Exchange Rates
The current laws
and regulations governing the Brazilian foreign exchange system allow the purchase and sale of foreign currency and the international
transfer of reais by any person or legal entity, regardless of the amount, subject to certain regulatory procedures. Since 1999,
the Central Bank has allowed the U.S. dollar-real exchange rate to float freely, and, since then, the U.S. dollar-real exchange
rate has fluctuated considerably.
In the past, the
Central Bank has intervened occasionally to control unstable movements in foreign exchange rates. We cannot predict whether the Central
Bank or the Brazilian government will continue to permit the real to float freely or will intervene in the exchange rate market
through the return of a currency band system or otherwise. The real may depreciate or appreciate against the U.S. dollar substantially.
Furthermore, Brazilian law provides that, whenever there is a serious imbalance in Brazil’s balance of payments or there are serious
reasons to foresee a serious imbalance, temporary restrictions may be imposed on remittances of foreign capital abroad. We cannot assure
you that such measures will not be taken by the Brazilian government in the future. See “—Risk Factors—Risks Relating
to Brazil—Brazilian government exchange control policies could increase the cost of servicing our foreign currency-denominated debt,
adversely affect our ability to make payments under our foreign currency-denominated debt obligations and impair our liquidity”
and “—Risk Factors—Risks Relating to Our Equity and Debt Securities—If holders of the ADSs exchange them for class
A preferred shares, they may risk temporarily losing, or being limited in, the ability to remit foreign currency abroad and certain Brazilian
tax advantages.”
ITEM 3.A (Reserved)
ITEM 3.B CAPITALIZATION AND INDEBTEDNESS
Not applicable.
ITEM 3.C REASONS FOR THE OFFER AND USE
OF PROCEEDS
Not applicable.
ITEM 3.D RISK FACTORS
Summary of Risk Factors
Below is a
summary of certain factors that make an investment in our securities speculative or risky. Importantly, this summary does not address
all of the risks and uncertainties that we face. This summary is qualified in its entirety by a more complete discussion of such risks
and uncertainties. In evaluating an investment in our securities, investors should carefully read the risks described below, as well
as other risks and uncertainties that we face, which can be found under “—Risk Factors” in this section of this annual
report. If any of the following events occur, our business, financial condition, and operating results may be materially adversely affected.
In that event, the trading price of our securities could decline, and you could lose all or part of your investment. Such risks include,
but are not limited to:
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Risks Relating To Our Business And
The Petrochemical Industry
· The cyclical and volatile nature of the petrochemical industry may reduce our net revenue and gross margin, impacting our financial condition.
· Adverse conditions in the petrochemical industry may adversely affect demand for our products.
· We face competition from suppliers of polyethylene, polypropylene, PVC, and other products.
· We may face competition from producers of substitutes for our products as a result of evolving technology, consumer and industry trends and preferences, and regulatory changes.
· Our revenue from certain of our customers may be significant, and the credit risks associated with customers could adversely affect the results of our operations and increase expected credit losses.
· Higher raw materials costs would increase our cost of products sold and may reduce our gross margin and negatively affect our overall financial performance.
· We rely on limited or sole-source suppliers for our raw materials, inputs, and energy, including transportation thereof.
· We do not hedge against price changes in our raw materials and, as a result, we are exposed to such fluctuations.
· We depend on Petrobras to supply us with a substantial portion of our feedstocks such as naphtha, ethane, propane, refinery off gas and propylene needs, and on logistics services.
· We depend on propylene and ethylene supplied by third parties in the United States and Europe.
Risks Relating To Global Macroeconomics
Factors
· Global macroeconomic factors have had, and may continue to have, adverse effects on the margins that we realize on our products.
· We may be affected by instability in the global economy and by financial turmoil, including as a result of military conflicts such as those between the United States, Israel and Iran, Russia and Ukraine, and other conflicts in the Middle East.
Risks Relating To Our Operations
· Our polyolefins and vinyls units in Brazil depend on our chemicals operations to supply them with their ethylene and propylene requirements. In addition, our Brazilian plants depend on certain providers of utilities, including environmental services for the treatment of effluents, industrial waste and water supply for industrial use.
· We may be materially adversely affected if there is an imbalance in global logistics, which may cause disruptions to our transport, storage and distribution operations, negatively impacting the costs related thereto.
· We rely on access to third-party licensed technology and related intellectual property, and if such rights cease to be available to us on commercially reasonable terms, or at all, or if any such third party ceases to provide us with technical support under license or technical services agreements, certain of our production plants, our operating results and financial condition could be adversely affected.
· Capital projects can take many years to complete, and market conditions could deteriorate significantly between the project approval date and the project startup date, negatively impacting project returns and the implementation of our growth strategy. If we are unable to complete projects and investments at their expected cost and in a timely manner, or if the market conditions assumed as a basis for our project economics deteriorate, our business, financial condition, results of operations and cash flows could be materially and adversely affected.
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· Our insurance coverage may be ineffective, either due to the lack of coverage for any claim, or due to insufficient coverage limits in the event of damage.
· Under our growth strategy, we may pursue strategic acquisitions, investments and investments in new businesses. The failure of an acquisition, investment or investments in new businesses to produce the anticipated results, or the inability to integrate an acquired company, could adversely affect our business financial condition and results of operations
· Labor strikes may materially and adversely affect our operations.
Risks Relating To Health, Safety
And Environmental Aspects
· Our business and operations are inherently subject to environmental, health and safety risks. As a result, our business is also subject to several stringent regulations, including environmental regulations.
· Natural disasters, severe weather and climate conditions, or health epidemics could have a material adverse effect on our overall business.
· Climate change may negatively affect our business, financial condition, results of operations and cash flow.
· Climate change-related risks and uncertainties, legal or regulatory responses to climate change and failure to meet our sustainable development objectives could negatively impact our results of operations, financial condition or reputation.
Risks Relating To Our Shareholders
· Some of our shareholders may have the ability to determine the outcome of corporate actions or decisions, which could affect the holders of our class A preferred shares and the ADSs.
· We may be subject to attempts to acquire our control, which may lead to significant changes in management, the strategies that we are currently pursuing, or in our current corporate governance practices.
· We may face conflicts of interest in transactions with related parties.
· If we are unable to comply with the restrictions, covenants or guarantees in the agreements governing our, or certain subsidiaries, indebtedness and liabilities, there could be a default under the terms of these agreements, which could result in an acceleration of payment of funds that we have borrowed or guaranteed and could affect our ability to make principal and interest payments on our debt and liabilities obligations.
· There can be no assurance that Novonor will remain our controlling shareholder. Novonor and Petrobras may enter into transactions or other arrangements that may result in us not having a controlling shareholder. If no single shareholder or group of shareholders holds more than 50% of our voting stock or exercise a controlling interest, there may be increased opportunity for alliances between shareholders and conflicts between them.
· We lost the right of preference set forth in the current shareholders’ agreement with respect to new business opportunities in the petrochemical sector, and as result, Petrobras, which is our largest supplier of raw materials in Brazil, will be able to invest in the petrochemical sector independently from us and without first giving us a preference to do so.
Risks Relating To Legal And Regulatory
Matters
· Adjustments in tariffs on imports that compete with our products could cause us to lower our prices.
· Changes in U.S. and global trade policies and other factors beyond our control may adversely impact our business, financial condition and results of operations.
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· New Tariffs Imposed or Threatened by the United States Could Result in Increased Costs.
· Failure to comply with export control or economic sanctions laws and regulations could have a material adverse impact on our results of operations, financial condition and reputation.
· We may not be able to specify in details technical specifications required by our customers’ or updated mechanisms to promptly attend regulatory requirements, and we could be subject to damages based on claims brought against us or our customers as a result of the failure of our products specification.
· We may not be able to obtain or renew all licenses, permits and authorizations necessary for conducting our business.
· We could be materially adversely affected by the impacts of the Global Settlement.
· Unfavorable outcomes in pending or future litigation may reduce our liquidity and negatively affect our financial performance and financial condition.
· We could be materially affected by violations of the FCPA, the Brazilian Anti Corruption Law and similar anti-corruption laws.
· We are exposed to behaviors of our employees, non-employees and third parties that may be incompatible with our ethics and compliance standards, and failure to timely prevent, detect or remedy any such behavior and/or process vulnerabilities may have a material adverse effect on our results of operations and financial condition.
· Unauthorized disclosure or loss of intellectual property, sensitive confidential or personal information, or disruption to information technology systems by cyberattacks or other security breaches, as well as our failure to comply with data protection laws and information security requirements may subject us to significant penalties or liability and may adversely impact our operations, reputation, and financial results.
· We are subject to audit by the tax authorities in the jurisdictions in which we operate, which may adversely affect our operating results and financial condition.
· Changes in tax laws may result in increases in certain direct and indirect taxes, which could reduce our gross margin and negatively affect our overall financial performance.
Risks Relating To Brazil
· Brazilian political, economic and business conditions, and the Brazilian government’s economic and other policies, may negatively affect demand for our products as well as our net revenue and overall financial performance.
· Changes in industrial policy and related actions undertaken by the Brazilian government and local state governments in Brazil may negatively affect demand for our products as well as our net revenue and overall financial performance.
· Fluctuations in the real/U.S. dollar exchange rate could increase inflation in Brazil, raise the cost of servicing our foreign currency-denominated debt and negatively affect our overall financial performance.
· The Brazilian government’s actions to combat inflation may contribute significantly to economic uncertainty in Brazil and reduce demand for our products.
· Fluctuations or changes in, or the replacement of, interest rates could impact the cost of servicing our debt or reduce our financial revenue, affecting our financial performance.
· Brazilian government exchange control policies could increase the cost of servicing our foreign currency-denominated debt, adversely affect our ability to make payments under our foreign currency-denominated debt obligations and impair our liquidity.
Risks Relating To Mexico
· Political conditions in Mexico may affect actions or decisions by the Mexican government, including Pemex, Cenagas, CFE and CENACE, which are, respectively, Braskem Idesa’s main suppliers of ethane, a provider of natural gas transportation services, an electricity back-up supplier, and the controller of national grid and dispatches of energy power generators, all of which are Mexican state-owned enterprises or governmental entities subject to political interference and related risks.
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· Mexico has experienced adverse economic conditions, which may adversely affect our business.
· A renegotiation of commercial treaties or changes in foreign policy among Mexico, Canada and the United States may negatively affect our business, financial condition, results of operations and prospects.
· Political events in Mexico could affect the Mexican economic policy and our business, financial condition and results of operations.
· We depend on ethane supplied by Pemex in Mexico.
· We depend on services and products supplied by a Mexican state-owned company.
· We may face unforeseen challenges in the operation of our Mexico Complex, which could result in this business unit failing to provide expected benefits to us.
· We source part of our ethane feedstock from Pemex in Mexico, which we expect to be our primary main source of ethane until the Ethane Import Terminal is operational.
· We may be unable to operate the Mexican Complex at full capacity or at all if one or more of our sources of ethane is disrupted.
· We depend on regulatory authorizations to import ethane for our production activities in México.
· The development of the Ethane Import Terminal may not be successful and may not commence operation as scheduled, be completed within budget or operate at expected levels, which could have a material adverse effect on our businesses, financial condition, cash flows, results of operations and/or prospects.
Risks
Relating To Our Equity and Debt Securities
· Our financial statements as of and for the year ended December 31, 2025 contains a footnote related to a substantial doubt about our ability to continue as going concern, due to increasing pressure on liquidity
· The Company is currently assessing alternatives to optimize its capital structure, and the outcome of this process, including any potential restructuring or creditor protection measures, is uncertain and is expected to adversely affect the Company and its stakeholders.
· All of the shares issued by Braskem and owned by NSP Inv. are secured for the benefit of certain secured creditors of the Novonor Group.
· Holders of our class A preferred shares or the ADSs may not receive any dividends or interest on shareholders’ equity.
· Our class A preferred shares and the ADSs have limited voting rights and are not entitled to vote to approve corporate transactions, including mergers or consolidations of our Company with other companies, or the declaration of dividends.
· Holders of the ADSs may find it difficult to exercise even their limited voting rights at our shareholders’ meetings.
· If holders of the ADSs exchange them for class A preferred shares, they may risk temporarily losing, or being limited in, the ability to remit foreign currency abroad and certain Brazilian tax advantages.
· Restrictions on the movement of capital out of Brazil may impair the ability of holders of our shares, ADSs and debt securities to receive payments on their respective obligations or guarantees and may restrict our ability to make payments in U.S. dollars.
· The foreign exchange policy of Brazil may affect the ability of Braskem to make money remittances outside Brazil in respect of our equity securities or debt securities.
· Holders of the ADSs may face difficulties in protecting their interests because we are subject to different corporate rules and regulations as a Brazilian company and our shareholders may have fewer and less well-defined rights than under the laws of other jurisdictions, including in a jurisdiction in the United States.
· Holders of the ADSs may face difficulties in serving process on or enforcing judgments against us and other persons.
· Judgments of Brazilian courts enforcing Braskem’s obligations under our equity securities, debt securities or related guarantees would be payable only in reais.
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· Actual or anticipated sales of a substantial number of class A preferred shares could decrease the market prices of our class A preferred shares and the ADSs.
· Holders of the ADSs or class A preferred shares in the United States may not be entitled to the same preemptive rights as Brazilian shareholders have, pursuant to Brazilian legislation, in the subscription of shares resulting from capital increases made by us.
· Brazilian tax laws may have an adverse impact on the taxes applicable to the disposition of our ADSs and preferred shares.
· The relative volatility and liquidity of the Brazilian securities markets may adversely affect holders of our class A preferred shares and ADSs.
· Economic developments and investor perceptions of risk in other countries, including both in developed or emerging market economies, may adversely affect the trading price of Brazilian securities, including our common shares and ADSs, as well as any outstanding debt securities.
· We rely on cash generated from operations and external sources to fund our ongoing capital needs. Our level of indebtedness and cash consumption could adversely affect our liquidity position and ability to raise additional capital to fund our operations, limit our ability to react to changes to general market and economic conditions and changes in our industry, and prevent us from meeting our obligations under our agreements (including financing agreements).
· Any downgrade in the ratings of Brazil, our Company or our debt securities would likely result in increased interest and other financial expenses related to our borrowings and debt securities that could reduce our liquidity.
· Because Braskem Netherlands Finance B.V. and Braskem America Finance Company have no operations of their own, holders of our outstanding debt securities issued by Braskem Netherlands Finance B.V. or Braskem America Finance Company depend on Braskem to provide Braskem Netherlands • Finance B.V., respectively, with sufficient funds to make payments on these debt securities when they become due.
· Payments on Braskem’s guarantees are junior to Braskem’s secured debt obligations and effectively junior to the debt obligations of Braskem’s subsidiaries and jointly controlled companies.
· Braskem’s obligations under the guarantees of the outstanding debt securities are subordinated to certain statutory preferences.
· Brazilian insolvency laws may be less favorable to holders of our shares, ADSs, and outstanding debt securities than bankruptcy and insolvency laws in other jurisdictions.
· Braskem Idesa is currently assessing alternatives to optimize its capital structure, and the outcome of this process, including any potential restructuring or creditor protection measures, is uncertain and is likely adversely affect the Company and its stakeholders. There is substantial doubt as to the ability of Braskem Idesa to continue as going concern.
Risk Factors
Risks Relating To Our Business And The Petrochemical Industry
The cyclical and volatile nature
of the petrochemical industry may reduce our net revenue and gross margin, impacting our financial condition.
The petrochemical
industry, including the global markets in which we compete, is cyclical and sensitive to changes in global supply and demand. Our future
operating results are expected to continue to be affected by this cyclicality and volatility. This cyclicality may reduce our net revenue,
increase our costs, and decrease our gross margin, including as follows:
· downturns in general business and global economic activity may cause demand for our products to decline;
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· when global demand falls, the industry may face competitive pressures to lower its prices, and so may we;
· changes in energy prices and other worldwide economic conditions can cause volatility that lead to increases in prices of the raw materials we use, including naphtha, ethane, ethanol and propylene, resulting in significant fluctuations in profits and cash flow from period to period and over business cycles; and
· if we decide to expand our plants or construct new plants, we may do so based on an estimate of future demand that may never materialize or may materialize at levels lower than we predicted.
Historically, the
international petrochemical markets have experienced alternating periods of limited supply, which have caused prices and profit margins
to increase, followed by expansion of production capacity worldwide, which has resulted in oversupply and reduced prices and profit margins.
Prices in the petrochemical industry follow the global petrochemical industry, and we establish the prices for the products we sell in
Brazil, other countries in Latin America, the United States, Europe, and the world with reference to international market prices. Therefore,
our net revenue, feedstock costs, and gross margin are linked to global industry conditions that we cannot control, and which may adversely
affect our results of operations and cash flow. As disclosed by the Company in the material fact notice dated September 26, 2025, the
Company engaged specialized financial and legal advisors to assist in preparing a comprehensive assessment of economic and financial alternatives
to optimize its capital structure. Such assessment is still ongoing, and the Company and its advisors have been making structured progress
in the formulation of a comprehensive plan to restructure its capital structure, as well as in negotiations with the creditors’
advisors, as reported in its financial statements for the fiscal year ended 2025, included in this annual report.
In the course of
the work related to such assessment, the Company and its advisors are considering different alternatives, including potential creditor
protection measures. Notwithstanding, we clarify that, as of this date, there is no decision regarding which alternative (or set of alternatives)
to be implemented.
Moreover, relevant
events or changes in the cycle and in the petrochemical industry, including initiatives to pursue self-sufficient production targets such
as in China, technological innovations, and regulatory changes including related to climate change, may materially affect the future profitability
of our business and consequently reduce the recoverable value of our assets, which is reviewed by the annual impairment test, which may
adversely affect the profit attributable to our shareholders.
Adverse conditions in the petrochemical
industry may adversely affect demand for our products.
Sales of our petrochemical
and chemical products are tied to global production levels and demand, which can be affected by macro-economic factors such as interest
rates, international oil prices, energy prices, shifts to alternative products, consumer confidence, employment trends, regulatory and
legislative oversight requirements, trade agreements, regulatory developments including related to climate change, as well as regional
disruptions, armed conflicts, natural disasters, epidemics, pandemics, or other global events. Therefore, our net revenue, feedstock costs,
and gross margin are linked to global conditions that we cannot control, and which may adversely affect our results of operations and
financial position. For example, the persistence of the geopolitical conflicts, such as the war in Iran, which is currently impacting
the Strait of Hormuz, the conflict involving Russia and Ukraine, the conflicts involving Hamas, Israel and Hezbollah, and other conflicts
in the Middle East (including economic sanctions and other regulations imposed by the United States and other international countries
as a result thereof) could negatively impact supply chains worldwide and demand for our products and the raw materials we use. Should
the conflict in Iran or other international locations further escalate, it is difficult to anticipate the extent to which the consequences
of such conflict, including without limitation effects on the price of oil and current or future sanctions, could increase our costs,
disrupt our supplies including feedstock, reduce our sales, or otherwise affect our operations.
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We face competition from suppliers
of polyethylene, polypropylene, PVC, and other products.
We face strong competition
across all of our products. Some of our foreign competitors are substantially larger and have greater financial, manufacturing, technological,
competitive feedstock and/or marketing resources than us. Our U.S. operations face competition in the United States from other North American
suppliers that serve the North American market. Our European operations face competition in Europe and the other export markets that it
serves from European and other foreign suppliers of polypropylene more competitive than us. Our Mexico operations face competition from
Mexican and U.S. producers of polyethylene. Competitors from South America may export to Brazil with reduced or no import duties, including
through the Manaus Free Trade Zone (Zona Franca de Manaus) and competitors from North America may export to Brazil with reduced
taxes or no import duties through the Manaus Free Trade Zone (Zona Franca de Manaus). In addition, suppliers of almost all continents
have regular or specific sales to trading companies and direct customers in Brazil for our products, including resins.
We generally follow
the international markets with respect to the prices for our products sold in Brazil. The domestic price is determined by the import parity,
which is based on converters’ imports into Brazil and typically represents spot market price, including but not limited to exchange
rate fluctuations and import tariffs that the Brazilian government uses to implement economic policies. Adjustments of tariffs could lead
to increased competition from imports, causing us to lower our domestic prices and impact the demand for our products, which would likely
result in lower net revenue and could negatively affect our overall financial performance. This combined effect would have a negative
impact on our gross margins and overall financial performance. We have no control over the import tax rate policy in Brazil or Mercosur
(the Southern Common Market, or Mercosur in Spanish), a common market that serves as a regional integration process and was initially
established by Argentina, Brazil, Paraguay, and Uruguay, and subsequently joined by Venezuela and Bolivia. Petrochemical import taxes
that are currently in place have changed in the past and may change in the future, including as a result of decisions of the Brazil government
or Mercosur. We generally set the prices for our products exported from Brazil based on international market prices. We set the prices
for products sold in the United States and Europe based on market pricing in such regions. The price for polyethylene in Mexico is based
on prices in the U.S. Gulf Coast region.
