XCMG, Brazil’s OAS in joint venture discussions: source

Chinese heavy machinery maker Xuzhou Construction Machinery Group Co ( XCMG) is in talks with Brazilian engineering company OAS SA to form a joint venture for construction in Africa and Latin America, a person with direct knowledge of the matter said on Friday.

According to the person, who was briefed on the talks, XCMG would contribute capital, equipment and financing to the venture. OAS would provide expertise in civil construction and engineering projects and a pipeline of contracts outside Brazil, the person added.

The venture would be the first major step in OAS’s efforts to rebuild itself almost three years after getting ensnared into Brazil’s biggest corruption scandal. In 2015, OAS became the first of Brazil’s major builders to file for bankruptcy after prosecutors accused it of bribing politicians to win lucrative contracts at state companies.

Both companies see the venture thriving in Africa, where Brazilian construction companies have a stable base of customers and strong reputation following several years of successful project execution, the person added.

Legal terms of the venture, or whether it would involve any cash investments or cross shareholdings, remain under discussion, said the person on condition of anonymity.

For XCMG, the world’s No. 5 construction machinery maker and its listed unit XCMG Construction Machinery Co, teaming up with OAS would help accelerate plans to grow across developing nations at a time when the price of some commodities, the main source of revenue for most of those countries, is recovering.

OAS, which before the scandal broke in early 2014 was Brazil’s No. 4 engineering conglomerate, has cut more than 30,000 jobs, sold assets and filed for bankruptcy protection to deal with the impact of the scandal.