Aircraft

Maurício Botelho is to step down as Embraer president and chief executive as part of widespread restructuring plans announced in Brazil today.

Botelho will become chairman of a "New Embraer" company to be formed following a recapitalisation programme. The new company structure was approved by the company's board yesterday at Embraer's headquarters in São José dos Campos near São Paulo and, subject to approval the shareholders, comes into effect in April 2007.

Flight International has learned that the leading internal candidate to replace Botelho as chief executive is current executive vice president Frederico Fleury Curado.

Embraer has detailed a proposal to transform its corporate structure in a bid to ease access to capital markets and build on its financing resources in order to fund future programme development.

Speaking at a press briefing today, Botelho said that the capital restructuring was the “most important event” since the company’s privatisation.

Competition for funding is fierce, he says, and, in order to develop, Embraer must “create the conditions” required for the company to compete. This means giving the company greater freedom to access financial markets.

Embraer is presently controlled by a group of three main shareholders, comprising investment agency Compañia Bozano and the pension funds Previ and Fundação Sistel de Seguridade Social, but also has minority shareholders and a government-held golden share.

Under the proposal, Embraer will be recreated as a new company which will only have common shares, including the government’s stake.

As part of the transition, the controlling shareholders’ shares will be transferred to a corporate vehicle known as Rio Han. These shares are considered to have a relatively high value and will be exchanged for shares in the new company at a premium ratio of 1.1153:1.

Other regular shares will be exchanged on a one-for-one basis. This will result in a slightly-increased participation, to 22%, of the current controlling shareholders in the new company’s capital stock.

While the new organisation will temporarily adopt the name Novo Embraer in order to facilitate the transition, it will be renamed ‘Embraer’ once the formalities are completed.

Shareholders will meet at an extraordinary general meeting on 31 March.

JUSTIN WASTNAGE & DAVID KAMINSKI MORROW / LONDON

Read Kieran Daly's blog on the Embraer succession.