As a result of the
fractioned gas-based ethylene and polyethylene capacities and of the new capacities for the production of resins and petrochemicals, coupled
with the competitive pricing of feedstock for petrochemicals production such as ethane, we anticipate that we have been experiencing increased
competition from producers of thermoplastic resins, especially from North American, Middle Eastern, and Chinese producers, in the markets
in which we sell our products.
In addition, the
Chinese government has exercised, and continues to exercise, significant influence over the Chinese economy, including governmental actions
to incentivize and achieve self-sufficiency production in some specific chains, such as PE and PP. Those new capacities have led to a
relevant rebalancing of global export flows and an increase in global competition from our competitors, some of which are larger and have
greater competitive advantages than us.
In addition, exchange
rate variations may affect the competitiveness dynamics in different regions in which we operate. For instance, the appreciation of the real against
the U.S. dollar may increase the competitiveness of imported products, which may increase the competition from resins producers
in Brazil. Also, (i) the appreciation of the Euro against the U.S. dollar may increase the competitiveness of imported products and, as
a consequence, increase competition from imports, and (ii) the appreciation of the Mexican peso against the U.S. dollar may increase the
competition from other resins producers in Mexico.
We may face competition from producers
of substitutes for our products as a result of evolving technology, consumer and industry trends and preferences, and regulatory changes.
We compete in a market
that relies on technological innovation and the ability to adapt to evolving consumer and global industry trends and preferences. Petrochemical
products and other products produced with our petrochemical products, such as consumer plastic items, are subject to changing consumer
and industry trends, demands, and preferences, as well as stringent and constantly evolving regulatory and environmental requirements.
Therefore, products once favored may, over time, become disfavored by consumers or industries or no longer be perceived as the best option,
which may, therefore, affect our results of operations and financial position.
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Plastic waste and
climate change are global environmental concerns that receive growing attention from society in general, national and local governments,
private companies, trendsetters, and consumers worldwide. There has been a growing trend to attempt to move away from the use of plastic
products, which has been backed by governmental and lawmaking initiatives.
In 2019, the European
Union approved regulations banning as of 2021 single-use plastic items such as plates, cutlery, straws, and cotton bud sticks and adopting
a strategy for the disposal of plastic products in a circular economy that aims to increase recycling significantly and targets the plastic
products most often found on beaches and in seas. The European Union is now currently revising such rules to increase recycling and recycled
content targets, as well as to establish new regulations on the design and labeling of plastic products. In addition, state and local
governments in other countries, for example in China and in Brazil, have also proposed or implemented bans on single-use plastic products.
Regarding regulatory issues related to plastic for single use in Brazil, proposed regulations are being discussed at the federal, state,
and municipal levels.
Additionally, legislative
proposals on carbon border adjustment mechanisms aiming at preventing carbon leakage have been under discussion in several countries.
So far, none of the proposals have yet affected chemicals and plastic resins, but this might change in the future.
Also, new competitors
may develop new technologies to offer less carbon-intensive products, which could result in a loss of our competitiveness and a reduction
of our revenues.
In addition, regulations
may be amended or enacted in the future that could make it more difficult to appeal to our customers, end consumers, or market the products
that we produce. For example, failure to comply with applicable policies could lead to lower demand for our products, banning of
plastic products without allowing the search for alternatives employing efficient solutions, including resins produced by us, could have
a material adverse effect on our business, results of operations and financial condition. Also, even if we are able to continue promoting
our products, there can be no assurance that our competitors, including producers of substitutes, will not be successful in persuading
consumers of our products to switch to their products. Some of our competitors may have greater access to financial or other resources
than we do, which may better position them to react and adapt to evolving trends, preferences, and regulatory changes. Any loss of interest
in our products or consumer products produced with our products may have a material adverse effect on our business, results of operations,
and financial condition.
Our revenue from certain of our
customers may be significant, and the credit risks associated with customers could adversely affect the results of our operations and
increase expected credit losses.
We engage in several
transactions where counterparty credit risk is a relevant factor, including transactions with certain of our customers. These risks are
dependent upon market conditions and also the real and perceived viability of the counterparty. The failure or perceived weakness of any
of our counterparties has the potential to expose us to risk of loss in certain situations. Our revenue from certain of our customers may
be significant, and the credit risks associated with these customers could adversely affect our results of operations.
Additionally, if
the viability of the business of certain of our customers deteriorates, these customers seek bankruptcy protection, or our credit policies
are ineffective in reducing our exposure to credit risk relating to such customers, our ability to collect our receivables may be adversely
affected, and additional increases in expected credit losses accounts may be necessary, which could have a material adverse effect on
the results of operations and our cash flows. We record expected credit losses in an amount we consider sufficient to cover estimated
losses on the realization of our trade accounts receivable, considering our loss experience and the average aging of our accounts receivable,
but we cannot assure you that these amounts will be sufficient to cover eventual losses. In
addition, delays in payment cycles by customers may adversely affect our liquidity including the ability to obtain financing for working
capital, such as sales of receivables.
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Higher raw materials costs would
increase our cost of products sold and may reduce our gross margin and negatively affect our overall financial performance.
Naphtha, propylene,
ethane, condensate, refinery off gas, and propane are the main raw materials used in our operations. For the year ended December 31, 2025,
these raw materials accounted for an aggregate of 61% of our consolidated cost of products sold. Comparatively, they represented 63% in
2024.
Naphtha, a crude
oil derivative, is the principal raw material in Brazil that we use to produce our chemical and petrochemical products in Bahia, São
Paulo and Rio Grande do Sul, and represents the principal production and operating cost in the region.
In addition, ethane
and propane are the principal raw materials that we use to produce our chemical and petrochemical products in our petrochemical complex
located in Duque de Caxias, in the State of Rio de Janeiro, or the Rio de Janeiro Complex, and represent the principal production and
operating cost of such complex. Propylene is the principal raw material that we use to produce polypropylene in the United States and
Europe and represents the principal production and operating cost of our United States and Europe Segment. We also purchase propylene
in the Brazilian market for certain of our Brazilian polypropylene plants.
Ethane is the principal
raw material that we use to produce ethylene in the Braskem Idesa’s industrial site (“Mexico Complex”) and represents
its principal production and operating costs.
In Brazil, we purchase
naphtha at prices based on the Amsterdam-Rotterdam-Antwerp naphtha price, or the ARA price, and ethane and propane based on Henry Hub
gas and Mont Belvieu propane reference price. We purchase ethane used by our Mexico Segment at prices based on Mont Belvieu ethane reference
price. We purchase the propylene used in Brazil based on the international reference prices and in United States plants at prices based
on the U.S. Gulf (“USG”) reference prices. We purchase the propylene used in our European plants as reported by international
references based on the monthly contract price for propylene for Europe. We purchase refinery off gas used in the São Paulo petrochemical
complex at a price related to imported natural gas price.
The ARA price of
naphtha fluctuates primarily based on Brent crude oil but also follows the markets of fuels and petrochemicals.
The price of naphtha,
condensate, ethane, propane, and propylene in the international market has been, and may continue to be, volatile. In addition, fluctuations
in the U.S. dollar in the future may effectively increase our naphtha, ethane, propane, and propylene costs in reais. Any increase
in naphtha, ethane, propane, or propylene costs would reduce our gross margin and negatively affect our overall financial performance
to the extent we are unable to pass on these increased costs to our customers and could result in reduced sales volumes of our products
and cash flows.
We rely on limited or sole-source
suppliers for our raw materials, inputs, and energy, including transportation thereof.
For naphtha supply
to Brazil, we rely on several international suppliers for most of the purchases for the crackers in the states of Bahia and Rio Grande
do Sul, and we rely on Petrobras for all of the supply for the cracker located in the state of São Paulo, and we rely on Petrobras
for a major part of our supply of ethane and propane in the state of Rio de Janeiro. Also, we are subject to substantial risks because
of our reliance on these and other limited or sole-source suppliers of raw materials, additives, catalyzers, other inputs, energy, and
other utilities, including the following risks:
· if a supplier does not provide naphtha, ethane, propane, refinery off gas, propylene, sea salt, other inputs (including natural gas), or energy, as the case may be, that meet our or their specifications in sufficient quantities and with acceptable performance or quality on time or deliver when required, then sales, production, delivery of our products to our customers on a timely manner and revenue from our plants could be adversely affected;
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· if our relationship with a key supplier changes or is adversely affected, for example, due to competitive pressures (or conflicting interests), we may be unable to obtain naphtha, ethane, propane or propylene, natural gas, or other inputs, as the case may be, on satisfactory financial terms;
· if an interruption of supply of naphtha, ethane, propane, refinery off gas, propylene, sea salt, other inputs (including natural gas), or energy, as the case may be, occurs because a supplier changes its technology roadmap, suffers damage to its manufacturing plants, decides to no longer provide those products or services, increases the price of those products or services significantly or imposes reduced delivery allocations on its customers, it could take us a considerable period of time to identify and qualify alternative suppliers;
· some of our key suppliers are small companies with limited financial and other resources, and as a result, they may be more likely to experience financial and operational difficulties than larger, well-established companies, which increases the risk that they will be unable to deliver products as needed;
· some of our suppliers are state-owned enterprises subject to political interference, including in Mexico; and
· if a key supplier is acquired or there is a significant change in business, the production and sales of our systems and services may be delayed or adversely affected, or our development programs may be delayed or may be impossible to complete.
Delays in the availability
of naphtha, ethane, propane, refinery off gas, propylene, sea salt, other inputs (including natural gas), or energy of acceptable quality,
or our inability to obtain such acceptable naphtha, ethane, propane, refinery off gas, propylene, sea salt, other inputs (including natural
gas) or energy in the quantities we need or at all, may adversely affect our revenue and results of operations.
We do not hedge against price changes
in our raw materials and, as a result, we are exposed to such fluctuations.
Currently, we do
not hedge our exposure to feedstock price changes beyond transit periods when buying cargo from foreign sources. We believe there is a
natural hedge in the petrochemical industry dynamic, mainly due to the historical correlation observed between the principal feedstock
of a marginal producer in the global market and with higher production costs, such as naphtha, and its final products (PE, PP, PVC, and
others). Historically, naphtha price fluctuations show a high correlation with changes in first- and second-generation petrochemical products.
Therefore, any hedge solely with respect to naphtha’s price or any other high cost feedstock would break the natural protection,
most likely making our results more volatile. As a result, final consumer prices may not reflect feedstock cost fluctuations.
We depend on Petrobras to supply
us with a substantial portion of our feedstocks such as naphtha, ethane, propane, refinery off gas and propylene needs, and on logistics
services.
Petrobras is a relevant
Brazilian supplier of naphtha for us and our primary supplier of ethane, propane, propylene, and refinery off gas and has historically
supplied the ethane, propane, and refinery off gas that we consume in Brazil.
We are a party to
several propylene contracts with Petrobras refineries, which have historically supplied approximately 40% of our propylene needs to produce
polypropylene in Brazil at prices based on international references. As a result of the limited infrastructure in Brazil to allow the
importation of propylene in large quantities and substantial costs associated with the storage and transportation of the product, we depend
on propylene supplied by Petrobras to operate our PP plants at optimal operational levels.
We have five propylene
supply agreements with Petrobras that will expire between 2026 and 2029 and one contract for refinery off gas that will expire in 2028.
Two propylene agreements have been renewed (RECAP and REDUC), with the new terms starting in 2026 until 2031. As for the other contracts,
we cannot assure that these agreements will be renewed and, if renewed, whether we will be able to keep the same terms and conditions
currently in force, including with respect to pricing, volume, pipeline and other infrastructure access. We also have the possibility
to make spot propylene purchases from Petrobras in order to seize opportunities in the PP market, in case there are positive margins.
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In December 2025,
we entered into new agreements with Petrobras for the supply of petrochemical naphtha to our petrochemical complexes in São Paulo,
Bahia and Rio Grande do Sul with prices based on the international Naphtha ARA reference. The contracts establish for a minimum monthly
withdrawal volume, with the possibility of negotiating additional volume to those contracted monthly, reaching up to 4.116 million tons
in 2026 and reaching up to 4.316 million tons in 2030. The contracts have a five-year term, beginning on January 1, 2026.
In addition, to guarantee
access to the naphtha logistics system in Rio Grande do Sul, we also renewed the storage agreement with Petrobras until December 2030
at REFAP located in the city of Canoas. Also, the agreement for the storage at TEDUT, located in the city of Osório, was renewed
in June 2024 with a term expiring in June 2028.
Petrobras controls
a substantial portion of the pipeline infrastructure used to transport naphtha across Brazil and is our primary supplier of naphtha, ethane,
propane, propylene, and refinery off gas. A failure to renew or extend our existing agreements for the supply of raw materials or pipeline
infrastructure use or termination of such agreements with Petrobras could lead to difficulties in accessing Petrobras’ pipeline
infrastructure. The alternative would be to access pipeline infrastructure by negotiating with Transpetro and, if necessary, the National
Petroleum Agency, or the ANP, which would grant access to the pipeline infrastructure at a cost defined by the ANP.
Therefore, our production
volumes and net revenue would likely decrease, while our costs and investments would likely increase, and adversely affect our overall
financial performance in the event of the occurrence of one or more of the following:
· significant damage to Petrobras’ supply infrastructure through which Petrobras and Braskem import naphtha, or to any of the pipelines connecting our plants to Petrobras’ plants, whether as a result of an accident, natural disaster, fire, or otherwise;
· termination by Petrobras of the naphtha, ethane, propane, propylene, and refinery off gas supply contracts with us, which provide that Petrobras may terminate the contracts for certain reasons;
· considering that Petrobras (and/or its subsidiaries) controls a substantial portion of the logistics infrastructure of our raw material across Brazil and our existing agreements for using its assets and their operation over certain Braskem’s assets, we could also assume that we would face difficulties to import and ensure access of raw material to our crackers in a scenario that these agreements are terminated by Petrobras (and/or its subsidiaries) and therefore with a substantial impact on the infrastructure that we currently access; or
· failure to renew or extend our existing agreements for the supply of raw materials or pipeline infrastructure use, considering that Petrobras is conducting a divestment plan of its assets that also includes certain refineries that supply naphtha and propylene to us and some logistic infrastructure assets.
If the supply agreements
are terminated or not renewed, our production volumes and net revenue would likely decrease, while our costs would likely increase, and
adversely affect our overall financial performance.
In addition, although
regulatory changes have ended Petrobras’ monopoly in the Brazilian naphtha market and have allowed us to import naphtha, any restrictions
imposed on the importation of naphtha into Brazil could increase our production costs, which would reduce our gross margin and negatively
affect our overall financial performance.
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We depend on propylene and ethylene
supplied by third parties in the United States and Europe.
Our reliance on third-party
suppliers poses significant risks to our results of operations, business, and prospects. We rely upon third parties to supply our plants
with propylene and ethylene. We acquire propylene and ethylene for our polypropylene plants in the United States under long-term supply
agreements and through the spot market. As of December 31, 2025, we had 18 propylene supply agreements and two ethylene supply agreements
with several suppliers. The pricing formulas for propylene and ethylene under these supply agreements are generally based on market prices.
We cannot assure you that these agreements will be renewed and, if renewed, whether we will be able to keep the same terms and conditions
currently in force, including with respect to pricing, volume, pipeline, and other infrastructure access.
We acquire propylene
for our polypropylene plants in Germany under long-term supply agreements that provide approximately 92% of the propylene requirements
of these plants. We have two main supply agreements in Germany. The first can be automatically extended for one-year period and the second
has a current validity term of 2 years. The price quotation for propylene under these long-term supply agreements are related to the monthly
contract price for propylene for Europe, varying their discounts and/or formula rational according to each supplier.
We cannot assure
you that these agreements will be renewed and, if renewed, whether we will be able to keep the same terms and conditions currently in
force, including with respect to pricing, volume, pipeline, and other infrastructure access.
Delays in the availability
of acceptable quality propylene or our inability to obtain such acceptable propylene in the quantities we need over what has been contracted
or at all may adversely affect our revenue and results of operations.
Risks Relating To Global Macroeconomics Factors
Global macroeconomic factors have
had, and may continue to have, adverse effects on the margins that we realize on our products.
Our results of operations
may be materially affected by adverse conditions in the financial markets and generally depressed economic conditions. Economic downturns
globally and in geographic areas or jurisdictions in which we sell our products may substantially reduce demand for our products and result
in decreased sales volumes. Recessionary environments, including global inflation, adversely affect our business because demand for our
products is reduced and our costs increase.
In addition, raw
materials and other costs in our business are subject to wide fluctuations depending on market conditions and government policies. These
costs are influenced by several factors over which we have little or no control, including, but not limited to, international and national
economic conditions, including higher natural gas costs in Europe, regulations, government policies (including those applicable to the
pricing policies of Petrobras, which is one of our main suppliers in Brazil), tariff adjustments and global effects of supply and demand,
particularly on commodity prices. We cannot assure that the prices of our products may be increased in a timely manner or be sufficient
to keep pace with or offset increases in inflation, operation costs and expenses, amortization of investments, and taxes. As a result,
we might not be able to pass on the increased costs to our customers, which could decrease our profit margin and result in a material
adverse effect on our business, financial condition, and results of operations.
Our ability to export
to other countries depends on the level of economic growth in those countries and other economic conditions, including prevailing inflation
and interest rates. In addition, disruptions in the global balance between supply and demand and logistics constraints may impair our
ability to export our products. Prolonged volatility in economic activity in our key export markets, including the United States, South
America, Europe, and Asia, could continue to reduce demand for some of our products, which would adversely affect our results of operations.
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We may be affected by instability
in the global economy and by financial turmoil, including as a result of military conflicts such as those between the United States, Israel
and Iran, Russia and Ukraine, and other conflicts in the Middle East.
Instability in the
global markets and in the geopolitical environment in many parts of the world, as well as other disruptions, may continue to put pressure
on global economic conditions. Concerns over the recession, inflation, higher interest rates, geopolitical issues, the global financial
markets, unstable global credit markets and financial conditions, and the COVID-19 pandemic have led to periods of significant economic
instability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations
of slower global economic growth in the future, and increased unemployment rates. In addition, we face several risks associated with international
business and are subject to global events beyond our control, including war, public health crises, such as pandemics and epidemics, trade
disputes, economic sanctions, trade wars and their collateral impacts, and other international events. Any of these changes could have
a material adverse effect on our reputation, business, financial condition, or results of operations.
There may be changes
to our business if there is instability, disruption or destruction in a significant geographic region, regardless of cause, including
war, terrorism, riot, civil insurrection or social unrest; and natural or man-made disasters, including famine, flood, fire, earthquake,
storm or disease.
Additionally, the
military conflict between the United States, Israel and Iran has introduced a new and significant geopolitical and economic risk to global
markets. U.S. and Israeli military operations against Iran and subsequent Iranian military action throughout the Persian Gulf have raised
serious concern about oil and natural gas markets, particularly in relation to the Strait of Hormuz. Any prolonged disruption to this
waterway poses direct risks to global supply chains, energy availability and operating costs across multiple industries. Retaliatory measures,
countermeasures, and escalatory actions by Iran, including missile and drone strikes, cyberattacks, disruptions to critical shipping routes
and energy infrastructure, could adversely affect the global economy and financial markets, and lead to further instability and reduced
liquidity in capital markets, potentially resulting, for example, in difficulties in obtaining additional funds and sources of financing
for our operations. Oil prices have already seen significant upward pressure, as well as many other commodities, and economic expectations
related to inflation, monetary prices and activity levels are deteriorating, further straining economies already absorbing the lingering
effects of prior geopolitical disruptions. It is not possible to predict the length, outcome, or broader consequences of the ongoing military
conflict, which could include further sanctions, regional escalation, geopolitical realignment, and adverse effects on macroeconomic conditions,
commodity prices, currency exchange rates, and financial markets. Any such event may increase our costs, decrease our revenues or limit
our production and sales volume and adversely affect our business, results of operations and financial condition.
Geopolitical and
economic risks have also increased over the past few years as a result of trade tensions between the United States and China, the conflicts
involving Russia and Ukraine, and the conflicts involving Hamas, Israel and Hezbollah, and the United States, Israel and Iran, and the
rise of populism as a global political trend. Growing tensions may lead, among others, to a deglobalization of the world economy, an increase
in protectionism or barriers to immigration, a general reduction of international trade in goods and services and a reduction in the integration
of financial markets, any of which could materially and adversely affect our business, financial condition and results of operations.
