In another development of the Eldorado case, last week, the parent holding company of the Batista brothers, J&F Investimentos, made a proposal to Paper Excellence (PE) to return the funds it received for the purchase of 30.5% of Eldorado Brasil. Thus, through the cancellation of the transaction made between them in September 2017, which provided for the complete sale of the company within up to 12 months, J&F would again assume this stake in the pulp manufacturer.
Currently, Paper Excellence owns 49.41% of Eldorado and remains in a legal dispute that has lasted more than five years to take control of the company. The company disbursed approximately R$3.8 billion to reach this position, through the initial acquisition of a portion of the company owned by the Batista brothers (30.5%), in addition to the 17.06% owned by Petros and Previ, and another 1.96% of José Carlos Grubisich’s FIP Olímpia. However, control of Eldorado remains in the hands of J&F, which holds 50.59% of the shares.
The proposal comes in the midst of a public civil action filed by the Federal Public Prosecutor’s Office (MPF) in Mato Grosso do Sul, which seeks the annulment of the transaction arguing that being a foreign capital company, PE would need the approval of the National Congress and the National Institute of Colonization and Agrarian Reform (Incra) to conclude the negotiation.
However, during the settlement hearing, PE reaffirmed its interest in the business. According to the company, led by Jackson Wijaya, it is still interested in Eldorado’s industrial operations in Brazil and not in the land. In this regard, the company also affirmed its commitment to divest the areas it owns, which represent only 5.07% of the total planted area used, once it assumes control of the company.
In this context, PE also proposed to convert the lease contracts into agrarian association contracts as a measure to avoid future challenges. The rules for the purchase of land by foreigners in the country are still under debate in the Supreme Federal Court (STF), which decided not to prohibit transactions of this type, if the limits established by law are respected until a final decision is reached.
However, both J&F’s and PE’s proposals were rejected, and the MPF maintained its recommendation to undo the purchase and sale transaction. The public civil action, initiated by Fetagri (Federation of Agricultural Workers of Mato Grosso do Sul), continues in the 1st Federal Court of Tres Lagoas (MS).
In addition, a recent decision of the Regional Federal Court of the 4th Region (TRF-4) prevents the transfer of control of Eldorado to PE. So far, there are at least three legal actions related to the purchase of land by foreigners hindering the sale of the pulp producer, in addition to the request for annulment of the arbitration, filed by J&F and currently before the Court of Justice of São Paulo (TJ-SP).
On December 20, the 1st Chamber of Business Law of the TJ-SP will continue with the lawsuit, which already has two votes in favor of PE, against the annulment of the arbitration award ordering the transfer of control of Eldorado.
J&F and PE, contacted in this regard, did not comment on the matter.