Chinese state-owned defence giant Norinco has submitted a proposal to Brazilian authorities to acquire a 49 percent stake in Avibras Aeroespacial, the leading heavy defence systems manufacturer in Brazil.
Norinco reportedly took an interest in the acquisition after Australian investor group DefendTex was forced to withdraw from negotiations due to difficulty in obtaining the necessary financing for the project, valued at USD 200 million, and disagreement over supplying weapons to Ukraine.
Avibras Aeroespacial is the main supplier of missiles and rockets for the Brazilian army and solely responsible for supplying ammunition for the Astros System of self-propelled multi-rocket launchers. It is also developing the first Brazilian tactical cruise missile, which will have a range of 300 kilometres.
Years of financial difficulties, however, forced the company to file for judicial recovery in March 2022. The company then laid off 420 employees, a third of its workforce, and those who remained were not paid for more than a year.
Avibras’ debt, estimated at 570 million reais (USD 104.5 million) in 2022, has now ballooned to 700 million reais (USD 128.480 million).
A deal with Norinco would offer a much-needed injection of cash, but would arouse the ire of China’s geopolitical rival the US and could lead to sanctions on Avibras, cutting it off from US companies currently in its supply chain.
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