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Risks Relating To Our Operations
Our polyolefins and vinyls units
in Brazil depend on our chemicals operations to supply them with their ethylene and propylene requirements. In addition, our Brazilian
plants depend on certain providers of utilities, including environmental services for the treatment of effluents, industrial waste and
water supply for industrial use.
Our chemicals operations
are the only supplier of ethylene to our vinyls operations, the only supplier of ethylene to the polyethylene plants and the principal
supplier of propylene to the polypropylene plants of our operations in Brazil. Additionally, as the cost of storing and transporting ethylene
and its derivatives, including butadiene and other chemical products, is significant and there is no adequate infrastructure in Brazil
that allows for the storage of large volumes, a relevant reduction in sales of these products may impact the operating rate of our petrochemical
crackers, impacting product availability in Brazil, and our overall financial performance would be adversely affected in case of a major
disruption of operations in our chemicals facilities.
Also, our production
volumes of, and net revenue from, our chemicals operations products could decrease, and our overall financial performance would be negatively
affected in the event of any significant damage to the plants of our vinyls and polyolefins operations through which ethylene and propylene
is consumed.
Our Brazil Segment
depends on Cetrel S.A. (“Cetrel”) and Água de Camaçari (“DAC”), in both of which Braskem has indirect
relevant participation, and Distribuidora de Água Triunfo (“DAT”), Companhia Riograndense de Saneamento (“CORSAN”),
Aquapolo Ambiental S.A (“Aquapolo”), Refinaria de Paulínia (“REPLAN”), Refinaria Duque de Caixas (“REDUC”)
and Veolia Brasil for services such as: (i) treatment of effluents and industrial waste; (ii) supply of reuse water; (iii) supply of demineralized,
clarified and potable water; (iv) management of water reservoirs; and (v) supply of steam. An interruption in the operations of certain
providers of utilities may result in the shutdown of all of our plants in Brazil, in addition to increased environmental risks. If such
a shutdown were to happen, our production volumes and net revenue from sales from our plants referred to above would decrease, and our
financial performance and results of operations would be adversely affected.
We may be materially adversely affected
if there is an imbalance in global logistics, which may cause disruptions to our transport, storage and distribution operations, negatively
impacting the costs related thereto.
Our operations are
dependent upon uninterrupted transportation, storage, and distribution of our products and raw materials. Transportation, storage, or
distribution of our products and raw materials could be partially or completely, temporarily, or permanently shut down as the result of
any number of circumstances that are not within our control, such as:
· catastrophic events;
· strikes or other labor difficulties;
· disruption in global supply chains, including container shortages and lack of fuel impacting the logistics in the regions in which we operate;
· war and other armed conflicts, such as the conflicts involving Iran, Israel and United Stated, Russia and Ukraine, the conflicts involving Hamas, Israel and Hezbollah, and other conflicts in the Middle East; and
· other disruptions in means of transportation.
For example, in May
2018, Brazil experienced a national truck drivers’ strike that severely impacted the logistics operations of many companies throughout
Brazil, including the delivery of our raw materials, our products, and other goods. In response to such strike, we gradually reduced the
utilization rate of our petrochemical complexes in Brazil. We cannot assure, however, that we will be able to act in the same way in potential
new strikes or any other disruption in logistics that may arise in the future. Following the strike, Brazil introduced a national freight
cost schedule that set forth minimum prices for freight services provided by truck drivers and freight companies countrywide, which had
a lasting impact on freight prices in Brazil and led to sustained increased transportation costs in connection with our operations.
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In addition, due
to shipowners’ and market uncertainties with respect to the future propulsion technology adopted by the world’s merchant fleets,
we are currently witnessing a lack of investment in the renewal of the world’s merchant fleet. This might lead to a shortage of
ships available to us, which could drive our logistic costs higher.
Any significant interruption
at our distribution facilities, an inability to transport our products to or from these facilities, or to or from our domestic or foreign
customers or suppliers, or an increase in transportation costs, for any reason, would materially adversely affect our operations.
We rely on access to third-party
licensed technology and related intellectual property, and if such rights cease to be available to us on commercially reasonable terms,
or at all, or if any such third party ceases to provide us with technical support under license or technical services agreements, certain
of our production plants, our operating results and financial condition could be adversely affected.
We use technology
and intellectual property licensed from third parties in the regular operation of our business, particularly in the operation of certain
machinery and equipment required to produce certain of our products such as our first- and second-generation products, and we may continue
to rely on access to third-party technology and intellectual property in the future.
There can be no assurance
that we will be able to continue to obtain or renew any such necessary technology and licenses on acceptable terms, or at all. Failure
to obtain or renew the right to use third-party technology or intellectual property on commercially reasonable terms, or to maintain access
to satisfactory technical support, could ultimately lead to stoppages in our production processes and preclude us from selling certain
products, which could have a material adverse impact on our operating results and financing condition.
Additionally,
our inability to maintain existing access to third-party technology, licenses, and technical support on commercially reasonable terms,
or at all, or to obtain additional technology, licenses or technical support necessary to manufacture current products or develop new
ones, could require us to obtain substitute technology or licenses at a greater cost or of lower quality or performance standards, or
require us to carry out unscheduled interruptions of our production plants. There can be no assurance that we will be able to replace
any such third-party technology, intellectual property or technical support service for any adequate
substitute technology, intellectual property, or technical support in a timely manner to avoid any unscheduled interruption of our production
processes or plants, or in a cost-efficient manner. Any of these circumstances could harm our business, financial condition, and results
of operations.
Capital projects can take many years
to complete, and market conditions could deteriorate significantly between the project approval date and the project startup date, negatively
impacting project returns and the implementation of our growth strategy. If we are unable to complete projects and investments at their
expected cost and in a timely manner, or if the market conditions assumed as a basis for our project economics deteriorate, our business,
financial condition, results of operations and cash flows could be materially and adversely affected.
Delays or cost increases
related to investment programs involving engineering, procurement and construction of plants could materially adversely affect our ability
to achieve forecasted rates of return and results of operations and financial position. Delays due to required changes or upgrades to
our plants could subject us to fines or penalties as well as affect our ability to contract with our customers and supply certain products
we produce.
Such delays or cost
increases may arise as a result of unpredictable factors, many of which are beyond our control, including, but not limited to:
· denial of or delay in receiving requisite regulatory approvals or permits;
· unplanned increases in the cost of construction materials or labor;
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· disruptions in transportation of gear or construction materials;
· change in the market and regulatory conditions assumed as a basis for our project economics;
· adverse weather conditions, natural disasters, epidemics, pandemics or other events (such as equipment malfunctions, explosions, fires or spills) affecting our plants, or those of vendors or suppliers, shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages;
· non-performance by, or disputes with, vendors, suppliers (including those responsible for transportation of supplies), contractors or subcontractors. Any one or more of these factors could have a significant impact on our ongoing projects; and
· lack of funding or difficulty in obtaining resources for investment including cash from our operations or third-party sources.
If we are unable
to make up the delays associated with such factors or to recover the related costs, or if market conditions change, it could materially
and adversely affect our business, financial condition, results of operations, and cash flows, as well as our ability to implement our
business strategy.
Our insurance coverage may be ineffective,
either due to the lack of coverage for any claim, or due to insufficient coverage limits in the event of damage.
We
maintain property, business interruption, general liability, environmental, construction, marine, credit, and other types of insurance
that we believe are appropriate for our business and operations as well as in line with industry practices. However, we are not fully
insured against all potential hazards and incidents inherent in our business. Changes in insurance market conditions have caused, and
may in the future cause, premiums, and deductibles for certain insurance policies to increase substantially and, in some instances, for
certain insurance to become unavailable or available only for reduced amounts of coverage. If we were to incur a significant liability
for which we were not fully insured, we might not be able to finance the amount of the uninsured liability on terms acceptable to us or
at all and might be obligated to divert a significant portion of our cash flow from normal business operations. Also,
in the event of an accident, we are required to undergo a regulatory assessment through which the insurance coverage needs to be confirmed.
If coverage is not confirmed, there will be no indemnity to be paid.
In addition, adaptation
actions, including those related to climate change, could be considered insufficient by insurance companies, and may make it difficult
for us to obtain insurance for our business. Also, premiums and deductibles for certain insurance policies could increase substantially
and, in some instances, certain insurance coverage could become unavailable or available only in reduced coverage amounts.
Under our growth strategy, we may
pursue strategic acquisitions, investments and investments in new businesses. The failure of an acquisition, investment or investments
in new businesses to produce the anticipated results, or the inability to integrate an acquired company, could adversely affect our business
financial condition and results of operations.
We have adopted
a growth strategy that is based on organic and inorganic growth, including investments and capital expenditures focused on existing and
traditional business, bio-based and recycling businesses. Pursuant to such growth strategy, we may from time to time acquire or invest
in complementary companies or businesses with a similar or equal focus. Such acquisitions or investments may include businesses that operate
in modern, innovative, and ground-breaking fields, all of which may have an increased level of uncertainty and risk, as they often develop
or adopt new technologies and initiatives that may not yet have been proven to work as expected and may not have been sufficiently settled
or consolidated. Certain of these businesses may also involve greenfield or brownfield operations, which may take longer periods of time
to mature, if they ever mature, and also pose increased uncertainties, challenges and risks.
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In February 2023,
we completed the process of acquiring shares and subscribing to new shares issued by Wise Plásticos S.A. (“Wise”),
a Brazilian company in the mechanical recycling sector, holding a 61.1% equity interest in Wise.
The success of any
acquisition or investment pursuant to our growth strategy will also depend on our ability to make accurate assumptions regarding the valuation,
operations, growth potential, integration and synergies, technology, international market, and other factors related to that business.
We cannot assure you that our acquisitions or investments will produce the results that we expect at the time we enter into, or complete
a given transaction. Furthermore, acquisitions may result in difficulties integrating the acquired companies, and may result in the diversion
of our management’s attention from other business issues and opportunities. We may not be able to successfully integrate the operations
that we acquire, including, but not limited to, their personnel, financial systems, distribution, or operating procedures. If we fail
to integrate acquisitions successfully, our business, financial condition and results of operations could suffer. In addition, the expense
of integrating any acquired business and their results of operations may adversely affect our results of operations.
Certain acquisitions,
partnerships, and joint ventures we make may prevent us from competing for certain clients or in certain lines of business and may lead
to a loss of clients. We may spend time and money on projects that do not increase our revenue in the foreseeable future or at all, including
those investments related to industrial decarbonization and recycling, renewable products, and the circular economy. To the extent we
pay the purchase price of any acquisition in cash, it would reduce our cash reserves, and to the extent the purchase price is paid with
any of our shares, it could be dilutive to our shareholders. If we pay the purchase price with proceeds from the incurrence of debt, it
would increase our level of indebtedness and could negatively affect our liquidity and restrict our operations. Our competitors may be
willing or able to pay more than us for acquisitions, which may cause us to lose certain acquisitions that we would otherwise desire to
complete. We cannot ensure that any acquisition, partnership or joint venture we make will not have a material adverse effect on our business,
financial condition and results of operations.
Labor strikes may materially and
adversely affect our operations.
Labor strikes in
our plants and facilities, operated by us or third parties, and in our main suppliers and customers plants and facilities may have a material
adverse effect on our financial condition or results of operations. Future labor actions, including strikes, could have a material adverse
effect on our financial performance.
Risks Relating To Health, Safety And Environmental Aspects
Our business and operations are
inherently subject to environmental, health and safety risks. As a result, our business is also subject to several stringent regulations,
including environmental regulations.
As a company operating
in the petrochemical industry, our operations, including acquired by us, and operated by us or third parties, including the companies
and businesses that we have acquired, involve the generation, use, handling, storage, transportation (mainly by pipeline, road, train,
fluvial and maritime), treatment, discharge and disposal of hazardous substances and waste into the environment. Notwithstanding our
environmental, health and safety standards, policies and controls, our operations remain subject to incidents or accidents that could
adversely affect our business or reputation. Our industry is generally subject to significant risks and hazards, including fire, explosions,
toxic gas leaks, contamination of soil and water, spilling of polluting substances or other hazardous materials, smoke or odor emission,
failure of operational structures and incidents involving mobile equipment, vehicles or machinery, associated or not with the manufacture
of petrochemicals and the storage and transportation of feedstock and petrochemical products. These events may occur due to technical
failures, human errors or natural events, among other factors, and could result in significant environmental and social impacts, damage
to or destruction of production plants and communities, personal injury, illness or death of employees, contractors or community members
close to our operations or close to our logistic routes, terminals and pipelines, environmental damage, delays in production, and, in
certain circumstances, liability in civil, labor, criminal and administrative lawsuits, difficulties in obtaining or maintaining operating
permits and environmental licenses, and impacts on our reputation, among other consequences.
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In addition,
our operations, operated by us or third parties, could generate impacts to the communities and to the environment, from our regular operations,
as well as in the management of the existing environmental liabilities, which may result in environmental, material and human damages,
fines and sanctions, including loss of operating license, in addition to damage to our image and reputation, which could have a material
adverse effect on our results of operations and financial condition.
For example,
over 30 years ago, a leak of chemical products occurred from a tank installed on a property owned by the company Companhia Carbonos Coloidais
(“CCC”), located in Madre de Deus, in the State of Bahia. These products were the property of the company Tecnor Tecnolumen
Química do Nordeste Ltda. (“Tecnor”) and may have been acquired by domestic producers at the time, including by Companhia
Petroquímica de Camaçari, a company that subsequently was merged into Braskem. Both CCC and Tecnor are companies that have
never had any corporate relations with Braskem and no longer have any operating activities.
Given our experience
in the chemical and petrochemical industry and related products, the authorities requested our collaboration on the analysis, studies
and environmental remediation, with monitoring by local authorities, which has been occurring since 2003. Following the agreement between
the City of Madre de Deus, the Public Ministry of the State of Bahia and CCC in 2015, by means of an Amendment to this Term of Commitment,
we supported through the implementation of a vacancy program, including about 200 properties, of an area near CCC’s property, declared
as public utility by the City Hall in February of 2021, for the safe continuity of the remediation efforts.
Our
business could be adversely affected by safety or product liability issues. Failure to appropriately manage occupational safety, process
safety, product safety, human health, product liability and environmental risks inherent to the chemical and petrochemical businesses
and associated with our products, product life cycles and production processes could result in unexpected incidents, including releases,
fires, or explosions resulting in personal injury, loss of life, environmental damage, loss of revenue, legal liability, and/or operational
disruptions. Public perception of the risks associated with our products and production processes could impact product acceptance and
influence the regulatory environment in which we operate.
Changes to
current applicable laws may impose changes on standards we have already implemented, which can take time to review and update and could
require significant capital expenditures. For example, we have concluded or are currently concluding studies related to dams located at
certain of our industrial sites as a result of a change in Brazilian law that now requires that all water and waste dams have a safety
plan for these structures. Environmental studies that we have commissioned have indicated instances of environmental contamination of
the soil and underground water at certain of our plants. If the laws and regulations applicable to risks and safety plans change, we may
be required to revise the studies that we have carried out or take further action to rectify potential issues that would not need to be
addressed under current laws and regulations.
In addition,
we and certain of our executive officers have received certain notices related to environmental violations and are or have been subject
to investigations or legal proceedings with respect to certain alleged environmental violations. These environmental issues, and any future
environmental issues that may arise, could subject us to fines or other civil or criminal penalties imposed by Brazilian authorities.
Also, under environmental
laws and regulations in the countries in which we operate, we are required to obtain operating licenses and permits for our manufacturing
plants. For example, under Brazilian federal and state environmental laws and regulations, if any of our environmental licenses or permits
lapse or are not renewed or if we fail to obtain any required environmental licenses or permits or does not to meet the conditions established
in the licenses or environmental permits, we may be subject to fines ranging from R$500 to R$50 million, and the Brazilian government
may reverse mentioned licenses or permits, partially or totally suspend our activities and impose other civil and criminal sanctions
on us, including our managers.
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Pursuant to
Brazilian environmental legislation and regulations, our corporate veil may be pierced to ensure that sufficient financial resources are
available to parties seeking compensation for damage caused to the environment. In this sense, officers, shareholders and/or business
partners or affiliates may, together with the polluting company, be held liable for damage to the environment.
In addition,
our production and logistics processes are subject to inherent safety risks, which may lead to injuries, disability or death of our employees
or individuals participating in such processes and communities, as well negatively impact the environment. Such risks cannot be entirely
eliminated or fully mitigated even with full compliance with all safety measures applicable to us or required by laws or regulations.
We may face a negative impact on our image and reputation, and on our business, financial condition and results of operations.
Until May 2019,
we operated rock salt extraction wells located in Maceió, in the state of Alagoas. The operation was permanently interrupted due
to the indication that it would have contributed to the occurrence of relevant subsidence in the region of four districts, with the occurrence
of damage to properties and public roads located in the region. Several individual and collective lawsuits were filed in the state of
Alagoas in relation to this geological event.
To date, we
have entered into the agreements described below to terminate three public-interest civil actions or civil public actions (“ACP”)
filed by the competent authorities:
· ACP Labor settlement: in February 2020, we committed to disbursing R$40 million to fund a Business Recovery and Promotion of Educational Activities Program for residents and workers in the districts of Mutange, Bom Parto, Pinheiro and Bebedouro, in Maceió, state of Alagoas. This agreement has been fulfilled in its entirety;
· ACP of Residents settlement: through an Instrument of Agreement to Support the Relocation of People in Risk Areas, ratified by the court in January, 2020 and updated in December, 2020, we committed to supporting the relocation and to compensating residents, business owners and owners of vacated properties located in the risk areas defined in the Civil Defense Map through the Financial Compensation and Support for Relocation Program (Programa de Compensação Financeira e Apoio à Realocação, or “PCF”), by offering proposals for financial compensation and entering into individual agreements ratified by the court on January 6, 2021, which resulted in the termination of ACP of Residents; and
· ACP Socio-Environmental settlement: in December, 2020, we committed to (i) adopting the necessary measures to stabilize the cavities and monitor the ground, implementing the measures of the mine closure planning presented to the Brazilian National Mining Agency (Agência Nacional de Mineração, or “ANM”) and subject to its approval; (ii) repairing, mitigating or compensating potential environmental impacts and damages resulting from the mining activities (salt extraction) in the city of Maceió, state of Alagoas, to be defined by an Environmental Diagnosis developed by an expert and independent company approved by the Prosecutor’s Office; (iii) allocating R$1.58 billion to implement measures in the vacated area, actions related to urban mobility and to compensate potential socio-urbanistic impacts and damages, and for social collective moral damages. Following court approval of this agreement, the public civil action seeking socioenvironmental reparation was dismissed.
Additionally, we
have also entered into three other main agreements with the competent authorities:
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· Term of Agreement for Implementation of Socioeconomic Measures for the Requalification of the Flexal Area: this agreement, which was ratified in October 2022, establishes the adoption of requalification actions in the Flexais region, compensation to the Municipality of Maceió and indemnities to the residents of this location;
· Instrument of Global Agreement with the Municipality of Maceió: this agreement, which was ratified in July, 2023, establishes, among other things: (i) payment of R$1.7 billion as indemnity, compensation and full reimbursement for any property and non-property damages caused to the Municipality of Maceió; and (ii) adhesion of the Municipality of Maceió to the terms of the Socio-environmental Agreement, including the Social Actions Plan (PAS); and
· Term of Agreement with the State of Alagoas (“State Agreement”), entered into on November 10, 2025, which establishes, among other matters: (a) a total amount of R$1.2 billion as compensation, indemnification and/or reimbursement to the State of Alagoas for the full reparation of any and all pecuniary and non-patrimonial damages at the state level; and (b) grants the Company full settlement for any damages arising from and/or related to the geological event in Alagoas, including the extinction of the State of Alagoas’ indemnification lawsuit. Of the R$1.2 billion established in the State Agreement, R$139 million (on an updated basis) had already been paid. The remaining balance must be paid in 10 variable annual installments, subject to adjustment, mainly after 2030, considering the Company’s payment capacity.
We have been
taking the necessary actions for closing and monitoring the salt cavities, environmental actions and other technical matters. Based on
the findings of sonar and technical studies, stabilization and monitoring actions were defined for all 35 existing mining fronts and are
being reviewed and updated from time to time according to the evolving status of the geological event.
