difficult to comply with this pre-condition, preventing the closing of the deal within the contractual period. The arbitration accepted the claim in February 2021 and entered the damages definition phase.

However, J&F resorted to common law to annul the arbitration, alleging a conflict of interest of one of the arbitrators, as well as the partner’s involvement in a hacker attack on its e-mail servers, obtaining the suspension of the arbitral award.

In July of last year, Judge Renata Mota Maciel, of the 2nd Business Court of Arbitration Conflicts, denied the request of the holding company, which appealed the decision and awaits the judgment of the merits in the second instance.