Major Brazilian contractors Galvão and OAS have filed for bankruptcy protection within a week of each other. Both are embroiled in the Petrobras corruption scandal, and say large payments are outstanding from the state-owned oil company for work they have carried out. OAS said it had payments outstanding from other clients too.
OAS added that since the ‘Operation Carwash’ investigation into corruption at Petrobras began, its credit rating has been downgraded, normal channels to funding had been closed and debts had been called in.
If the application for bankruptcy projection is approved by the Justice department, the companies are allowed to suspend payments to their creditors while they restructure. They have 60 days to submit a payment plan, which can then be considered for 120 days by creditors and suppliers.
OAS said it would sell non-core businesses such as its real estate and investment companies to restore liquidity, and would in future focus on the construction sector.
Galvão’s filing only applies to the Galvão Engenharia and Galvão Holding businesses and excludes the Group’s environmental, oil & gas, highway concession and finance companies.
According to sister magazine Construction Latin America (CLA), OAS is the 4th largest contractor in Brazil and the 5th largest in Latin America, with revenues of US$ 1.8 billion in 2013. Galvão is the 6th largest contractor in Brazil and 8th largest in the region, with sales in 2013 of US$ 1.7 billion.
iC’s ranking of the world’s 200 largest contractors put OAS 184th and Galvão 191st in last year’s global league table.