The closure
plan of 35 salt cavities currently considers the following:
(i) 18 cavities have recommendation for priority filling with solid material. To date, 6 cavities have been filled with sand, 4 cavities have reached the technical filling limit, 6 cavities are in the filling process, and 2 cavities are in the preparation and planning activities;
(ii) 6 cavities were naturally filled and, therefore, do not indicate, at this moment, the need for additional measures; and
(iii) 11 cavities remain within the salt layer and suitable for pressurization. By the end of 2024, the Company based on the technical note issued by expert consultancy, considered the recommendation of filling these pressurized cavities with solid material, in the long term, over the course of several years to decades, and after the completion of the current filling plan, with the purpose of to achieve a maintenance-free state for the 35 cavities, suitable for the final closure of the field.
Note that any
need for additional actions is assessed on an ongoing basis by us and are based on technical studies prepared by external specialists,
whose recommendations may be updated periodically according to the changes in the geological event and knowledge obtained, being submitted
to competent authorities and following the execution timeframe agreed under the mine closure plan, which is public and regularly revaluated
with ANM. Subsidence is a dynamic process occurring in the area outlined by the priority action lines map issued by Civil Defense of Maceio
Municipality and should continue to be monitored during and after the actions envisaged in the closure plan. The results of the monitoring
activities will be important to assess the need for potential future actions, with a focus on safety and monitoring of stability in the
region. Any potential future actions may result in significant additional costs and expenses that may differ from current estimates and
provisions.
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Regarding environmental
initiatives, in compliance with the Agreement for Socio-Environmental Reparation, we continue implementing the actions established in
the environmental plan approved by the Federal Prosecution Office (“MPF”) and sharing the results of its actions with the
authorities. A review of the environmental diagnosis is planned after the implementation of the ongoing actions. As one of the results
of the collapse of cavity 18, occurred in December 2023, as agreed in the Socio-Environmental Reparation Agreement, the specific Environmental
Diagnosis to evaluate potential impacts caused by the collapse of said cavity, conducted by specialized technical advisors, was completed.
The report was submitted to the authorities
Considering
the actions for closing and monitoring the salt cavities, environmental actions and other technical matters, we have provisioned as of
December 31, 2025 the amount of R$1.7 billion, net of adjustment to present value.
There are currently
several lawsuits related to the geological event in Alagoas. Below, we describe the current status of the main claims faced by the Company:
On February
2, 2021, we were notified of the filing of a lawsuit by Companhia Brasileira de Trens Urbanos (“CBTU”), initially requesting
only a preliminary injunction for maintaining the terms of the cooperation agreement previously signed by the parties. The request was
denied in the lower and appellate courts, given the fulfillment of the obligations undertaken by us. On February 24, 2021, CBTU filed
an amendment to the initial request claiming the payment of compensation for losses and damages in the amount of R$222 million and for
moral damages in the amount of R$500 thousand, as well as the imposition of obligations, including the construction of a new rail line
to replace the stretch that passed through the risk area. As of December 31, 2025, the amount of this lawsuit was R$1.53 billion. As a
result of a joint petition filed by the parties, an agreement was presented by the parties and ratified by the court, and the parties
agreed to continue negotiations for a possible conciliation between the parties. On August 26, 2025, CBTU and Braskem entered into a Technical
Cooperation Agreement aimed at enabling the road requalification of the railway section whose operations were suspended. After the lawsuit
suspension period ended, on September 18, 2025, Braskem submitted its defense, and on October 15, 2025, CBTU filed a reply with its considerations.
Our management, supported by the opinion of outside legal counsel, classifies the probability of loss in this lawsuit as possible.
In March 2023,
we were informed of the claim filed by the State of Alagoas, requesting
compensation for alleged damages resulting, among others claims, from the loss of properties within the risk area defined by the Civil
Defense of Maceió, alleged investments initiated by the State of Alagoas that were rendered useless due to the evacuation of the
risk area and alleged loss of tax revenue, with a request that such damages to be determined by a court appraiser. On October 10, 2023,
the trial court issued a summary judgment ordering Braskem to reimburse the amounts invested, public equipment and losses in tax collection
as required by the State of Alagoas. The indemnity amounts must be set in the award calculation phase. We filed an appeal against the
decision. On November 10, 2025, Braskem and the State of Alagoas entered into a settlement agreement related to the geological event that
occurred in Alagoas (the “State Agreement”). The State Agreement provides, among other matters: (a) a total amount of R$1.2
billion as compensation, indemnification and/or reimbursement to the State of Alagoas for the full reparation of any and all pecuniary
and non-patrimonial damages at the state level; and (b) grants the Company a full settlement for any damages arising from and/or related
to the geological event in Alagoas, including the extinction of this indemnification lawsuit, which in December 2025 has an adjusted amount
of R$1.9 billion, with its effects taking place upon judicial ratification. On January 7, 2026, the agreement was judicially approved.
The decision is not final and remains subject to appeal. There is a performance bond pledged by us for this lawsuit in the amount of R$1.4
billion. Our management, supported by the opinion of outside legal counsel, classifies the probability of loss in this lawsuit as possible.
In March 2023, we also
became aware of the Public Civil Action filed by the Public Defender’s Office of the State of Alagoas (“DPE”) against
us, the Federal Government, the State of Alagoas and the Municipality of Maceió, which pleads for measures related to the Flexais
region, including (i) the registration of residents of this region so that they can opt for relocation through the Company’s Relocation
and Financial Compensation Program; and (ii) the claim for compensation in the amount of R$1.7 billion for moral and material damages
allegedly owed to residents of this region, with a subsidiary claim for judicial blocking of said amount. The injunction relief requests
were rejected by the trial and appellate courts. On January 19, 2024, a decision was rendered judging partially valid the requests made
by the DPE. The judge determined, among other directives, to establish the amount of moral damage until the requalification is completed
and to ascertain the material damage resulting from the devaluation of properties in the area. It was also determined the development
of the case to adjudicate the request for relocation of residents, among others. On
August 19, 2025, the appeals of both Braskem and the Federal Government were upheld on their merits, resulting in the reversal of the
lower court’s ruling, recognizing the validity of the agreement and therefore reversing the additional indemnification previously
imposed. The appeals of the State of Alagoas and the DPE were denied. On October 30, 2025, the Federal Court of Appeals (“TRF5”)
unanimously granted Braskem's interlocutory appeal and overturned the lower court's ruling that had ordered an anthropological expert
examination. As of December 31, 2025, the amount of this claim was R$345 million. Our management, supported by the opinion of outside
legal counsel, classifies the probability of loss in this lawsuit as possible.
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In August 2023,
we were informed of the Public-Interest Civil Action filed by FEPEAL and CNPA (jointly the “Associations”) against the Company,
seeking compensation for material damages (damages and loss of profit) and homogeneous individual and collective moral damages for the
Associations and each of the alleged 8,493 affected fishermen represented by the Associations. As a preliminary measure, the Associations
requested, among other claims, that the Company provision sufficient funds to guarantee the compensation of fishermen included in the
public-interest civil action, while publishing a material fact disclosed on Form 6-K on October 6 to the shareholders, requests that were
denied by the Court. Among other requests, the Associations claim the payment of: (i) compensation for (a) individual and homogeneous
moral damages suffered; (b) material damages in the form of individual and homogeneous loss of profits; (ii) compensation for collective
moral damages for the Associations; (iii) compensation for collective material damages to the Associations; and (iv) attorney fees in
the amount of 20% on the value of the award. The proceedings were stayed by the TRF5 pending the judgment of the interlocutory appeal
filed by Braskem, which alleges the irregularity in the representation of the plaintiff institutions. On November 13, 2025, TRF5 denied
Braskem’s interlocutory appeal and Braskem filed motions for clarification against this decision, which remains pending of judgment.
As of December 31, 2025, the plaintiffs’ claims amounted to R$2.36 billion, and our management, supported by the opinion of outside
legal counsel, classifies the likelihood of loss in the amount of R$1.97 billion as possible and the amount of R$394 million as remote.
On November 30,
2023, we were informed of the Public-Interest Civil Action filed by the Federal Prosecution Office, Federal Public Defender’s Office
(“DPU’) and Alagoas State Prosecution Office (“MPE”) against the Municipality of Maceió and Braskem, with
a request for a injunctive relief based on evidence, against the Municipality of Maceió: (i) the disclosure of the new Map of
Priority Action Lines, Version 5, and (ii) preparation of the Action Plan to address issues related to the identification of the roads
and public equipment located in the region. Against Braskem, they request through a preliminary injunction: (i) inclusion in the PCF
of the new criticality area 00 (area defined by the Civil Defense of Maceió with recommendation of vacancy) of Version 5 of the
Civil Defense Map and making feasible the optional inclusion of all residents affected whose properties are located in the criticality
area 01 (area defined by the Civil Defense of Maceió with recommendation of monitoring) of Version 5 of the Map, with inflation
adjustment corresponding to the amounts adopted by the PCF; (ii) establishment, with the permission of the affected party of the criticality
area 01, of a Program for Reparation for Damages to Properties resulting from the alleged depreciation of the property, as well as the
alleged pain and suffering resulting from the inclusion of the property in the version 5 of the Map; (iii) engagement of independent
and specialized consultants to identify the alleged damage to properties if the affected party decides to remain in the area of criticality
01 of Version 5 of the Civil Defense Map; and (iv) engagement of independent and specialized technical advisory to provide support to
the affected parties in the analysis of the scenarios and decision-making of their relocation or staying in the area. On the merits,
they request confirmation of the preliminary injunctions. On November 30, 2023, the judge rendered a decision granting the injunctive
relief. Such decision granting injunction relief was suspended on January 22, 2024, and formally reversed, on February 27, 2025 by TRF5
on a final decision issued in the interlocutory appeal filed by the Company. In June 2025, the plaintiffs reiterated their request for
evidentiary relief, seeking the voluntary relocation of residents from a specific area of the Bom Parto neighborhood. On September 3,
2025, a decision was rendered granting the evidentiary relief and ordering the inclusion, within the PCF, of 13 properties located in
a specific area of the Bom Parto neighborhood, which had previously been declared uninhabitable by the Municipal Civil Defense authorities
due to other reasons not related to the geological event. On October 10, 2025, following an appeal filed by Braskem, the TRF5 rendered
a decision suspending the effects of the decision. As
of December 31, 2025, the adjusted amount of this claim was R$1.25 billion. Our management, supported by the opinion of outside legal
counsel, classifies the probability of loss in this lawsuit as possible.
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On December 18,
2023, we were informed of the Action against the Violation of a Constitutional Fundamental Right (ADPF) filed by the Alagoas State Governor
before the Federal Supreme Court due to some clauses of the agreements entered into out-of-court and ratified in the records of the cases
ACP Reparation for Residents, ACP Social-Environmental Reparation and Flexais Agreement, which deal with the waiver given to the Company,
as well as the acquisition and potential exploration of the vacant properties. We presented a statement applying for the denial of the
ADPF continuance. On January 10, 2024, the judge rapporteur determined the testimony of Braskem, Municipality of Maceió, State
of Alagoas Prosecution Office, Alagoas State Defender’s Office and Federal Public Defender’s Office and the statement of the
Office of the Attorney General and Office for the General Counsel for the Federal Government. These interested parties presented their
statements, and, on June 24, 2024, the judge rapporteur issued a decision denying the ADPF continuance. The Alagoas State Governor appealed
this decision. It is not possible to assign a contingency amount to this lawsuit, which has illiquid claims, aiming at the declaration
of nullity of specific contractual clauses of the Agreements. Our management, supported by the opinion of outside legal counsel, classifies
the probability of loss in this lawsuit as possible.
In March 2024, we were
informed of the Public-interest Civil Action filed by DPE against Braskem, seeking, among other requests, the challenge of clause 69 of
the Agreement for Socio-environmental Reparation (payment of R$150 million for collective moral damages) alleging that there were facts
subsequent to the date of the agreement that would give rise to additional damages. The DPE sustains that: (i) the waiver set forth in
the Agreement for Socio-environmental Reparation would not cover future damages; (ii) the transfer of the vacated properties to Braskem
would violate constitutional principles; (iii) the damages caused should be fairly compensated; (iv) collective existential damages should
be compensated; and (v) Braskem should be condemned for illicit profit, yet to be liquidated. Based on such allegations, it requests,
as a preliminary measure: (i) the suspension of clause 58, second paragraph, of the Agreement for Socio-environmental Reparation, in order
to rule out the possibility of reversion of the area to the benefit of Braskem; (ii) the imposition of inalienability of the PCF area
until the final and unappealable decision on the merits of the claim, considering the need for the assets acquired by the Financial Compensation
Program not to be subject to any disposal, nor subject to seizure. On April 12, 2024, these preliminary claims were rejected by the court.
On the merits, it requests, among others: (i) the loss of all properties subject to the PCF, with the possibility of reverting the area
to the victims or to public domain, in addition to the conviction of Braskem to the payment, as collective and social moral damages, to
the same amount spent by Braskem for material damages; (ii) the conviction of Braskem, as existential damages, for the loss of all properties
subject to the PCF; (iii) the conviction of Braskem for illicit profit, with the loss of the PCF properties, in addition to the payment
of the amounts the Company obtained due to its alleged illicit conduct (to be determined in a liquidation proceeding); and (iv) subpoena
to the Investor Relations Officer, for the purposes of regulatory obligations, with publication of a relevant fact. On November 27, 2025,
by unanimous decision, the TRF5 granted Braskem’s interlocutory appeal, recognizing the lack of standing of the DPE as well as the
validity of the Agreement for Socio-environmental Reparation and the res judicata, resulting in the dismissal of the lawsuit. On
January 6, 2026, the DPE submitted a petition requesting that the trial session be declared null and void. On March 17, 2026, a judgment
was rendered by the 3rd Federal Court dismissing this Public Civil Action, based on binding precedent set by the TRF5. The decision recognized
that relativizing res judicata creates legal uncertainty and discourages amicable settlement and further emphasized the inadmissibility
of the claims brought by the Public Defender’s Office due to lack of legal interest, legal impossibility, and unfeasibility. The
adjusted value of the claim attributed by the DPE is R$182 million. Our management, supported by the opinion of outside legal counsel,
classifies the probability of loss in this lawsuit as possible.
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In September 2024, we were
notified of the filing of a public civil action Public Defender’s Office of the State of Alagoas seeking, among other requests,
to review the compensation paid for moral damages in the context of the Financial Compensation and Relocation Support Program, with a
request for partial annulment of the signed agreements related to the PCF and approved in court. On July 28, 2025, Braskem filed an appeal
against the decision that dismissed its preliminary defenses, which remains pending judgment. On December 10, 2025, the Federal Public
Defender’s Office filed a motion seeking its inclusion as a plaintiff to replace the State Public Defender’s Office, based
on arguments set forth in the appellate decision issued in the class action lawsuit concerning collective moral damages. The adjusted
value of the claim attributed by the plaintiff is R$5.8 billion. Our management, supported by the opinion of outside legal counsel, classifies
the probability of loss in this lawsuit as remote.
In January 2026, we are
informed of the Public Civil Action filed by the Public Defender’s Office of the State of Alagoas and the Association of Entrepreneurs
and Victims of Braskem, seeking to hold Braskem liable for damages allegedly suffered by entrepreneurs who conduct economic activities
along the boundary of the Civil Defense Map, including Area 01. As a preliminary injunction, the plaintiffs seek the creation of an emergency
support fund for entrepreneurs, with an initial contribution of R$400 thousand by Braskem to subsidize loans for the benefit of the entrepreneurs.
On the merits, they seek compensation for actual damages (including real estate devaluation, loss of improvements, and other property
losses), loss of profits, loss of business goodwill, individual and collective moral damages, existential damages, and social damages.
The plaintiffs assigned a value of R$2 billion to the claim. Our management, supported by the opinion of outside legal counsel, classifies
the probability of loss in this lawsuit as possible.
For additional information
on the main lawsuits, see “Item Financial Information—Legal Proceedings—Civil Proceedings—Alagoas—Mining
Activities.”
As of December 31,
2025, the total outstanding provision related to the geological event in Alagoas was R$3.5 billion, which was based on current estimates
and assumptions and may be updated in the future due to new facts and circumstances, including, but not limited to: changes in the execution
time, scope, method and the success of action plans, new repercussions or developments arising from the geological event, including possible
revisions of the Civil Defense Map, studies that indicate recommendations from specialists, including the Technical Monitoring Committee,
according to the Agreement for Compensation of Residents; and other new developments related in the matter.
The actions to repair,
mitigate or offset potential environmental impacts and damages, as provided for in the Socio-Environmental Reparation Agreement, are in
progress and eventually new measures may be necessary and will be consolidated as part of the measures for a Plan to Recover Degraded
Areas (“PRAD”).
We have been making
progress in negotiations with private and public entities about other indemnification requests to understand them better, which may lead
to future agreements. Although future disbursements may occur as a result of said negotiations, as of the date of this annual report,
we are unable to predict the results and timeframe for concluding these negotiations or their possible scope, and the total associated
costs in addition to those already provisioned for.
It is not possible
to anticipate all of the new claims related to damages or other nature that may be brought by individuals or groups, including public
or private entities, that understand they suffered impacts or damages somehow related to the geological event and the relocation of people
from risk areas, as well as new notices of violation or administrative penalties of diverse nature. We continue to face and could still
face administrative procedures and various lawsuits filed by individuals or legal entities not included in the PCF or that disagree with
the financial compensation offer for individual settlement, as well as new collective actions and new lawsuits filed by public utilities
concessionaires, entities of the direct or indirect administration of the State of Alagoas, the Municipality of Maceió or the Brazilian
federal government. Therefore, the number of such actions or lawsuits, their nature or the amounts involved cannot be estimated at this
moment.
Consequently, we
cannot eliminate the possibility of future developments related to all aspects of the geological event in Alagoas, the relocation process
and actions in vacated and adjacent areas, so the expenses to be incurred may significantly differ from its estimates and provisions.
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Natural disasters, severe weather
and climate conditions, or health epidemics could have a material adverse effect on our overall business.
We are subject to
increasing climate-related risks and uncertainties, many of which are outside of our control. Climate change may result in more frequent
severe weather events, potential changes in precipitation patterns and extreme variability in weather patterns which can disrupt our operations
as well as those of our customers, partners and suppliers. Some of our plants are located in places that could be affected by natural
disasters, such as floods, earthquakes, hurricanes, tornados and other natural disasters, which could disrupt our operations, operated
by us or third parties, or the operations of our customers or suppliers and could damage or destroy infrastructure necessary to transport
our products as part of the supply chain. Additionally, other unanticipated problems such as health epidemics or pandemics, could also
cause operational disruptions of varied duration. Such events could require maintenance shutdowns, delay shipments of products or supplies
or result in costly repairs, replacements or other costs, which could have a material adverse effect on our financial performance.
Brazilian power generation
capacity is mainly based on hydroelectric facilities. If the amount of water available to energy producers becomes scarce due to drought
or diversion for other uses, the cost of energy may increase due to burdens and additional costs to guarantee the operation of the system,
which could lead to price increases in long-term price contracts. The reliability of energy production can also be impacted, leading to
an increase of the risk of interruptions and shutdowns at our plants. In addition, if the amount of water available to industrial plants
becomes scarce, there may be a need to reduce production at the affected sites. Such conditions could have a material adverse effect on
our sales and margins.
Climate change may negatively affect
our business, financial condition, results of operations and cash flow.
A considerable number
of experts, international organizations, regulators and other analysts argue that global climate change has contributed, and will continue
to contribute, to the increase in the unpredictability, frequency and severity of natural disasters (among but not limited to hurricanes,
droughts, tornadoes, freezes, other storms and fires) in some parts of the world. As a result, several legal and regulatory measures,
in addition to social measures, have been and will be established in several countries to reduce carbon and other GHG emissions and combat
climate change globally. Such reductions in GHG emissions are expected to lead to an increase in energy, transport and input costs, in
addition to requiring us to make additional investments in facilities and equipment. It is not possible to predict the impact of global
climate change, if any, or legal, regulatory and social measures in response to climate change concerns, and whether such factors could
negatively affect the business, financial condition, results of operations and operating cash flows.
Also, several countries
are evaluating and seeking to implement carbon pricing policies for carbon emitting companies that are producers in these countries or
that export products to these countries. If this occurs, our costs may be negatively impacted as we, as a petrochemical company, have
a material carbon footprint. International market restrictions or taxation on products imported from countries with insufficient climate
policies could lead to a loss of our global competitiveness and reduce our revenues.
Since
2008, we account for the emissions of our operations and publish the results in a GHG inventory, which currently follows the operational
control approach, contemplating our global emissions of scopes 1, 2, and 3, and which is annually verified by an independent third party.
In 2025, Braskem recorded 9.4 million tons in carbon emissions
and any carbon tax mechanism could negatively affect our business, financial condition, results of operations and operating cash flows.
