Deal to sell Peru's Aenza may collapse as settlement talks drag: sources

SAO PAULO/LIMA (Reuters) – Delays in signing an agreement settling corruption accusations against Peruvian construction conglomerate Aenza are threatening a deal to sell control of the group, three people with knowledge of the matter told Reuters in recent weeks.

Brazilian private equity fund IG4 Investimentos, which agreed in November 2019 to buy up to 25% of the company from its founding families and former executives, is warning it may withdraw its offer if a leniency agreement with prosecutors is not reached within 6 weeks, the sources added, asking for anonymity to disclose private discussions.

Aenza, formerly known as Grana y Montero, had partnered with Brazilian conglomerate Odebrecht SA on infrastructure projects in Peru and has been accused of bribing public officials, including former presidents. It has been targeted by graft investigations since 2017. Odebrecht also changed its name after the corruption scandal to Novonor.

When the deal was signed, IG4 acquired the shares and voting rights from members of Aenza’s founding families, and committed to a public offering to buy out minority shareholders after certain conditions were met.

They included signing a leniency agreement with Peruvian prosecutors that would protect acquirers from paying fines or being saddled with other fallout from the corruption scandal.

Continuing talks over the leniency agreement have been delayed by the pandemic and disagreements between the company and the Attorney General’s office, according to one person close to the collaboration process. An agreement may be reached within weeks.

The company needs to sign first and agreement on the criminal charges and the fine amount can be determined accordingly, the source added. An agreement may be reached within weeks.

In an e-mailed statement, Aenza said it is understandable that IG4 Capital has considered canceling the deal given the delay. The CEO of Aenza, Luis Diaz Olivero, recently said the company needs to sign the collaboration agreement and sell $90 million in convertible bonds to keep operations going. Peru’s attorney general office said it cannot comment on current negotiations.

If IG4 gives up on the deal, Aenza’s survival is uncertain, as well as its 17,000 jobs.

The Brazilian private equity firm had decided to transform Aenza into a platform to bid to operate infrastructure projects such as railways and airports in different Latin American countries.

IG4 was planning to sell its construction unit and had even started talks with prospective buyers, the sources added.

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