The ten-year alliance is over. After harsh sanctions imposed by the United States on the former president of Paraguay, Horacio Cartes, for corruption, bottler CCU and fuel distributor Enex on Wednesday closed the end of joint ventures with a partner who had become uneasy. CCU and Enex have signed agreements with their partners Bebidas del Paraguay, Distribuidora del Paraguay and Enex Paraguay, in order to complete the legal procedures to determine, before March 27, the complete separation of Grupo Cartes from those companies.
At the end of January 2023, the US Treasury Department reported that it had sanctioned the former President of Paraguay, Horacio Cartes, for his involvement in acts of corruption before, during and after his term of office and imposed a series of economic measures. penalties for him. The United States has blocked access to the American financial system for four of its companies: Tabacos USA Inc. and Bebidas USA Inc. and Dominicana Acquisition SA and Frigorífico Chajha SAE. after that, The Luksic group companies announced that they had activated the end of the alliances and gave Cartes 30 days to buy the shares of the Chilean companies, which are both subsidiaries of Quiñenco.
Quiñenco Holdings stated that the agreements comply with the shareholder’s intent to abide by the guidelines and procedures established by the US Treasury’s Office of Foreign Assets Control (OFAC) for finalizing transactions with Cartes and its business group entities. ,” and the deadline set by that institution for this purpose was the 26th of January, when it included Horacio Cartes and other companies associated with him in List of Specially Designated Nationals and Prohibited Persons (List of Prohibited Entities).
In light of the agreement, the Cartes Group – which owns more than 70 companies and is led by Horacio Cartes and his sister Sarah – will cease to own any direct or indirect shareholding in the companies in which CCU and Enex participate. Through this, the share package and management of each company separately, or in partnership with third-party investors, will be controlled by CCU, in the case of Bebidas del Paraguay and Distribuidora del Paraguay, and by Enex, in the case of Enex Paraguay.
Within the Agreement, as stated by CCU by Fundamental Fact, the acquisition by a third party unrelated to Cartes of all the shares it owns in those companies, within a period ending March 17, 2023 and subject to CCU agreeing with such third party certain modifications to Shareholder agreements currently in force in companies in Paraguay.
CCU owns 50.005% of Bebidas del Paraguay and 49.959% of Distribuidora del Paraguay. The agreement considers that CCU will first buy the percentage of the former Paraguayan president’s sister, Sara Cartes, which will give control of the two companies to the Chilean group. Although he did not specify it, in the ownership of Bebidas del Paraguay, Horacio Cartes owns about 45%, and Sarah 5%, as published. to throb in 2022.
If the third party fails to purchase Horacio Cartes’ participation in the beverage companies, the CCU will purchase their percentage and it will rise to 100%. The total amount that will be paid to Sarah and Horacio Cartes is $36.3 Million US Dollars.
A similar formula will be used at Enex, a company controlled by Quiñenco through Invexans, where the Chilean group and Horacio Cartes jointly own two halves. Here, too, the Chileans were keen to gain control of Enex Paraguay. Cartes has until March 17 to sell 50% of Enex Paraguay, which it controls through HC Energía, to a third party. However, this will be subject to Enex’s agreement with this third party to transfer a 1% stake in Enex Paraguay to Luksic Group. With this, Enex will be left with complete control of the business in Paraguay.
And again, if the sale to a third party does not take place before March 17th, Luksic will buy 50%, for US$35 million.
Besides communicating the agreement, the parties expressed their desire that the three companies be able to “continue all their operations as usual to continue providing their customers with quality services and products, preserving the companies that contribute to the generation of development and employment in Paraguay.”
Although Kartz’s sanction occurred in January 2023, the alliance began to unravel in July 2022, when US Secretary of State Anthony Blinken declared Kartz ineligible to visit the country and accused him of engaging in “significant acts of corruption”. In August, the president of Quiñenco and the CCU, Andrónico Luksic Craig, traveled to meet with the former president of Paraguay, accompanied by Quiñenco’s general manager, Francisco Pérez McKenna; The Attorney General, Rodrigo Hinzpeter, and the Directors General of CCU and Enex, Patricio Gutar and Nicholas Correa, respectively. And already on that occasion Luksic reported his intention to put an end to joint project that unite them and that would put an end to societies.
After the January sanctions, the process accelerated. During February, senior executives from CCU and Enex traveled to Paraguay to negotiate the terms of the division. For Koenenko, the negotiations were led by Koenenko’s attorney general and former interior minister, Rodrigo Hinzpeter.