For example, The
European Commission has published in 2021 its “Fit for 55 Package” climate package, which includes extensive policy towards
tougher emissions targets including the carbon border adjustment mechanism (CBAM) as holding wide ranging implications for the export
industry into Europe.
Laws and regulations
that seek to reduce GHG are being defined in some regions and may be defined globally in the future, which could have a material adverse
impact on our operating results, cash flows and financial condition. One of the possible effects of the increase in requirements related
to the reduction of GHG emissions is the increase in costs, mainly due to the demand for the reduction of fossil fuel consumption and
the implementation of new technologies in the production chain. Removing
subsidies or levying taxes on fossil energy sources could increase fuel prices for large consumers and thus production costs. Levying
taxes on carbon-intensive suppliers could increase associated production costs. Taxation on carbon intensive suppliers could increase
production costs that could negatively affect our business, financial condition, results of operations and operating cash flows. Additionally,
the difficulty of adapting to climate change and reducing the emission of GHG in production processes and the value chain could negatively
affect our business, financial condition, results of operations and cash flows.
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Climate change-related risks and
uncertainties, legal or regulatory responses to climate change and failure to meet our sustainable development objectives could negatively
impact our results of operations, financial condition or reputation.
In 2020, we announced
long term sustainable development objectives, including (i) to reach in 2030 an absolute 15% reduction in greenhouse gas emissions (GHG)
in scopes 1 and 2 – in relation to the average of the years 2018, 2019, and 2020 – and to achieve carbon neutrality by 2050
in scopes 1 and 2 and (ii) to expand our bioproducts and bio-attributed products production capacity to 1 million tons including the use
of renewable feedstock and (iii) to expand the commercialization of resins and chemicals products with recycled content to reach 1 million
tons by 2030, including the objective of recovering plastic waste and the commercialization of products with recycled content, as these
are directly related.
Execution and achievement
of these objectives within the projected costs and expected timeframes are also subject to risks and uncertainties which include, but
are not limited to: capital, advancement, availability, development and affordability of technology necessary to achieve these commitments;
unforeseen design, operational and technological difficulties; availability of necessary materials and components; adapting products to
customer preferences and customer acceptance of sustainable supply chain solutions; changes in public sentiment and political leadership;
our ability to comply with changing regulations, taxes, mandates or requirements related to greenhouse gas emissions or other climate-related
matters.
The transition to
technologies that reduce greenhouse gas emissions, along with the impact of carbon pricing, evolving public opinion, new regulations,
taxes, public mandates, and the rise in climate-related lawsuits and insurance premiums, as well as the implementation of disaster recovery
and business continuity plans, could lead to higher costs. These increased costs might make it harder for us to maintain or resume our
operations or meet our sustainability objectives within the expected timeframes, which could negatively impact our business, financial
health, operational results, and cash flow.
Risks Relating To Our Shareholders
Some of our shareholders may have
the ability to determine the outcome of corporate actions or decisions, which could affect the holders of our class A preferred shares
and the ADSs.
Novonor S.A. –
Em Recuperação Judicial (“Novonor”), directly or through its wholly-owned subsidiary NSP Investimentos S.A.,
or NSP Inv., owns 38.3% of our total share capital, including 50.1% of our voting share capital, and Petrobras holds 36.1% of our total
share capital, including 47.0% of our voting share capital. Nominees of Novonor constitute a majority of the members of our board of directors.
Under a shareholders’ agreement to which Novonor and Petrobras are parties, which we refer to as the Braskem S.A. Shareholders’
Agreement, all matters that may be resolved at a shareholder’s meeting or by our board of directors shall be decided by consensus
among Novonor and Petrobras (except for our business plan, which is approved separately by the directors appointed by Novonor, as described
under “Item 7. Major Shareholders and Related Party Transactions—Major Shareholders—Shareholders’ Agreements”),
taking into account our best interest. Furthermore, the shareholders’ agreement provides for the possibility (and not the obligation),
if deemed necessary, to hold prior meetings, as a legitimate mechanism for alignment between Novonor and Petrobras, with a view to ensuring
consistency and uniformity in their decisions, which could affect holders of class A Preferred Shares and American Depositary Shares,
or ADSs.
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Furthermore, on June
17, 2019, Novonor, together with certain of its controlling and controlled entities, filed a petition for judicial restructuring before
the First Judicial Bankruptcy Court of the State of São Paulo, Brazil, seeking a judicial restructuring and emergency relief staying
certain foreclosure actions by their secured creditors, or the Novonor Judicial Restructuring Proceedings. The Novonor Judicial Restructuring
Proceedings does not include us.
We are exposed to
certain risks related to the Novonor Judicial Restructuring Proceedings, such as risks related to the change of our corporate control
resulting from decisions taken and/or agreed in the context of such proceedings and the consequences derived thereto, including but not
limited to significant changes in our management and our strategy that may be undertaken by any new controlling shareholders that may
arise from the conclusion of these proceedings. We have no control over the Novonor Judicial Restructuring Proceedings, and no assurance
can be given on the outcome of the Novonor Judicial Restructuring Proceedings or their effect on us.
We may be subject to attempts to
acquire our control, which may lead to significant changes in management, the strategies that we are currently pursuing, or in our current
corporate governance practices.
We may be subject
to attempts to acquire our control. In the event there is a change in our corporate control, there might be significant changes in management,
the strategies that we are currently pursuing, or in our current corporate governance practices.
In addition, under
shareholders’ agreements in certain joint ventures we are a party to, in the event there is a change in our corporate control, our
partner could execute a call option right and buy our shares in such joint ventures.
All common and preferred
shares issued by us and held by NSP Inv. were pledged with fiduciary assignment (alienação fiduciária) as
a collateral given under certain financing agreements entered into by Novonor and certain of its subsidiaries with specific non-bankruptcy
creditors (credores extraconcursais). It is possible that, under certain circumstances, the pledge over such shares may be enforced,
with the consequent sale of the shares, which could result in a change of Braskem’s control and other consequences arising therefrom.
On August 7, 2020,
we received a correspondence from our controlling shareholder, Novonor, informing that, in order to fulfill certain commitments assumed
with bankruptcy and non-bankruptcy creditors (credores concursais e extraconcursais), it had taken preliminary measures to structure
a process for the private sale of up to its total equity ownership in our company, which, if implemented, will result in the change of
our corporate control, adopting the necessary measures to organize such process, with the support of legal and financial advisors.
On December 15, 2025,
we received a correspondence sent by Novonor S.A – Em Recuperação Judicial and Shine I Fundo de Investimento em Direitos
Creditórios de Responsabilidade Limitada, represented by its manager Vórtx Capital Gestora De Recursos Ltda. (“FIDC”),
advised by IG4 Sol. Ltda., informing about the execution of (i) a definitive binding agreement between the FIDC and the creditor banks
of NSP Investimentos S.A. (“NSP Inv.”) and other entities of the group Novonor S.A. – Em Recuperação Judicial
(“Grupo Novonor”) to acquire all the credits held by the aforementioned banks against Novonor guaranteed by, among others,
fiduciary assignment constituted on the shares issued by the Company held by NSP Inv. (“Transaction”); and (ii) exclusivity
agreement with an initial term of sixty (60) days between FIDC and Novonor regarding a potential transaction involving the shares issued
by Braskem held by NSP Inv. On March 6, 2026, the Administrative Council for Economic Defense (CADE) General Superintendence (Superintendência
Geral) issued a decision (despacho), through which it decided to approve, without restrictions, the Transaction.
In addition, we are
exposed to certain risks related to the Novonor Judicial Restructuring Proceedings, including risks related to the change of our corporate
control resulting from decisions taken or agreed under such proceedings and the consequences derived therefrom. We have no control over
the Novonor Judicial Restructuring Proceedings, and no assurance can be given on the outcome of the Novonor Judicial Restructuring Proceedings
or their effect on us.
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We may face conflicts of interest
in transactions with related parties.
We maintain trade
accounts receivable and current and long-term payables with related parties, including Petrobras and its subsidiaries, which is our main
Brazilian supplier of naphtha and other raw materials such as propylene, ethane, propane and refinery off gas just as logistics supplier,
and Novonor and its subsidiaries. These trade accounts receivable and trade accounts payable balances result mainly from purchases and
sales of goods, which are mainly made based on international price references. These and other transactions between us and our related
parties can result in conflicting interests, which may adversely affect our results of operations and financial condition.
Furthermore, the
shareholders’ agreement provides for the possibility (and not the obligation), if deemed necessary, to hold prior meetings, as a
legitimate mechanism for alignment between Novonor and Petrobras, with a view to ensuring consistency and uniformity in their decisions,
which could affect holders of class A Preferred Shares and American Depositary Shares, or ADSs.
If we are unable to comply with
the restrictions, covenants or guarantees in the agreements governing our, or certain subsidiaries, indebtedness and liabilities, there
could be a default under the terms of these agreements, which could result in an acceleration of payment of funds that we have borrowed
or guaranteed and could affect our ability to make principal and interest payments on our debt and liabilities obligations.
Any default under
the agreements governing our, and certain of our subsidiaries’, indebtedness or liabilities that is not cured or waived by the required
lenders or noteholders could result in the holders of any such indebtedness or liabilities accelerating the payment of amounts outstanding,
which could potentially render us unable to pay principal and interest on those and other obligations. If we are unable to generate sufficient
cash flow or otherwise fail to obtain the funds necessary to meet required payments of principal and interest on our indebtedness, or
if we otherwise fail to comply with the various covenants in the agreements governing our indebtedness or liabilities, we could be in
default under the terms of such agreements. In the event of such default:
· the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest;
· the lenders or noteholders under such agreements could elect to terminate their commitments thereunder and cease making further loans;
· the acceleration under such indebtedness may trigger cross-acceleration provisions under other financing arrangements entered into by us; and
· we could be forced into bankruptcy or liquidation.
Certain of our contractual
arrangements, including debt obligations, contain certain change of control provisions that provide our counterparties with a termination
right or the ability to accelerate the maturity of our indebtedness in the event of a change of our control without their consent and/or
a ratings decline, as applicable.
Furthermore, in October
2023, with the support of its shareholders, Braskem Idesa and Advario, TQPM entered into a syndicated project finance loan agreement in
the principal amount of R$1,975 million (US$408 million) with a 5 (five) year short-term loan deal with standard guarantees for transactions
of this type. The project financing taken by TQPM for the construction of the ethane import terminal in Mexico is also guaranteed by an
Equity Support Agreement provided by the Company that, as of the end of December 2025, covers 50% of the financing balance of TQPM, with
the remaining 50% guaranteed by the other TQPM shareholder until the project perfection collateral date (which includes the authorization
from the local energy regulator – CRE/CNE – to pledge certain assets of TQPM to the syndicated lenders). After reaching such
milestone, the Company is committed to provide support covering 100% of the monthly payments for the offtake agreement entered by Braskem
Idesa and TQPM up to the outstanding amount of TQPM financing.
In addition, pursuant
to the indentures governing our 4.500% Notes due 2028, 4.500% Notes due 2030, 8.500% Notes due 2031, 7.250% Senior Notes due 2033, 8.000%
Senior Notes due 2034, 7.125% Notes due 2041, 5.875% Notes due 2050, Subordinated Resettable Fixed Rate Notes due 2081, 15th
Debentures Issuance (used as a security for the issuance of a CRA – Agribusiness Receivables Certificates), 16th Debentures
Issuance, 17th Debentures Issuance and 18th Debentures Issuance,
a “change of control” with a “ratings decline” (as such terms may be defined in each agreement governing our
indebtedness) would require a repurchase of, or an offer to repurchase, any such outstanding notes or debentures, plus accrued and unpaid
interest, if any, to the repurchase date.
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These provisions
would be triggered, for example, in the event a third party acquires, directly or indirectly, more than 50% of our voting capital stock
outstanding and if, because of such a “change of control” (as such term may be defined in each agreement governing our indebtedness)
our ratings are downgraded under certain thresholds (a “ratings decline,” as such term may be defined in each agreement governing
our indebtedness) within a certain period of time.
In the case
of our 4.500% Notes due 2028, 4.500% Notes due 2030, 7.125% Notes due 2041, 5.875% Notes due 2050 and Subordinated Resettable Fixed Rate
Notes due 2081, a “ratings decline” would occur if, at any time within 90 days after the earlier of the date of public notice
of a “change of control” and the date on which Braskem and/or any other “person” (as applicable, and as defined
in each agreement governing our indebtedness) publicly declares its intention to effect a “change of control,”: (i) in the
event the notes are assigned an investment grade rating by at least two rating agencies prior to such public notice or declaration, the
rating assigned to the notes by at least two of the rating agencies is below an investment grade rating; or (ii) in the event the ratings
assigned to the notes by at least two of the rating agencies prior to such public notice or declaration are below an investment grade
rating, the rating assigned to the notes by at least two of the rating agencies is decreased by one or more categories (i.e., notches);
provided that, in each case, any such “ratings decline” is expressly stated by the applicable rating agencies to have been
the result of the “change of control.”
In the case
of our 8.500% Senior Notes due 2031, 8.000% Senior Notes due 2034 and 7.250% Senior Notes due 2033, a “ratings decline” would
occur if, at any time within 90 days after the date of public notice of a “change of control,” (i) in the event the notes
are assigned an investment grade rating by at least two rating agencies prior to such public notice, the rating assigned to the notes
by any two or more of the rating agencies is below an investment grade rating; or (ii) in any other case, the rating assigned to the notes
by at least two of the rating agencies is decreased by one or more categories (i.e., notches); provided that, in each case, any such “ratings
decline” is expressly stated by the applicable rating agencies to have been the result of the “change of control.”
As a result,
if a third party acquires our control, whether as a result of the Novonor Judicial Restructuring Proceedings (or agreements entered into
within the context of the Novonor Judicial Restructuring Proceedings) or otherwise, such acquisition may result in a ratings downgrade
that constitutes a “ratings decline.” In such cases, if appropriate consents or waivers are not obtained, such creditors could
accelerate the maturity of our indebtedness or as applicable, require a repurchase of, or an offer to repurchase, our outstanding notes
or debentures.
The termination
of any of our contractual arrangements, the acceleration of the maturity of, or the requirement to repurchase or offer to repurchase any
of our indebtedness may have a material adverse effect on our business, financial condition, results of operations and cash flows, and
ultimately result in the cross-acceleration of all of our indebtedness.
There can be no assurance that Novonor
will remain our controlling shareholder. Novonor and Petrobras may enter into transactions or other arrangements that may result in us
not having a controlling shareholder. If no single shareholder or group of shareholders holds more than 50% of our voting stock or exercise
a controlling interest, there may be increased opportunity for alliances between shareholders and conflicts between them.
Currently, Novonor,
directly or through its wholly-owned subsidiary NSP Inv., owns 38.3% of our total share capital, including 50.1% of our voting share
capital, and Petrobras holds 36.1% of our total share capital, including 47.0%
of our voting share capital. Each of Novonor (our indirect controlling shareholder) and Petrobras are currently a party to a shareholders’
agreement governing the exercise of their voting rights, appointment of directors and officers and other matters related to our corporate
governance and their interests in us. In the event there is a change in our corporate control, we may be subject to significant changes
to our management, business plan and strategies, as well as to our current corporate governance practices, all of which may have a material
adverse effect on our results of operations and financial condition.
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On November 3, 2022,
we received a correspondence from Novonor, informing that, due to the discussions and analysis currently underway relating to a possible
transaction, it may be necessary for Braskem to interact with potential interested parties, for which Novonor asked for our support and
for that of our officers. Novonor further informed that, at that moment, there was no exclusivity agreement with any interested party,
no binding offer, and no definition or decision on the structure to be adopted or on any alternative related to the disposal process.
In addition, as disclosed
by us on December 16, 2021, we were notified by Novonor and Petrobras that each of their governance bodies approved, on December 15, 2021,
the execution of a term sheet providing for Novonor’s and Petrobras’ mutual commitment to take necessary measures that could,
if implemented, ultimately result in a change of control of our company (the “Notice”).
If we migrate to
the Novo Mercado in the future, all of our class A and class B preferred shares will be converted into common shares, resulting
in Novonor no longer holding indirectly the majority of our voting stock. Even if Novonor and Petrobras enter into a new shareholders’
agreement, the potential material sale of our common shares held by either or both of them could leave Novonor and Petrobras with less
than 50% plus one share of our voting stock.
Irrespective of whether
the transactions described in the Notice are implemented, Novonor or Petrobras may initiate discussions regarding other transactions that
could ultimately have similar effects in the future.
Should Novonor and
Petrobras cease to hold more than 50% of our voting stock, there can be no assurance that the influence by such shareholders will be maintained,
including, without limitation, in relation to corporate governance, business plan, strategical, and key management matters. If a control
group emerges with decision-making power over us, we may experience sudden and unexpected changes to our corporate governance and strategic
policies, including through the replacement of directors and key executive officers.
The absence of a
controlling shareholder or controlling group of shareholders may also affect our decision-making process, as the minimum quorum required
by Brazilian law for certain decisions by shareholders may not be reached. In that case, we may be unable to pursue our business plan
effectively to pursue our business plan and strategies effectively. Additionally, we may be more vulnerable to a hostile takeover.
Additionally, all
common and preferred shares issued by Braskem and held by NSP Inv. were pledged with fiduciary assignment (alienação
fiduciária) as a collateral given under certain financing agreements entered into by Novonor and certain of its subsidiaries
with specific non-bankruptcy creditors (credores extraconcursais). It is possible that, under certain circumstances, the pledge
over such shares may be enforced, with the consequent sale of the shares, which could result in a change of Braskem’s control and
other consequences arising therefrom.
On December 15, 2025,
we received a correspondence sent by Novonor S.A – Em Recuperação Judicial and Shine I Fundo de Investimento em Direitos
Creditórios de Responsabilidade Limitada, represented by its manager Vórtx Capital Gestora De Recursos Ltda. (“FIDC”),
advised by IG4 Sol. Ltda., informing about the execution of (i) a definitive binding agreement between the FIDC and the creditor banks
of NSP Investimentos S.A. (“NSP Inv.”) and other entities of the group Novonor S.A. – Em Recuperação
Judicial (“Grupo Novonor”) to acquire all the credits held by the aforementioned banks against Novonor guaranteed by, among
others, fiduciary assignment constituted on the shares issued by the Company held by NSP Inv. (“Transaction”); and (ii) exclusivity
agreement with an initial term of sixty (60) days between FIDC and Novonor regarding a potential transaction involving the shares issued
by Braskem held by NSP Inv. On March 6, 2026, the Administrative Council for Economic Defense (CADE) General Superintendence (Superintendência
Geral) issued a decision (despacho), through which it decided to approve, without restrictions, the Transaction.
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Any unexpected change
to our management team, business plan and strategies, any dispute between our shareholders, or any attempt to acquire our control may
divert our management’s attention and also have an adverse effect on our business plan, strategies, financial condition and results
of operations.
We lost the right of preference
set forth in the current shareholders’ agreement with respect to new business opportunities in the petrochemical sector, and as
result, Petrobras, which is our largest supplier of raw materials in Brazil, will be able to invest in the petrochemical sector independently
from us and without first giving us a preference to do so.
Novonor and Petrobras
are currently parties to a shareholders’ agreement that provides, among other matters, for the commitment between them to use their
best efforts in the development of new business opportunities in the “petrochemical sector” (defined as business opportunities
that involve: (i) the use of ethylene and propylene for the manufacture of PE, PP, PVC and cumene; (ii) petrochemical investments for
the production of butadiene, paraxylene, PE, PP, PVC, cumene, PTA and PET, as well as the sale of these products; (iii) investments based
on pyrolysis of hydrocarbons for the petrochemical industry; and (iv) other investments or products that Novonor and Petrobras may agree
in good faith to include in the definition of the “petrochemical sector” relating to new production processes that may be
developed in the future), with a right of preference given to us.
Subject to some exceptions
related to specific projects, if there is a direct or indirect business initiative, opportunity, undertaking, investment or participation
that each of Novonor or Petrobras intends to pursue in the petrochemical sector (an “Opportunity”) that overlaps with certain
objectives described in such shareholders’ agreement, the party that identified the Opportunity (the “Identifying Party”)
shall grant Braskem a preference to explore the Opportunity.
If we do not express
an interest in exercising the right of preference over a given Opportunity, and the Identifying Party subsequently decides to pursue such
Opportunity, the Identifying Party shall offer us the right to market the products related to the Opportunity under mutually satisfactory
market conditions.
On December 15, 2021,
Novonor and Petrobras entered into an amendment to such shareholders’ agreement, generally providing that, if Braskem’s potential
migration to the Novo Mercado listing segment of the B3 was not implemented, Braskem’s right of preference with
regard to any future Opportunity would lapse by October 31, 2024. Because the migration of Braskem to the Novo Mercado listing
segment of the B3 was not completed by October 31, 2024, Braskem lost its right of preference with regard to any future Opportunity.
