Embraer’s board of directors is expected today to approve proposed recapitalisation plans designed to fund new projects and its international expansion.
Currently around two-thirds of Embraer shareholders have preferential shares, which the company plans to swap for ordinary shares, which would then be traded on the high tech Novo Mercado section of the São Paulo stock exchange and the New York Stock Exchange. The company hopes the plans will increase its market capitalisation and help it fund future aircraft developments.
Shares in the Brazilian airframer have risen all week after reports of the recapitalisation plan were leaked to Brazilian financial newspaper Valor Econômico late last week. Shareholders would receive an extraordinary dividend to accept the new structure when it is put to shareholder vote following board approval.
Embraer is pressing ahead despite the failure of its plan to open an assembly line in the USA to build regional jets for the Aerial Common Sensor surveillance aircraft programme. The assembly line would have been in Jacksonville, Florida. The US Army cancelled the Lockheed Martin-led programme last week after it emerged that Lockheed had been unable to meet a payload weight the modified ERJ145 platform would be capable of carrying.
Despite this setback, Embraer says the recapitalisation will provide “long-term growth opportunities by facilitating access to the capital markets and increase financing resources for future new programme developments”.
As part of the proposal, the Brazilian government says it will keep the golden share it took during the company's privatisation, “in order to protect the strategic interests of Brazil, inherent to Embraer’s business activities”.
Source: Flight International
