SAO JOSE DOS CAMPOS, Brazil,
July 5, 2018 /PRNewswire/ -- Embraer
S.A. (the "Company" or "Embraer") hereby informs its shareholders
and the market in general that, on this date, it has entered into a
preliminary and non-binding memorandum of understanding, with The
Boeing Co. ("Boeing"), through which the parties have established
the basic premises for a potential combination of certain
businesses ("Memorandum" and "Transaction", respectively) as
detailed below. The execution of the Memorandum was duly
authorized by Company's Board of Directors at a meeting held
on this date.
The Transaction will include the creation of a joint venture
between the Company and Boeing, in the form of a Brazilian company
(the "New Partnership"), which will operate the commercial aviation
business currently being operated by the Company and combined with
the operations of the New Partnership. Boeing will acquire, upon
payment to the Company, shares issued by the New Partnership, so
that the Company and Boeing will hold 20% and 80% of the total
capital and voting stock of the New Partnership, respectively.
The executive jets and defense & security business units,
among others, will not be accessible to the New Partnership and
will continue to be developed and operated by Embraer.
The following chart demonstrates the corporate structure after
completion of the Transaction:
The Transaction also contemplates the facts and assumptions
indicated below.
1.
Overview
With the implementation of the Transaction, the Company will
remain a Brazilian publicly-listed company, registered in Category
A with shares listed in the special segment Novo Mercado of the B3 S.A. - Brasil, Bolsa,
Balcão. The Government of Brazil will preserve rights derived from its
ownership of the ordinary share, with special voting rights, issued
by the Company (golden share), under the terms set forth in the
Company's Bylaws.
In addition, in order to enable mutual growth and stability of
the business, the parties involved in the Transaction will enter
into long-term operating contracts involving engineering services,
reciprocal intellectual property licenses, research and development
agreements, agreement to share the use of certain establishments,
agreement to provide preferential treatment in the supply of
certain products and components and an agreement to maximize
potential opportunities in the supply chain.
The Transaction includes the transfer by the Company to the New
Partnership of the commercial aviation business currently being
operated by the Company (assets and liabilities), as well as the
transfer of related operations, services and engineering
capabilities. The Company will retain the executive jets and
defense & security business units, as well as the related
operations, services and engineering capabilities.
The parties to the Transaction will create another joint venture
for the promotion and development of new markets and applications
for defense products and services, notably the KC 390 multi-mission
aircraft, on jointly identified opportunities.
2. Financial
Terms
The amount attributed by the parties involved in the Transaction
for the New Partnership that will own 100% of the commercial
aviation business is US$4.75 billion,
subject to potential adjustments, of which Embraer will acquire 20%
and Boeing 80%, which contemplates a value of US$3.8 billion for Boeing's 80% ownership stake
in the New Partnership. This amount will be confirmed in due
diligence to be conducted by Boeing and will be subject to usual
adjustments to reflect changes in working capital and net debt of
the New Partnership. It is not yet possible to determine the net
effect of the Transaction on the Company's financial position and
results.
3. Corporate
Governance of the New Partnership
The New Partnership will be a company with operations,
management and headquarters in Brazil.
The New Partnership will be administered by a Board of Directors
and a Management Board, both bodies composed of professionals with
appropriate qualifications to fill their respective positions, and
Boeing shall have control of the New Partnership.
The Company shall have governance rights and shall be entitled
to veto certain matters, subject to terms and conditions to be
established in the definitive documents.
The New Partnership will have anti-dilution policy and a
dividend policy with the objective of protecting the Company's
investment in the New Partnership.
In order to align the interests of the parties in the
partnership resulting from the Transaction, as a general rule, the
Company and Boeing will not be able to dispose of their respective
shares issued by the New Partnership for a period of 10 years from
the closing of the Transaction (the "Lock-Up Period").
In addition, the final documents should provide for further
provisions regarding the transfer of shares, including the right of
first offer, tag-along rights and drag-along rights, in terms
customary for transactions of this type, and in compliance with the
Lock-Up Period. Under certain circumstances, the Company will have
the right to sell its interest in the New Partnership to Boeing, as
customary in transactions of this nature.
4. Necessary
Final Documents and Approvals
As of this date, the Company and Boeing will begin negotiations
of the definitive agreements for the Transaction, which shall set
forth in a binding manner, the structure and financial terms of the
Transaction on mutually satisfactory bases. In the event that the
parties reach a consensus on such definitive documents of the
Transaction, Embraer will consult the Brazilian Government, and the
parties shall submit necessary approvals for completion of the
Transaction, including among others, (i) approval by the Brazilian
Government; (ii) approvals by the competent corporate bodies of
both parties involved in the Transaction; and (iii) approval of the
competent regulatory authorities.
Accordingly, it is not possible at this time to provide any
guarantee as to entry into definitive agreements or the
consummation of the Transaction.
5. Other
Relevant Information
Until the actual consummation of the Transaction, both parties
will conduct their businesses completely separate and independent
from one another. Therefore, customers, suppliers, employees and
other third parties should not expect any change in the composition
of management, business relationships, supply agreements and supply
of products during this period from the Transaction.
If the definitive documents are entered into and all necessary
authorizations are obtained by the governmental authorities in a
timely manner, the Company expects the Transaction to close by the
end of 2019.
The Company will keep its shareholders and the market in general
informed about any new material information with respect to the
Transaction.
Nelson Krahenbuhl Salgado
Executive Vice-President of Finance and Investor Relations
Valtecio Alencar
Embraer Corporate Communications
valtecio.alencar@embraer.com.br
+5511-3040-6891
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SOURCE Embraer S.A.