The loss of the right
of preference with regard to an Opportunity may result in a decision by Petrobras, which is Braskem’s largest supplier of raw materials
in Brazil, to invest in the petrochemical sector, which may affect the implementation of our strategic and growth plans and adversely
affect our revenues and results of operations.
Risks Relating To Legal And Regulatory Matters
Adjustments in tariffs on imports
that compete with our products could cause us to lower our prices.
The Brazilian government
has used import tariffs to implement economic policies. As a result, import tariffs imposed on petrochemical products have varied in
the past and may vary in the future. Until November 2021, tariffs on imports of first-generation petrochemical products varied between
0% and 4%, and tariffs on polyethylene, polypropylene and PVC resins were 14.0%. In November 2021, the Brazilian government unilaterally
reduced by 10% the import tariff rates of 87% of all its internationally commercialized goods. In May 2022, Brazil reduced, unilaterally,
by an additional 10% tariffs on certain exports, which were expected to remain in force until December 2023 at the level of 11.2%.
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In July 2022, Mercosur
decided to reduce permanently the Common External Tariff (TEC) by 10%, which was applicable to all Mercosur members. Following these changes,
tariffs on imports of first-generation petrochemical products from Mercosur members now vary between 0% and 3.6%, and tariffs on polyethylene,
polypropylene and PVC resins are set at 12.6%.
In August 2022, the
Brazilian government also enacted Resolutions Nos. 369 and 381 of the Executive Management Committee of Chamber of Foreign Trade (“Gecex”)
approving a reduction in the import tax, by inclusion in the List of Exceptions to the Mercosur Common External Tariff (“Letec”)
for the following of our products: (i) ethylene and alpha-olefin copolymers with density lower than 0.94, from 11.2% to 3.3%; (ii) S-PVC
resin obtained from suspension processes, from 11.2% to 4.4%; (iii) PP (propylene copolymer) resin, from 11.2% to 4.4%; and (iv) PP (propylene
homopolymer), from 11.2% to 6.5%. This reduction was valid for one year, from August 5, 2022 until August 2023. We have historically prioritized
supply to the Brazilian market, and currently there are no signs of shortages of the products we supply to the Brazilian market.
On March, 21, 2023,
the Executive Management Committee (“Gecex”) of the Foreign Trade Chamber (“Camex”) decided to remove certain
products from Letec and adjust their import tax rates. The changes are as follows: the tax rate for ethylene and alpha-olefin copolymers
(with a density of less than 0.94) increased from 3.3% to 11.2%; the tax rate for PVC-S resin (produced by a suspension process) increased
from 4.4% to 11.2%; and the tax rate for PP "cup" resin (propylene copolymer) increased from 4.4% to 11.2%. The PP (propylene
homopolymer) remained in Letec until July 31, 2023, after which its import duties were also raised to 11.2%.
On November 10, 2023,
the Gecex of Camex decided to reestablish import tariffs on 73 chemical products that were included in Resolution 353/2022 (the second
unilateral reduction of 10% of the External Common Tariff (Tarifa Externa Comum) (“TEC”). The measure was taken aiming
at reversing the negative impacts caused to the national industry, especially related to the surge in imports and the strong price variation
that resulted from the 10% reduction in import tax that had been implemented. Therefore, as of November 28, 2023, the import tax applied
to Braskem resins returned to the TEC level, being set at 12.6%.
On September 18,
2024, the Executive Management Committee (Comitê-Executivo de Gestão) of Brazil’s Chamber of Foreign Trade (Câmara
de Comércio Exterior, the “Camex”) approved an increase in the import tax from 12.6% to 20%, by adding the following
products to the List of Temporary Tariff Increases due to Structural Trade Imbalances of Camex, which are marketed by us: (i) PE resins:
certain types of other PE without fillers; certain other copolymers of ethylene and vinyl acetate; and certain copolymers of ethylene
and alpha-olefins; (ii) polypropylene (“PP”) resins: certain types of PP; and certain copolymers of PP; and (iii) PVC resins:
certain PVC products. This increase is effective for one year from the publication of the decision in the Brazilian Federal Official Gazette,
valid from October 15, 2024, to October 14, 2025. On October 17, 2025, the 20% import tax maintenance was approved by Camex through October
16, 2026.
Adjustments of tariffs
could lead to increased competition from imports and cause us to lower our domestic prices and impact the demand for our products, which
would likely result in lower net revenue and could negatively affect our overall financial performance. Additionally, the products we
export to the United States and Europe are subject to tariffs in the amount of 6.5% in each jurisdiction, subject to certain preferences.
These tariffs generally balance the level of competition of our products produced locally and any future adjustments to these tariff structures
could negatively impact our sales in these jurisdictions. Future trade agreements entered into by Brazil, the Mercosur, the United States
or the European Union could also lead to increased competition from imports and lower domestic prices.
Changes in U.S. and global trade
policies and other factors beyond our control may adversely impact our business, financial condition and results of operations.
The international environment
in which we operate is affected from inter-country trade agreements and tariffs. As a result of recent changes to United States administrative
policy, there are, and there may be additional changes to existing trade agreements, greater restrictions on free trade and significant
increases in tariffs on goods imported into the United States. Future actions of the United States administration and that of foreign
governments, including China, with respect to tariffs or international trade agreements and policies remains currently unclear.
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The escalation of
a trade war, tariffs, retaliatory tariffs or other trade restrictions on products and materials including those exported by us to China
or raw materials imported by us from China, or other countries, may significantly hinder our ability to provide our products to customers
in China or other affected locations. Such developments may result in a decrease in demand for our products as well as delays in payments
from our customers. Furthermore, other governmental action related to tariffs or international trade agreements, changes in U.S. social,
political, regulatory and economic conditions, or in laws and policies governing foreign trade, manufacturing, development and investment
in the territories and countries where our customers are located, could lead to a rebalancing of global export flows and an increase in
global competition, which in turn could adversely affect our business, financial condition, results of operations and cash flows.
New Tariffs Imposed or Threatened
by the United States Could Result in Increased Costs
The new United States
administration has imposed or threatened to impose tariffs ranging from 10 to 25% on a variety of countries, including China, Mexico,
Canada, and the European Union, and products, including steel, aluminum, copper, automobiles, and lumber and is likely to continue to
do so in the future. In addition, the United States has threated the imposition of reciprocal tariffs on those countries who impose unequal
tariffs or taxes on United States exports. While to date the only United States tariff increases in effect are the additional 20% tariffs
on United States imports from China, the 25% tariff on United States imports of steel and aluminum, and the 25% tariff on United States
imports from Canada and Mexico (excluding imports from Canada and Mexico that qualify for exemptions under the United States-Mexico-Canada
Agreement (the “USMCA”), there is no guarantee that other threatened tariff increases will not become effective in the future. Given
the current uncertainty around the threat of tariff increases, it is not possible to estimate the potential effect or to determine the
level of materiality to the Company. Such tariff increases, if adopted and applicable to United States imports by the Company or its suppliers,
could result in increased costs, including potential costs related to shifting more production to the United States or other countries,
which might be material to the Company. The retaliatory tariffs adopted by third countries could also have similar effects on products
of the Company being exported into those countries.
Failure to comply with export control
or economic sanctions laws and regulations could have a material adverse impact on our results of operations, financial condition and
reputation.
We
operate on a global basis and face risks related to compliance with export control and economic sanctions laws and regulations, including
those administered by the United Nations, the European Union and the United States, including the U.S. Treasury Department’s Office
of Foreign Assets Control. Economic sanctions programs restrict our dealings with certain sanctioned countries, territories, individuals
and entities. Economic sanctions are complex, frequently changing, and often increase in number, and may impose incremental prohibitions,
fines, restrictions on dealings with additional countries, territories, individuals or entities or compliance obligations on our dealings
in certain countries and territories. We have conducted, and may in the future seek to conduct, business in certain countries that are
subject to sanctions under the laws of the United States, the European Union, or other countries. Although we have pursued these transactions,
and intend to pursue any future transactions, in full compliance with applicable laws and regulations, we may not be successful in ensuring
compliance with limitations or restrictions on business with companies in any such countries. Additionally, Russia’s annexation
of Crimea, recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine, and the military interventions in Ukraine
have led to sanctions and other penalties being imposed by the United States, the European Union and other countries on Russia, Belarus,
the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s
Republic, including the agreement to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial
Telecommunication (“SWIFT”) payment system.
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Additional potential
sanctions and penalties have also been proposed and/or threatened and the United States and other countries could impose wider sanctions
and take other actions should the conflict further escalate. If we are found to be in violation of applicable sanctions laws or regulations,
we may face criminal or civil fines or other penalties, we may suffer reputational harm and our results of operations and financial condition
may be adversely affected. Additionally, even though we have adopted a global trade control directive and provide regular training to
our employees, there can be no assurance that our employees, directors, officers, partners or any third parties that we do business with,
including, among others, any distributors, or suppliers, will not violate sanctions laws and regulations. We may ultimately be held responsible
for any such violation of sanctions laws and regulations by these persons, which could result in criminal or civil fines or other penalties,
have a material adverse impact on our results of operations and financial condition and damage our reputation.
We may not be able to specify in
details technical specifications required by our customers’ or updated mechanisms to promptly attend regulatory requirements, and
we could be subject to damages based on claims brought against us or our customers as a result of the failure of our products specification.
Our products specifications
may not meet certain technical or regulatory requirements, specifications or standards. In addition, our customers may impose stricter
requirements on our products or governments may enact stricter regulations for the distribution, sale or use of our products. Failure
to meet such standards could materially adversely affect our business, financial condition and results of operations if we are unable
to sell our products in one or more markets or to important customers in such markets.
As with all quality
control systems, any failure or deterioration of our quality control systems could result in defects in our products, which in turn may
subject us to contractual, regulatory, product liability and other claims, which could have a material adverse effect on our reputation,
business, financial condition and results of operations.
We may not be able to obtain or
renew all licenses, permits and authorizations necessary for conducting our business.
We are subject to
a wide variety of federal, state and municipal laws, regulations and licensing requirements, and depend on obtaining licenses, permits
and authorizations to carry out our activities.
We cannot guarantee
that we will be able to maintain, renew or obtain any new authorization, license, grant, or permit, in a timely manner, or that any additional
requirements will not be imposed in connection with such renewal order.
Failure to obtain
or maintain the permits, authorizations and licenses necessary for our operations, or failure to obtain or timely maintain them, may result
in fines, loss or early termination of permits, authorizations and/or licenses, as well as closing of plants, or breach of financing and
commercial contracts, which could have a material adverse effect on our results of operations and financial condition.
We could be materially adversely
affected by the impacts of the Global Settlement.
On December 14, 2016,
we entered into a leniency agreement with the MPF (the “Leniency Agreement”), which was ratified by the competent Brazilian
court on June 6, 2017. On December 21, 2016, we (i) filed a plea agreement in the United States District Court for the Eastern District
of New York under which we agreed to plead guilty to a one-count criminal information charging us with conspiracy to violate the anti-bribery
provisions of the U.S. Foreign Corrupt Practices Act (the “FCPA”) and (ii) consented to the entry of a final judgment in
a civil action brought by the SEC based on civil violations of the anti-bribery, books and records and internal accounting controls provisions
of the FCPA. The competent federal courts in the United States approved the U.S. Department of Justice (the “DoJ”) and SEC
resolutions on January 26, 2017 and February 28, 2017, respectively. In addition, on December 21, 2016, the Swiss Attorney General’s
Office (“OAG”) closed its investigation of these matters. We refer to these actions as the “Global Settlement.”
Under the Global Settlement, we agreed to pay to the governmental authorities in these jurisdictions an aggregate amount of US$957 million
(equivalent to R$3.1 billion), based on the exchange rate of R$3.27 per U.S. Dollar, applicable at the time of the negotiation.
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Pursuant to the Global
Settlement, the MPF agreed to communicate with other public authorities or entities, as well as stated-owned companies and mixed-capital
companies with which Braskem enters into discussions to address the facts under the Global Settlement and avoid making duplicate restitution
payments. In this context, pursuant to the notice to the market disclosed on Form 6-K on July 11, 2018, and the material fact disclosed
on Form 6-K on May 27, 2019, we have cooperated and engaged in negotiations with the Ministry of Transparency and Controllership (CGU)
and the Office of the Attorney General (AGU) in Brazil, and our Board of Directors approved the signing of a leniency agreement with the
CGU and the AGU (the “CGU/AGU Agreement”).
The CGU/AGU Agreement,
in the amount of R$2.9 billion, to be adjusted by the SELIC rate, addresses the same facts that are the object of the Global Settlement
executed in December 2016 with the Brazilian Federal Prosecution Office (MPF), the DoJ, the SEC and the Swiss Office of the Attorney General.
Of this amount, R$3.1 billion will be offset by the amount that Company already had undertaken to pay under the scope of the Global Settlement,
resulting in an additional disbursement of R$410 million.
As of December 31,
2025, we had paid R$3.4 billion since 2016, as follows:
· R$1,213 million to the AGU, CGU and MPF;
· R$297 million to the DoJ;
· R$407 million to the OAG;
· R$1,282 million to the MPF; and
· R$206 million to the SEC
In August 2023,
the Company was notified by CGU about the end of the monitoring period of the Company’s integrity program and also presented the
closing of the monitorship.
In February 2024,
a decision was rendered by the Brazilian Supreme Court, within the scope of the Action against the Violation of a Constitutional Fundamental
Right (“ADPF”) No. 1051, determining the renegotiation of leniency agreements. On December 19, 2024, the Company entered into
an Amendment to the Leniency Agreement to adjust the payment schedule and other obligations and conditions, as outlined below:
(i) 2025: installment of R$35 million;
(ii) 2026: installment of R$35 million;
(iii) 2027: installment of R$55 million; and
(iv) 2028, 2029 and 2030: installments of R$158 million each.
The CGU/AGU Amendment
will be submitted for approval by the Federal Supreme Court (STF), in the ADPF records. As a result, from the renegotiation the Company
has written off an amount of R$112 million from the provision.
The amount payable
under the Leniency Agreement, as of December 31, 2025, was R$673 million, of which R$90 million is classified as current liabilities and
R$583 million is classified as non-current liabilities.
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By reason of the Global
Agreement, we will continue to cooperate with these relevant governmental authorities and improve our governance and anti-corruption compliance
practices. Over the three years between 2017 and 2020, we were subject to independent monitoring as a result of the Agreements (the “CGU/AGU
Agreement” and, together with the Global Agreement, the “Agreements”). Such monitors were responsible for verifying
compliance with the Global Agreement, as well as the effectiveness of our internal controls, policies and procedures to reduce the risk
of non-compliance with anti-corruption laws.
We are in compliance
with all of our obligations under the Agreements and continue to cooperate with government authorities.
The Global Settlement
does not prevent us from being held liable to any legitimate third party, which may seek indemnification for damages for the facts subject
to the agreements, including other authorities with jurisdiction over us may seek to impose monetary sanctions or fines on, or to initiate
investigative proceedings against us, which could adversely affect our results of operations and financial condition.
We cannot guarantee
that the total amount agreed will be sufficient to repair any harm fully.
Unfavorable outcomes in pending
or future litigation may reduce our liquidity and negatively affect our financial performance and financial condition.
We are, and in the
future may be, involved in numerous tax, civil, environmental and labor disputes, among others, involving monetary claims and guarantees
including equity in our subsidiaries. If unfavorable decisions are rendered in one or more of these lawsuits, we could be required to
provide guarantees or pay substantial amounts. For certain of these lawsuits, we have not established any provision on our statement of
consolidated financial position or have established provisions only for a portion of the amounts in controversy, based on our judgments
as to the risk of loss for these lawsuits.
In the context of
the geological events occurred in Maceió, we entered into agreements for the termination of three public-interest civil actions
(ACP Labor, ACP Socio-environmental and ACP of Residents). The terms of the settlements were as follows:
· ACP Labor settlement: in February 2020 we committed to investing R$40 million to fund a Business Recovery and Promotion of Educational Activities Program for residents and workers in the districts of Mutange, Bom Parto, Pinheiro and Bebedouro in Maceió, in the state of Alagoas. This agreement has been fulfilled in its entirety.
· ACP of Residents settlement: through an Instrument of Agreement to Support the Relocation of People in Risk Areas, which was ratified by the court in January 2020 and updated in December 2020, we committed to supporting the relocation and compensating residents, merchants, business owners and property owners located in the risk areas defined in the Civil Defense Map subject to relocation, by offering proposals for financial compensation and entering into individual agreements ratified in court (as of December 31, 2021, the risk area encompasses approximately 15,000 properties); and
· ACP Socio-environmental settlement: in December 2020, we committed to (i) adopting the necessary measures to stabilize the cavities and monitor the soil, implementing the measures of the mine closure planning presented to ANM and subject to its approval; (ii) repairing, mitigating or compensating potential environmental impacts and damages resulting from the mining activities (salt extraction) in the city of Maceió, to be defined by an Environmental Diagnosis developed by an expert and independent company approved by the Prosecutor’s Office; and (iii) allocating R$1.58 billion to implement measures in the vacated area, actions related to urban mobility and to compensate potential socio-urbanistic impacts and damages.
The provisions of the Company are based on
current estimates and assumptions and may be updated in the future due to new facts and circumstances, including, but not limited to:
changes in the execution time, scope and method and the success of action plans; new repercussions or developments arising from the geological
event, including possible revision of the Civil Defense Map; and possible studies that indicate recommendations from specialists, including
the Technical Monitoring Committee, according to Agreement for Compensation of Residents and other new developments in the matter. The
Company has been making progress in negotiations with private entities and government authorities about other indemnification claims,
deepening its understanding, which may lead to future agreements. Although future disbursements may occur as a result of said negotiations,
as of the reporting date, the Company is unable to predict the results and timeframe for concluding these negotiations or their scope
and the total associated costs in addition to those already provisioned for.
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Furthermore, the contingent liabilities
whose loss is assessed as possible by the Company’s Management, based on its evaluation and that of its external legal advisors,
related to the geological event in Alagoas in December 31, 2025 was R$8,132 million.
On May 21, 2024,
the final report of the Parliamentary Investigative Committee (“CPI”), set up by the Brazilian Senate on December 13, 2023,
was approved, with the purpose of investigating the effects of the Company’s socio-environmental legal liability related to the
geological event in Alagoas. On this date, the aforementioned CPI was declared closed, with the subsequent submission of the final report
to the appropriate institutions.
There are also administrative
proceedings related to the geological event in Alagoas currently in progress before the Federal Accounting Court (“TCU”) and
the Securities and Exchange Commission of Brazil (“CVM”).
In October 2024,
the Company was informed of the conclusion of the Federal Police investigation in Alagoas, which had been ongoing since 2019. The inquiry
records were sent to the Prosecution Office for evaluation, which requested additional investigations. The Company has always made itself
available to the competent authorities and has been providing all information related to salt mining over the course of the investigation.
In October 2025, the MPF filed charges based on the final report of the Federal Police from October 2024.
We have been making
progress with local authorities about other indemnification requests to understand them better. Although future disbursements may occur
because of progress in negotiations, as of the reporting date, we are unable to predict the results and timeframe for concluding these
negotiations or its possible scope and the total associated costs in addition to those already provisioned for.
It is not possible
to anticipate all of the new claims related to damage or other nature that may be brought by individuals or groups, including public or
private entities, that understand they suffered impacts or damages related to the geological event and the relocation of people from risk
areas, as well as new notices of infraction or administrative penalties of diverse nature. Braskem continues to face and could still face
administrative procedures and various lawsuits filed by individuals or legal entities not included in the PCF or that disagree with the
financial compensation offer for individual settlement, as well as new collective actions and new lawsuits filed by public utilities,
entities of the direct or indirect administration of the State of Alagoas, the Municipality of Maceió or the Brazilian federal
government. Therefore, the number of such actions or lawsuits, their nature or the amounts involved cannot be accurately estimated at
this time.
Consequently, we
cannot eliminate the possibility of future developments related to all aspects of the geological event in Alagoas, the relocation process
and actions in vacated and adjacent areas, so the expenses to be incurred may differ significantly from our estimates and provisions.
We could be materially affected
by violations of the FCPA, the Brazilian Anti-Corruption Law and similar anti-corruption laws.
We, our subsidiaries
and our joint venture partners are subject to a number of anti-corruption laws, including Law No. 12,846/2013, or the Brazilian Anti-Corruption
Law, which entered into effect on January 28, 2014, the FCPA and various other anti-corruption and anti-bribery laws of other jurisdictions.
