Still far from the end, dispute for Eldorado totals R$ 15 billion

On its way to completing four years, the R$ 15 billion dispute between partners J&F Investimentos and Paper Excellence (PE) for control of the Brazilian pulp producer still seems far from over. After the arbitration that accepted the PE’s allegations, lawsuits from both sides and criminal investigations, it was found that there is, at this moment, no willingness to seek an agreement or abandon the conflict, which should have new developments soon.

According to sources from Valor Econômico, a Brazilian newspaper, there was an attempt to put an end to the imbroglio shortly after the victory of the PE in the arbitration, in February of last year. J&F would have indicated that it would not question the process in the ordinary court and would hand over the 50.59% stake it still holds in Eldorado, observing the price formula provided for in the purchase and sale agreement signed in September 2017, provided that the PE to waive the losses and damages that will still be discussed in the arbitration.

However, the accounts presented by J&F, including Selic (an infrastructure of the Brazilian financial market managed by the Central Bank of Brazil) correction, resulted in a value to be paid for the remaining shares greater than that calculated by PE – a difference of R$150 million or up to R$600 million, depending on the interlocutor. The proposal was not forwarded to businessman Jackson Widjaja, owner of PE, according to the newspaper.

After J&F filed for annulment of the arbitration, Joesley Batista would have proposed a new meeting with Widjaja, now to take a proposal to buy the minority partner’s stake in Eldorado. The meeting, according to a source, would be a precondition for J&F to go ahead with the offer, but it did not take place in the face of the Indonesian businessman’s refusal.

The expectation of the partners is in the increasingly close decision on the request for annulment of the arbitration. According to sources close to the process, Judge Renata Maciel, from the 2nd Business Court and Arbitration Conflicts of the District of São Paulo, should detail the decision between May and June. In a hearing on the 18th, the last witnesses were heard in the case of hacking of the email servers of the owner of JBS, one of the arguments that support the request for annulment of the arbitration.

If the decision is unfavorable to J&F, the injunction that suspended the transfer of control of Eldorado will lose effect and there could be a loophole for PE to take control of the pulp producer. According to a source, as Eldorado no longer has debts guaranteed by J&F and both the PE funds to settle the transaction – R$5.7 billion – and the stock book are deposited in court at Itaú, the closing of the deal could take place. soon.

In this scenario, J&F must seek a new injunction suspending the effects of the arbitration award, at the São Paulo Court of Justice (TJ-SP), and try to prevent the “closing”, said another source.

Eldorado’s parent company is also considering appealing to the Judiciary, questioning the appointment of Portuguese lawyer Paulo Mota Pinto to compose the arbitration court, replacing Anderson Schreiber. The former arbitrator resigned after becoming the target of J&F in the request for annulment of the arbitration and, later, in a police investigation in Rio, which received a recommendation to archive the State Public Ministry.

The Batista holding company has already appealed against the appointment of the Portuguese arbitrator to the International Chamber of Commerce (ICC), on the grounds that, under Brazilian rules, Mota Pinto could not compose an arbitration court since he is a parliamentarian in your country. However, it was defeated on two occasions.