Bolsonaro’s Son Weighs Into Dispute Over Brazil Pulp Maker

(Bloomberg) -- The son of Brazilian President Jair Bolsonaro, appointed by his father to become U.S. ambassador, just got indirectly involved in a clash between tycoons over the ownership of one of Brazil's largest makers of pulp.

Eduardo Bolsonaro, also a federal lawmaker, published Tuesday on his Twitter account a picture in which he appears receiving a symbolic 31-billion-real ($8.2 billion) check from Jackson Widjaja, the owner of pulp and paper producer Paper Excellence and grandson of Indonesian mogul Eka Widjaja, after a dinner in Jakarta.

In 2017, Paper Excellence agreed to buy Eldorado Brasil Celulose SA from the billionaire Batista brothers. But the deal collapsed amid a dispute over collateral. In the tweet, Bolsonaro made reference to an arbitration process that Paper Excellence opened against the Batistas' holding company J&F Investimentos SA.

Read More: Billionaire Versus Billionaire: Meat Kings Clash With Pulp Heir

“This amount will be invested in Brazil through the end of 2022,” Eduardo Bolsonaro said on Twitter. “For this long-term investment to be realized, it's needed to solve a litigation involving J&F, controlled by the brothers Joesley and Wesley Batista, and Eldorado's sale.”

In 2017, the Batistas agreed to sell Eldorado to Paper Excellence after getting embroiled in a corruption scandal. But a year later, J&F said it was ending the agreement after Paper Excellence missed the deadline to free up 8 billion reais in collateral that the Batistas had offered to secure bank loans to Eldorado. Widjaja's company, which had already bought a 49.4% interest in Eldorado, argued in court that the Batistas failed to cooperate for the collateral release and opened an arbitration process to take full ownership of the Brazilian pulp maker.

The 31 billion reais that Widjaja has pledged to invest in Brazil would include a 4 billion-real payment to the Batistas for a remaining stake in Eldorado and over 5 billion reais in Eldorado debt, part of which is owed to Brazilian development bank BNDES, a person with direct knowledge of the matter said. The remainder would be spent in a second pulp production line in Tres Lagoas, a municipality in Mato Grosso do Sul state.

J&F and Paper Excellence declined to comment on the tweet. Bolsonaro wasn't immediately available to comment.

--With assistance from Samy Adghirni.

To contact the reporters on this story: Tatiana Freitas in São Paulo at tfreitas4@bloomberg.net;Gerson Freitas Jr. in São Paulo at gfreitasjr@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Patrick McKiernan

©2019 Bloomberg L.P.