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The FCPA, the Brazilian
Anti-Corruption Law and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making
improper payments to government officials or other persons for the purpose of obtaining or retaining business. Violations of these laws
may result in criminal or civil sanctions, inability to do business with existing or future business partners, injunctions against future
conduct, profit disgorgements, disqualifications from directly or indirectly engaging in certain types of businesses, the loss of business
permits or other restrictions which could have a material adverse effect on our business, financial condition, results of operations or
liquidity. Any negative reflection on our image or our brand from any violation of these laws could have a negative impact on our results
of operations, as well as our ability to achieve our growth strategy. Furthermore, the Brazilian Anti-Corruption Law provides for joint
and several liabilities between companies of the same economic group.
Given the size of
our operations and the complexity of our production chain, there can be no assurance that our internal policies and procedures will be
sufficient to prevent or detect all inappropriate or unlawful practices, including fraud or violations of law or violations of our internal
policies and procedures by our employees, directors, officers, partners or any third-party agents or service providers. Furthermore, there
can be no assurance that such persons will not take actions in violation of our policies and procedures (or otherwise in violation of
applicable laws and regulations) for which we or they may ultimately be held responsible. Violations of anti-fraud, anti-corruption, anti-money
laundering or other international laws and regulations could have a material adverse effect on our business, reputation, brand, selling
prices, results of operations and financial condition, including as a result of the closure of international markets. We may be subject
to one or more enforcement actions, investigations or proceedings by authorities for alleged infringement of these laws. These proceedings
may result in penalties, fines, sanctions or other forms of liability.
We are exposed to behaviors of our
employees, non-employees and third parties that may be incompatible with our ethics and compliance standards, and failure to timely prevent,
detect or remedy any such behavior and/or process vulnerabilities may have a material adverse effect on our results of operations and
financial condition.
We are subject to
the risk that our employees, partners, counterparties, or any person doing business with us may engage in fraudulent activity, corruption,
or bribery, or circumvent, or override our internal controls and procedures or misappropriate or manipulate our assets for their personal
or business advantage. Investigations conducted by us internally or through outside counsel on potential violations of any applicable
anti-corruption laws, including the FCPA by our employees or agents can be expensive and require significant time and attention from senior
management. Our Anti-Corruption Program may not be completely effective for identifying, monitoring, and mitigating these risks.
In addition, we cannot
guarantee the existence of a socially responsible value chain that offers decent working conditions. Any breach of work-related regulations
could result in human rights violations, impacts on people’s quality of life, and poor work conditions, which in turn could have
an impact on our results of operations due to potential financial implications and lawsuits brought by individuals, public authorities,
or other agents, which could impact our reputation and image.
In the future, we
may be required to conduct additional procedures and analyses with respect to our internal processes and controls that may lead to a delay
in the conclusion of our audited financial statements and, as a result, prevent us from filing future annual reports in a timely manner.
Any failure to timely file our annual reports in the future may have an adverse effect on our business.
Unauthorized disclosure or loss
of intellectual property, sensitive confidential or personal information, or disruption to information technology systems by cyberattacks
or other security breaches, as well as our failure to comply with data protection laws and information security requirements may subject
us to significant penalties or liability and may adversely impact our operations, reputation, and financial results.
We collect, store, process,
and use certain sensitive confidential information and other personal data in connection with our business operations. We must ensure
that any personal data activity such as processing, collection, use, storage, dissemination, transfer, and disposal of data for which
we are responsible complies with relevant data protection and privacy laws. The protection of information relating to our business partners
(customers and suppliers), employees and confidential information related to our business is critical to us. We rely on commercially
available systems, software, and monitoring tools to provide secure processing, transmission,
and storage of relevant information, such as business confidential information and personal data including sensitive information.
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The Brazilian Constitution,
Law No. 10,406/2002 (Civil Code), Law No. 8.078/1990 (Consumer Protection and Defense Code), Law No. 12.965/2014 (Brazilian Civil Rights
Framework for the Internet), Decree No. 8771/2016 and the recent Law No. 13.709/2018 (Brazilian General Data Protection Law, or “LGPD”),
which entered into force on September 18, 2020, are the main laws governing the practice of processing personal data in Brazil.
The LGPD established
a new legal framework for personal data processing transactions in Brazil. The LGPD also provided for administrative sanctions that can
be applied in case of non-compliance with its provisions by the National Data Protection Authority (“ANPD”), which is responsible
for preparing guidelines and supervising compliance with the law. Non-compliance with any provisions provided for in the LGPD may result
in judicial or administrative proceedings enforcement by consumer protection agencies of penalties provided for in the sparse data protection
regulation, such as those set forth in the Consumer Protection and Defense Code and the Brazilian Civil Rights Framework for the Internet.
Since August 1, 2021,
with the entry into force of the LGPD’s administrative sanctions, if the ANPD understands that we are not in compliance with the
LGPD, we may be subject to individual or cumulative sanctions, warning, requirement to disclose the incident, temporary blocking and/or
exclusion of personal data to which the violation refers, daily fine, simple fine of up to 2% of the company, group or conglomerate’s
revenue in Brazil in its last fiscal year, excluding taxes, and up to the aggregate amount of R$50.0 million per infringement. In case
of recurrence, more severe administrative penalties provided for in the LGPD may be applied.
In addition, we may
be held liable for material, moral, individual or collective damages caused to the holders of personal data, including when caused by
our subsidiaries or by third parties that process personal data on our behalf or as controllers together with us due to non-compliance
with the obligations provided by the LGPD. In this sense, we cannot guarantee that we will be successful in adapting our activities, procedures,
documentation and the relationship with third parties hired by us to meet the high standards provided by the LGPD. Administrative sanctions
or legal convictions may cause material financial impacts, in addition to adversely affecting our reputation in the market.
Even if we adopt
practices in line with the provisions and obligations set forth in the LGPD, it cannot be guaranteed that the measures adopted to adapt
our personal data processing activities will be considered adequate or sufficient by ANPD, by other public authorities, such as the Public
Ministry and consumer protection bodies, or by the court.
Our failure to comply
with any additional privacy laws or regulations enacted or approved in Brazil or in other jurisdictions in which we operate could seriously
harm our business, financial condition or results of operations. For example, on May 25, 2018, Regulation No. 2016/279 of the European
Parliament and of the Council of April 27, 2016 on the protection of personal data (the General Data Protection Regulation), or the GDPR,
became directly applicable in all member states of the European Union. The GDPR has introduced new obligations relating to data privacy,
control and retention, including, among others: (i) accountability and transparency requirements; (ii) enhanced data consent requirements;
(iii) obligations to consider data privacy as any new products or services are developed and limit the amount of information collected,
processed, stored and its accessibility; (iv) constraints on using data to profile data subjects; (v) providing data subjects with personal
data in a useable format upon request and erasing personal data in certain circumstances; and (vi) reporting breaches without undue delay.
As we seek to expand
our business and operations, we expect to be increasingly subject to laws and regulations relating to personal data activity such as
collection, use, retention, security, and transfer of our employee and customer data. These may change over time and may vary by jurisdiction,
and it is possible they will be interpreted and applied in ways that will materially and adversely affect our business. Any failure—real
or perceived—by Braskem to comply with any applicable privacy or data protection-related laws and regulations could cause our customers
to reduce their use of our products and services.
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Compliance with data
protection laws requires us to expend resources to revise our procedures and policies. There are no guarantees that we have sufficient
resources to comply with new regulations or to comply with this changing regulatory environment successfully. Further, there is a risk
of improper implementation and sanctions or reputational damage for noncompliance, both of which could have a material adverse effect
on our operations, financial condition, and prospects.
Despite the information
security measures that we have in place, our facilities and systems—and those of our third-party service providers—may be
vulnerable to security breaches, cyberattacks (including ransomware and phishing), computer viruses, misplaced or lost data, programming
or human errors, or other similar events. There has been an increasing number of cyberattacks globally. Any security breach or perceived
threat resulting in the loss or other unauthorized disclosure of confidential information could damage our reputation, expose us to litigation
risk and liability, subject us to negative publicity, disrupt our operations and harm our business.
Cyberattacks or security
breaches could compromise critical information and cause a disruption in our operations, which are heavily dependent on information technology
and telecommunication systems and services. Information assets, including intellectual property, trade secrets, personal data and other
business-sensitive critical information are an attractive asset to cyber criminals, cyberterrorism or other external agents. A significant
cyberattack, a human error, including from our employees and partners, or obsolescence of technology could result in the loss of critical
business information and/or negatively impact our operations, which could have a negative impact on our financial results.
Our own security
measures cannot be guaranteed and are susceptible to new cyberattacks. On October 4, 2020, we detected a cyberattack on our information
technology environment and several improvements in people, processes and technologies have been and are being applied in the Company’s
environment, significantly increasing the maturity of information security at Braskem. We believe that all these actions ensured that
no new incidents happened to date.
We are subject to audit by the tax
authorities in the jurisdictions in which we operate, which may adversely affect our operating results and financial condition.
We operate in and
sell our products into several countries, including Brazil, Argentina, Colombia, Chile, the United States, Germany, the Netherlands, Mexico
and Singapore, each with its own tax legislation and specific audit procedures. The tax legislation in each country are frequently ambiguous
and subject to interpretation, which may lead to divergent views between the tax authorities in each country and us and/or our advisors.
We operate in and
sell our products into several countries, including Brazil, Argentina, Colombia, Chile, the United States, Germany, the Netherlands, Mexico
and Singapore, each with its own tax legislation and specific audit procedures. The tax legislation in each country is frequently ambiguous
and subject to interpretation, which may lead to divergent views between the tax authorities in each country and us and/or our advisors.
Changes in tax laws may result in
increases in certain direct and indirect taxes, which could reduce our gross margin and negatively affect our overall financial performance.
We operate in several
countries, including Brazil, Argentina, Colombia, Chile, the United States, Germany, Netherlands, Mexico and Singapore. Besides, we sell
our products to several other countries through different commercial approaches.
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Each
of these countries has its own tax legislation, and these tax laws undergo frequent changes according to specific government purposes
in each country. An example is the Brazilian government, which implements, from time to time, changes to tax regimes that may increase
our and our customers’ tax burdens. These changes include modifications in the rate of
assessments and, on occasion, enactment of temporary taxes. In addition, our tax treatment may be affected by tax policy initiatives and
reforms related to the Organization for Economic Cooperation and Development (“OECD”), the work of the OECD/G20 inclusive
framework on Pillar One and Pillar Two of the base erosion and profit shifting (“BEPS”) project and other initiatives. Pillar
Two establishes a global minimum tax of 15% for each jurisdiction in which a multinational group operates. The Company is subject to the
Pillar Two rules in Germany, Brazil, and the Netherlands.
We cannot predict
the changes to Brazilian tax law or in any other jurisdiction in which we operate that may be proposed and enacted in the future. However,
future changes in these tax laws may result in increases in our overall tax burden, which could reduce our gross margin and negatively
affect our overall financial performance.
Risks Relating To Brazil
Brazilian political, economic and
business conditions, and the Brazilian government’s economic and other policies, may negatively affect demand for our products as
well as our net revenue and overall financial performance.
The Brazilian economy
has been characterized by frequent and occasionally extensive intervention by the Brazilian government and unstable economic cycles. The
Brazilian government has often changed monetary, taxation, credit, tariff and other policies to influence the course of Brazil’s
economy. The Brazilian government’s actions to control inflation and implement other policies have at times involved wage and price
controls, blocking access to bank accounts, imposing capital controls and limiting imports into Brazil.
Our results of operations
and financial condition may be adversely affected by factors such as:
· expansion or contraction of the Brazilian economy, as measured by rates of growth in GDP;
· fluctuations in exchange rates;
· exchange control policies;
· interest rates;
· inflation;
· tax policies and tax reforms;
· liquidity of domestic capital and lending markets; and
· other political, diplomatic, social, economic and business developments in or affecting Brazil.
Brazilian markets
have experienced heightened volatility due to the uncertainties derived from the corruption investigations by the Federal Prosecutor’s
Office under Operations Car Wash, Zelotes, Greenfield, Efficiency and other investigations, and their impact on the Brazilian economy
and political environment. Certain current and former members of the Brazilian government and of the legislative branch, as well as former
senior officers of the state-owned oil company and our shareholder Petrobras have been prosecuted for political corruption. These government
officials and former senior officers allegedly accepted bribes by means of kickbacks on contracts granted by Petrobras to several infrastructure,
oil and gas and construction companies, including Novonor, our controlling shareholder.
We cannot currently
predict how the Operation Car Wash investigation, related investigations and any future decisions and actions by authorities or developments
in relation to our shareholders, may impact us. The profits of these kickbacks allegedly financed the political campaigns of political
parties of federal, state and city governments that were unaccounted for or not publicly disclosed, as well as served to personally enrich
the recipients of the bribery scheme.
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The potential outcome
of these investigations is uncertain, but they have adversely affected and may continue to adversely affect the Brazilian markets and
trading prices of securities issued by Brazilian issuers.
The outcome of potential
inquiries involving former president Jair Messias Bolsonaro and any new inquiries involving current president Luiz Inácio Lula
da Silva, are uncertain, but they have had a negative impact on the general perception of the Brazilian economy and the securities of
Brazilian companies and affected and may continue to adversely affect our business, our financial condition and results of operations.
Additionally, uncertainties
regarding a new government’s implementation of changes to monetary, tax, labor, and pension fund policies, as well as relevant legislation,
may contribute to economic instability. These uncertainties and the measures adopted by a new administration could materially adversely
affect our operations and increase the market volatility of Brazilian securities issued abroad.
Changes in industrial policy and
related actions undertaken by the Brazilian government and local state governments in Brazil may negatively affect demand for our products
as well as our net revenue and overall financial performance.
We currently benefit
from certain industrial policies and related actions undertaken by the Brazilian government and local state governments in Brazil intended
to strengthen the domestic economy and certain local industries. Some of these policies and actions have recently included reductions
in payroll taxes for plastic manufacturers, a program to improve the competitiveness of Brazilian producers in the export markets by refunding,
in part or in full, the federal taxes levied on their export sale, intervention of the federal government to reduce incentives to imports
at local ports, increases in import duties on certain products, including polyethylene, and the reduction in the rates of the Social Integration
Program (Programa de Integração Social, or PIS), a federal value-added tax, and Contribution for Social Security
Financing (Contribuição para Financiamento da Seguridade Social, or COFINS), taxes on feedstock purchases by first-
and second-generation petrochemical producers, reduction of the tax burden and tax incentives in certain regions to foster local industries.
In December 2025,
Law No. 15,294/25 was published, establishing the Special Sustainability Program for the Chemical Industry (Programa Especial de Sustentabilidade
da Indústria Química, or “PRESIQ”), encompassing an incentive regime to stimulate the Brazilian chemical
industry, effective from January 1, 2027 to December 31, 2031, in the industrial modality, related to the acquisition of certain chemical
products, and the investment modality, related to the expansion or modernization of installed capacity.
In March, 2026, Supplementary
Law No. 228 was published in the Official Gazette of the Federative Republic of Brazil, providing for the increase, from 0.73% to 5.8%,
of the benefit of the Special Regime for the Chemical Industry ("REIQ"), which corresponds to PIS/COFINS credits, based on feedstock
of the chemical and petrochemical industries, subject to offsetting with federal taxes, the benefit will have a budget limit of R$2 billion
for the sector and will be effective from March to December 31, 2026.
We cannot predict
or control which policies will be renewed or discontinued and whether future changes to Brazilian industrial policy will be proposed and
enacted in the future. If industrial policies that benefit us expire, or policies detrimental to us are implemented, our business, results
of operations and financial condition may be adversely affected.
Fluctuations in the real/U.S.
dollar exchange rate could increase inflation in Brazil, raise the cost of servicing our foreign currency-denominated debt and negatively
affect our overall financial performance.
The exchange rate
between the real and the U.S. dollar and the relative rates of depreciation and appreciation of the real have
affected our results of operations and may continue to do so.
The Brazilian real has
been devalued on several occasions. Throughout the last several decades, the Brazilian government has implemented various economic plans
and various exchange rate policies, including sudden devaluations, periodic mini-devaluations (during which the frequency of adjustments
has ranged from daily to monthly), exchange controls, dual exchange rate markets and a floating exchange rate system. From time to time,
there have been significant fluctuations in the exchange rate between the Brazilian currency and the U.S. dollar and other currencies.
The real depreciated by 4.0% during 2019, 28.9% during 2020, 7.4% during 2021, and appreciated
by 6.5% during 2022, appreciated by 7.2% during 2023, depreciated by 27.9% in 2024, and appreciated by 11.1% in 2025. Depreciation of
the real relative to the U.S. dollar also could result in inflationary pressures in Brazil by generally increasing the
price of imported products and services. On the other hand, the appreciation of the real against the U.S. dollar may
lead to a deterioration of the country’s current account and the balance of payments and may dampen export-driven growth.
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We had total foreign
currency-denominated debt obligations, all of which were denominated in U.S. dollars, in an aggregate amount of R$61,933 million (US$11,256
million) as of December 31, 2025, (including an aggregate amount of R$14,308 million (US$2,600 million) outstanding as of December 31,
2025, in connection with our secured debt related to our Mexico Complex), representing 93.7% of our consolidated indebtedness. As of December
31, 2025, we had R$6,368 million (US$1,157 million) in foreign currency-denominated cash and cash equivalents, including the aggregate
amount of R$233 million (US$42 million) of Braskem Idesa’s cash and cash equivalents.
A significant depreciation
of the real in relation to the U.S. dollar or other currencies could increase our financial expenses as a result of foreign
exchange losses that we must record and could reduce our ability to meet debt service requirements of our foreign currency-denominated
obligations. To enable us to manage the effects of exchange rate fluctuations on our results, in 2013 we decided to designate part of
our U.S. dollar-denominated liabilities as a hedge for our future exports. However, we cannot assure that the designation of part of our
U.S. dollar-denominated liabilities as a hedge for our future exports will be enough to not affect our financial results. The hedge accounting
program was prospectively discontinued as of December 2025. For additional information, see "ITEM 5. Operating and Financial Review
and Prospects — Principal Factors Affecting Our Results of Operations — Effects of Fluctuations in Exchange Rates between
the Real and the U.S. Dollar".
The
prices of naphtha, our most important raw material, and of some of our other raw materials, are denominated in or linked to the U.S. dollar.
For the year ended December 31, 2025, naphtha accounted, directly and indirectly, for 30.2%
of our consolidated cost of products sold. When the real depreciates against the U.S. dollar, the cost in reais of
our U.S. dollar-denominated and U.S. dollar-linked raw materials increases, and our operating income in reais may decrease
to the extent that we are unable to pass on these cost increases to our customers.
The Brazilian government’s
actions to combat inflation may contribute significantly to economic uncertainty in Brazil and reduce demand for our products.
Historically,
Brazil has experienced high rates of inflation. Inflation, as well as government efforts to combat inflation, had significant negative
effects on the Brazilian economy, particularly prior to 1995. The inflation rate, as measured by the General Price Index—Internal
Availability (Índice Geral de Preços—Disponibilidade Interna, or the “IGP-DI”), reached 2,708%
in 1993. Although inflation rates have been substantially lower since 1995 than in previous years, inflationary pressures persist. Inflation
rates, as measured by the IGP-DI, were negative 0.4% in 2017, positive 7.1% in 2018, 7.37% in 2019, 23.1% in 2020, 17.7% in 2021 and,
5.03% in 2022, negative 3.30% in 2023, positive 6.5% in 2024 and negative 1.2% in
2025. The Brazilian government’s measures to control inflation have often included maintaining a tight monetary policy with high
interest rates, thereby restricting availability of credit, and reducing economic growth. Inflation, actions to combat inflation and public
speculation about possible additional actions also may contribute to economic uncertainty in Brazil and to heightened volatility in the
Brazilian securities markets.
Brazil may experience
high levels of inflation. Increasing prices for petroleum, the depreciation of the real and future governmental measures
seeking to maintain the value of the real in relation to the U.S. dollar may trigger increases in inflation in Brazil.
Periods of higher inflation may slow the rate of growth of the Brazilian economy, which would lead to reduced demand for our products
in Brazil and decreased net revenue. Inflation is also likely to increase some of our costs and expenses, which we may not be able to
pass on to our customers and, as a result, may reduce our profit margins and net income. In addition, high inflation generally leads
to higher domestic interest rates, and, as a result, the costs of servicing our real-denominated debt may increase, causing
our net income to be reduced. Inflation and its effect on domestic interest rates can in addition, lead to reduced liquidity in the domestic
capital and lending markets, which could adversely affect our ability to refinance our indebtedness in those markets. Any decline in
our net revenue or net income and any deterioration in our financial condition would also likely lead to a decline in the market price
of our securities, including class A preferred shares and the ADSs.
