The debentures issued by Braskem in 2002, during the company’s creation process, and fully subscribed by ODBPAR, will be converted into Braskem shares, by decision of the major shareholder, Odebretcht S/A. The conversion of the total of 59,185 debentures, set for July 31, will have a positive impact on Braskem´s capital structure and financial leverage.

"The decision taken by Odebretcht to convert the debentures into Braskem shares confirms the confidence of the major shareholder on the company’s strong capacity to create value, and in our talent to achieve growth, aimed at placing Braskem among the 10 major petrochemicals of the world in terms of market value in the next years", states Braskem’s chairman, José Carlos Grubisich.

The debentures were issued with the payment of interest and amortization in a single installment set for July 31, 2007. The conversion shall be into class "A" preferred and ordinary Braskem shares, obeying the maximum limit of 2/3 of preferred shares.

The balance from the debentures set for July 31 is of approximately R$ 1.2 billion and the conversion price R$ 14.37 per share. As result of the conversion on July 31, about 77.5 million Braskem shares should be issued, out of which 25.8 million are ordinary shares and 51.7 million are class "A" preferential shares, values which may suffer correction in case of any changes occurring in the Long Term Interest Rate ("TJLP") of the month of July. Thus, the Braskem’s floating shares should go from 49% on May 31/2007, to 45.2% on July 31/2007.

According to Carlos Fadigas, Braskem’s vice-president of Finances and Investor Relations, "the conversion of debentures into shares will result in a series of positive impacts in favor of Braskem, from the asset and economic-financial perspective, highlighting (1) the improvement of the company’s capital structure, (2) reduction in financial expenses by about R$ 130 million per annum with the debenture capitalization, leverage, measured by the net debt over the EBITDA, which had reduced from 2.51 times to 1.8 times on March 31, 2007, without taking into account the effects of the merger of Copesul and the petrochemical assets of the Ipiranga Group."

The major accounting aspects will already reflect on Braskem’s financial statements as soon as the results of the second quarter of 2007 are disclosed.