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Fluctuations or changes in, or the
replacement of, interest rates could impact the cost of servicing our debt or reduce our financial revenue, affecting our financial performance.
Our financial expenses
are affected by changes in the interest rates that apply to our floating rate debt. As of December 31, 2025, we had, among other debt
obligations:
· R$843 million of loans and financing that were subject to the Interbank Deposit Certificate (Certificado de Depósito Interbancário, or “CDI”), rate;
· R$243 million of loans and financing that were subject to the Extended National Consumer Price Index (Índice de Preços ao Consumidor Amplo, or “IPCA”);
· R$8,986 million of certain of our loans and financing that were subject to the Secured Overnight Financing Rate (SOFR).
The CDI and the IPCA
rates have fluctuated significantly in the past in response to the expansion or contraction of the Brazilian economy, inflation, Brazilian
government policies and other factors. A significant increase in any of these interest rates could adversely affect our financial expenses
and negatively affect our overall financial performance.
Any other changes
or reforms to the determination or supervision of these interest rates could have an adverse effect on our financial expenses and/or financial
revenue and adversely affect our overall financial performance.
Brazilian government exchange control
policies could increase the cost of servicing our foreign currency-denominated debt, adversely affect our ability to make payments under
our foreign currency-denominated debt obligations and impair our liquidity.
The purchase and
sale of foreign currency in Brazil is subject to governmental control. The current laws and regulations governing the Brazilian foreign
exchange system allow the purchase and sale of foreign currency and the international transfer of reais by any person
or legal entity, regardless of the amount, subject to certain regulatory procedures. Many factors could cause the Brazilian government
to institute more restrictive exchange control policies, including the extent of Brazil’s foreign currency reserves, the availability
of sufficient foreign exchange on the date a payment is due, the size of Brazil’s debt service burden relative to the economy as
a whole, Brazil’s policy towards the IMF and political constraints to which Brazil may be subject. A more restrictive policy could
increase the cost of servicing, and thereby reduce our ability to pay, our foreign currency-denominated debt obligations and other liabilities.
Our foreign-currency
debt denominated in U.S. dollars represented an aggregate of 93.7% of our indebtedness on a consolidated basis as of December 31, 2025,
including transaction costs and Braskem Idesa Debt. If we fail to make payments under any of these obligations, we will be in default
under those obligations, which could reduce our liquidity as well as the market price of our securities, including our class A preferred
shares and ADSs.
Risks Relating To Mexico
Political conditions in Mexico may
affect actions or decisions by the Mexican government, including Pemex, Cenagas, CFE and CENACE, which are, respectively, Braskem Idesa’s
main suppliers of ethane, a provider of natural gas transportation services, an electricity back-up supplier, and the controller of national
grid and dispatches of energy power generators, all of which are Mexican state-owned enterprises or governmental entities subject to political
interference and related risks.
The Mexican government
has exercised, and continues to exercise, significant influence over the Mexican economy. Accordingly, Mexican governmental actions concerning
the Mexican economy and state-owned enterprises could have a significant impact on Mexican private sector entities in general and on our
operations in particular. We cannot predict the impact that political conditions will have on the Mexican economy or on our operations.
We can give no assurances that changes in Mexican federal government policies will not adversely affect our business, financial condition,
results of operations and prospects. We currently do not have and do not intend to obtain political risk insurance.
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Pemex, a state-owned
Mexican entity, produces polyethylene and competes in the same commercial market as we do. The Mexican government may intentionally interfere
with us and our operations in various ways that limit our commercial competitiveness. According to Pemex’s public disclosure, its
production of oil, natural gas and ethane, over which we have no control, has decreased in recent years, and no assurance can be given
that there will not be a decrease in the delivery of ethane in the future.
Furthermore, our
long-term supply agreement to purchase ethane from Pemex could be modified through regulatory means, terminated or jeopardized by them
as a result of political pressure to not comply with the agreement, to change the terms of the agreement, expropriation measures, or change
in laws regulations by the Mexican government. Any non-compliance, modification, termination or interruption of this supply agreement
could have a material adverse effect on the results of our operations or our financial condition.
In June 2024, Mexico
held presidential, federal and local elections. Claudia Sheinbaum won the presidency and her political party, Movimiento Regeneración
Nacional (National Regeneration Movement, or “MORENA”) won a qualified majority in both the Senate and the Chamber of
Deputies, as well as most local elections. This majority could allow MORENA to change Mexican policies and regulations in a manner that
increases or mitigates adverse effects on our businesses.
In light of the
allegations of undue payments related to the Ethylene XXI project, the former name of Braskem Idesa during the construction phase, which
were originally published in the media in Mexico and were included in the testimony by the former CEO of Pemex to the Office of the Attorney
General of Mexico, Braskem S.A., together with Braskem Idesa, in compliance with the standards established by Braskem’s Global Compliance
System Policy and Braskem Idesa’s governance guidelines, approved the hiring of an U.S. law firm with proven experience in similar
cases to conduct an independent internal investigation of the allegations (the “Investigation”). The investigation was concluded
in February 2022 and did not find evidence to support the allegations by the former CEO of Pemex regarding allegedly improper payments
in connection with or otherwise related to the Ethylene XXI project.
Mexico has experienced adverse economic
conditions, which may adversely affect our business.
In the past, Mexico
has experienced several periods of slow or negative economic growth, high inflation, high interest rates, currency devaluation and other
economic problems. These problems may worsen or reemerge, as applicable, in the future and could adversely affect our business and ability
to service our debt. A worsening of international financial or economic conditions, such as a slowdown in growth or recessionary conditions
in Mexico’s trading partners, including the United States, or the emergence of a new financial crisis, could have adverse effects
on the Mexican economy, our financial condition and our ability to service our debt.
Changes in U.S. tariff
policy may have implications for Mexico, given the high degree of trade and supply chain integration between the two economies. Higher
tariffs could reduce the competitiveness of Mexican exports, particularly in manufacturing sectors closely linked to the U.S. market,
while increasing uncertainty for investment and trade flows.
Decreases in the growth
rate of the Mexican economy, periods of negative growth or reductions in disposable income may result in lower demand for our products.
The Mexican government recently cut spending in response to an austerity, and it may further cut spending in the future. These cuts could
adversely affect the Mexican economy and, consequently, our business, financial condition, operating results and prospects. In addition,
there can be no assurance that the recent Mexican sovereign debt rating downgrades will not adversely affect our business, financial
condition or results of operations.
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Our revenues are
subject to risk of loss from unfavorable political and diplomatic developments, social instability, and changes in governmental policies,
including expropriation, nationalization, international ownership legislation, interest-rate caps and tax policies. As a result, the actions
of the Mexican government concerning the economy and regulating certain industries could have a significant effect on Mexican private
sector entities, including us, and on market conditions, prices and returns on Mexican securities, including our securities.
A renegotiation of commercial treaties
or changes in foreign policy among Mexico, Canada and the United States may negatively affect our business, financial condition, results
of operations and prospects.
Due to the USMCA
and its predecessor, the North American Free Trade Agreement (“NAFTA”), Mexico’s economic conditions have become more
closely linked to those of the United States. Adverse economic conditions in the United States could significantly impact the Mexican
economy and, consequently, our business. The long-term effects of potential changes tothe USMCA on our operations remain uncertain.
Changes in United
States trade policy with respect to Mexico could either mitigate or exacerbate these impacts. Increasing immigration policy tensions between
the United States and Mexico may also negatively influence United States trade policy. Such changes could affect imports and exports between
Mexico and the United States, impacting the economies of both countries and the companies we do business with, potentially harming our
business, financial condition, and operations. The USMCA is effective for 16 years from its entry into force, with the possibility of
extension. On July 1, 2026, the parties will meet to decide whether to extend or terminate the agreement. Any decision to modify, withdraw,
or not extend the USMCA could negatively affect trade between Mexico and the United States, impacting the economies of both countries
and our business.
In July 2022,
the United States and Canada requested dispute settlement consultations with Mexico under the USMCA, arguing potential discriminatory
policies against United States and Canadian companies in favor of Mexico’s state-owned electrical utility (CFE) and state-owned
oil and gas company Pemex. In October 2022, the three countries agreed to extend such period and in December 2022, they published a working
outline to solve the pending issues and continue the consultations. In March 2025, the American Petroleum Institute sent a letter to the
United States government denouncing what they consider “unfair practices” in the fuel trade by favoring Pemex. The letter
urges the U.S. government to escalate disputes as part of preparations for the 2026 USMCA review. If disagreements persist, the United
States or Canada could request an independent dispute settlement panel under the USMCA. Such outcome and any retaliatory tariffs against
Mexico could adversely affect our business, results of operations and financial condition.
On January 20, 2025,
the new United States administration issued the America First Trade Policy, which directed the United States Trade Representative (“USTR”)
to commence a public consultation process with respect to the USMCA in preparation for the July 2026 review. On September 16, 2025, the
USTR issued a request for public comments on the operation of the USMCA. The USTR also held a public hearing on December 3-5, 2025. The
USTR is required to assess the impact of the USMCA on American businesses and make recommendations to the President regarding the United
States’ participation in the agreement. On December 16 and 17, 2025, USTR Jamieson Greer reported to certain Congressional Committees
on the USTR’s assessment of the operation of USMCA and the upcoming review. USTR Greer stated that "the shortcomings of USMCA
are such that a rubberstamp of the Agreement is not in the national interest" and indicated that the nature of the joint review will
depend on the "successful resolution" of various bilateral and trilateral issues.
Since 2003, Mexican
petrochemical exports to the United States have enjoyed zero tariffs under NAFTA and now the USMCA. Any changes to this arrangement through
changes to the USMCA or otherwise, could negatively impact the Mexican economy, reducing trade and investment, and adversely affecting
our business.
Political events in Mexico could
affect the Mexican economic policy and our business, financial condition and results of operations.
Political circumstances
in Mexico may significantly affect Mexican economic policies, which could affect our operations. Significant changes in laws, public
policies and/or regulations, or the use of public referendums (consultas populares) could affect Mexico’s political and
economic situation, which could, in turn, adversely affect our business. We cannot provide any assurances that political developments
in Mexico, over which we have no control, will not have an adverse effect on our business, results of operations, financial condition
and prospects.
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In general, changes
that may be made to the existing legal framework, as well as the impact of new regulations, may result in increased costs to us or our
customers and may require us to amend existing permits, secure additional permits to operate natural gas, ethane or render our services,
or take additional measures to secure permits for our projects. Specifically, Mexican tax legislation is subject to continuous change,
and we cannot assure you that the Mexican government will maintain existing political, social, economic or other policies or that such
changes would not have a material adverse effect on our business, financial condition, results of operations and prospects.
We depend on ethane supplied by
Pemex in Mexico.
We currently source
a significant portion of our supply of ethane, which is the primary feedstock used in our polyethylene production process, from Pemex
at prices that reference the Mont Belvieu ethane reference price, a U.S. dollar-based international reference price. As a result, our
production volumes, net revenue, and profit margins would likely decrease and materially adversely affect our overall financial performance
in case one or more of the following events occur:
· significant damage to Pemex’s gas processing centers or to any of the pipelines connecting our complex to Pemex ’s facilities, whether as a consequence of an accident, natural disaster, fire, or otherwise;
· any strategic plan for Pemex including but not limited to the reactivation of its ethane derivatives plants in Coatzacoalcos, Veracruz, decreasing the volume of ethane delivered by Pemex to Braskem Idesa;
· any further decrease in the volume of ethane currently being delivered by Pemex to our petrochemical complex;
· any dispute with Pemex, related to the ethane supply agreement, including the non-recognition or non-payment of shortfall penalties and the decrease or failure to supply the contracted volume of ethane;
· any material default by us or by Pemex to supply/receive ethane in the contractually agreed volumes or qualities under the ethane supply agreement;
· any material breach or termination by Pemex or by us of the ethane supply agreement, or any material breach or termination by other Mexican state-owned companies of related supply (including those for the transportation of supplies) agreements. As of the date of this annual report, the term has been extended through February 2026 or until the ethane import terminal is constructed, commissioned and commercially operational; or
· delays in the availability of ethane of acceptable quality, or our inability to obtain acceptable ethane in the quantities and quality that we need, or at all, or at reasonable prices.
Under the ethane
supply agreement with Pemex, if Pemex fails to deliver the contracted minimum daily volume during a given quarter, it may offset this
shortfall by delivering additional quantities of ethane during the two immediately subsequent quarters. If it does not do so, Pemex will
be required to pay Braskem Idesa a penalty equivalent to the average price of the ethane that was not delivered in the period in question.
On the other hand, if Braskem Idesa fails to purchase the contracted minimum daily volume, we may be able to offset this deficit by purchasing
additional amounts of ethane during the two immediately subsequent quarters. If it does not do so, Braskem Idesa will be required to pay
a penalty to Pemex equivalent to the average price of ethane that was not purchased during the period in question.
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Furthermore, the
ethane supply agreement could also be impacted by changes in laws and regulations, terminated or modified by Pemex as a result of political
pressure or be subject to expropriation or other adverse measures by the Mexican government or government entities. Braskem Idesa may
also renegotiate the terms of the ethane supply agreement, voluntarily or as a result of changes in laws and regulations, or otherwise.
The provisions for
early termination by Pemex under the Ethane Supply Agreement include: (i) failure by Braskem Idesa to pay that continues for more than
six months after notice; or (ii) an emergency stoppage in operations or force majeure event due to which Braskem Idesa’s insurers
consider the complex to be a total loss, or after which Braskem Idesa cannot or does not resume operations for 48 months.
If Pemex (i) delivers
less than an average of 75% of the agreed volume over a six-month period; (ii) reaches the annual limit in respect of shortfall penalties
owed by Pemex to Braskem Idesa and such limit is not waived by Braskem Idesa; or (iii) materially breaches any of its obligations related
to the supply of ethane thereunder; Braskem Idesa has the right to notify Pemex through a notice of breach. If such breach continues for
more than six months after notice, or an extended period if the parties agree, Braskem Idesa has the right to terminate the ethane supply
agreement and require Pemex to repay certain outstanding debt and compensate Braskem and Idesa according to an agreed valuation formula
including the repayment of certain of our debt in the form of a put option right under the ethane supply agreement.
On September 27,
2021, Braskem Idesa entered into: (i) an amendment to the ethane supply agreement (the “amendment to the ethane supply agreement”)
with Pemex with presence of Pemex Exploración y Producción to settle certain prior contractual outstanding issues; and (ii)
an agreement with Pemex, Pemex Logística with presence of other Mexican government entities, establishing certain support measures
to the project to build an ethane import terminal with the capacity to meet all of Braskem Idesa’s feedstock requirements (the “Ethane
Import Terminal Agreement”).
The amendment
to the ethane supply agreement changed the minimum volume commitment to 30,000 barrels per day until February 2025, and such term may
be extended in the event of a delay of obtaining permits not attributable to Braskem Idesa or TQPM (Terminal Química Puerto Mexico,
S.A.P.I.). As of February 9, 2026, the contractual volume commitment under the amendment to the ethane supply agreement expired, and the
parties entered into a right of first refusal arrangement in favor of Braskem Idesa, without any minimum volume obligation
The amendment to
the ethane supply agreement also gave Braskem Idesa the preemptive right to acquire all of the ethane that Pemex has available and has
not consumed in its own production process until 2045 at international benchmark prices. The terminal project is designed to complement
the ethane supply in Mexico and enables Braskem Idesa to operate at full capacity by accessing new feedstock sources.
Braskem
Idesa and its operations in Mexico, including agreements entered into with state-owned or state-controlled
entities, are subject to political interference by the Mexican government, which may lead to the termination or repudiation of certain
contractual relationships and interference on Braskem Idesa’s operations that may materially and adversely affect us.
Any termination,
cancellation or modification of the ethane supply agreement or reduction in the amount of shortfall penalties owed to us by Pemex for
any other reason, could have an adverse effect on our results of operations and financial position.
We depend on services and products
supplied by a Mexican state-owned company.
Braskem Idesa has
entered into agreements with Mexican state-owned companies for the transportation of natural gas and water supply, among others. Any political
interference by the Mexican government, termination, cancelation, modification or failure to renew such agreements could have an adverse
effect on our business, results of operations and financial condition.
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Furthermore, such
agreements could also be impacted as a result of changes in laws and regulations, terminated or modified as a result of political pressure,
or be subject to expropriation or other adverse measures by the Mexican government or government entities. We may also renegotiate the
terms of such agreements voluntarily or as a result of changes in laws and regulations or otherwise.
We may face unforeseen challenges
in the operation of our Mexico Complex, which could result in this business unit failing to provide expected benefits to us.
To develop the Mexican business unit,
Braskem Idesa invested significant capital and incurred significant debt. Our ability to achieve the strategic objectives of this business
unit and serve the debt incurred by it depends largely on its successful operation. Factors that could affect the operation of this business
unit include:
· any potential restructuring or creditor protection measures that may be taken as a result of ongoing discussions with its creditors;
· the inability of payment of its debt, including the recent defaults in the 2029 and 2032 bonds;
· general economic, political and business conditions in Mexico and worldwide;
· global demand for, and supply balance of, PE, impacting spreads in the international market;
· the occurrence of unforeseen technical and mechanical difficulties that may interrupt production or lead to unexpected downtime of the Mexico Complex’s plants;
· any material default by Pemex under the ethane supply agreement;
· any termination, cancelation or modification of the ethane supply agreement for any other reason;
· the failure to renew any material agreement with Mexican state-owned companies;
· any material supply chain disruptions including related to ethane, that can negatively impact Braskem Idesa business;
· an unstable and non-continuous supply (including the transportation of supplies) of ethane, natural gas and other inputs, including energy and water; and
· increased competition from domestic or foreign competitors and/or the emergence of new domestic or foreign competitors.
In the first quarter of 2021, Braskem
Idesa entered into a natural gas transport service agreement with Cenagas for a term of 15 years. Following the execution of this agreement
by Braskem Idesa, it resumed receiving natural gas transportation services from Cenagas, which had been unilaterally terminated by Cenagas
in December 2020.
On September 27, 2021, Braskem Idesa signed
the following documents: (i) an amendment to the ethane supply agreement with Pemex revising certain of its terms (“Amendment”);
and (ii) an agreement with Pemex and other government entities that establishes support measures for the project to build an ethane import
terminal, with the capacity to meet all of Braskem Idesa’s ethane needs.
The Amendment changes
the minimum volume commitment to 30,000 barrels per day until February 2025, provided that such term may be extended in the event of a
delay of obtaining permits not attributable to Braskem Idesa or to Terminal Química Puerto Mexico, S.A.P.I. (“TQPM”).
The term was extended until February 2026 or until the ethane import terminal is constructed, commissioned and commercially operational.
The Amendment also gives Braskem Idesa the preemptive right to acquire all the ethane that PEMEX has available and has not consumed in
its own production process until 2045, at international benchmark prices. As of February 9, 2026, the contractual volume commitment under
the Amendment expired, and the parties entered into a right of first refusal arrangement in favor of Braskem Idesa, without any minimum
volume obligation.
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In 2021, Braskem Idesa constituted the
TQPM, a company created to be responsible for the construction and operation of the ethane terminal. In June 2022, Braskem Idesa announced
the sale of 50% of TQPM’s stake to Advario B.V. (“Advario”). The TQPM ethane import terminal was designed to have a
capacity of 80,000 daily barrels, providing conditions for Braskem Idesa to import all of the raw material it requires.
In October 2023, with the support of its
shareholders, Braskem Idesa and Advario, TQPM entered into a syndicated project finance loan agreement in the principal amount of R$1,975
million (US$408 million) with a 5 (five) year short-term loan deal with standard guarantees for transactions of this type. The project
financing taken by TQPM for the construction of the ethane import terminal in Mexico is also guaranteed by an Equity Support Agreement
provided by the Company that, as of the end of December 2025, covers 50% of the financing balance of TQPM, with the remaining 50% guaranteed
by the other TQPM shareholder until the project perfection collateral date (which includes the authorization from the local energy regulator
– CRE/CNE – to pledge certain assets of TQPM to the syndicated lenders). After reaching such milestone, the Company is committed
to provide support covering 100% of the monthly payments for the offtake agreement entered by Braskem Idesa and TQPM up to the outstanding
amount of TQPM financing.
Any significant interruption in the Mexico
Complex operations, including due to financial condition or a restructuring, creditor protection measure or similar transaction, could
hinder or prevent the implementation of Braskem Idesa business plan as originally conceived, and result in revenue and net income below
original expectations and could impact the Company’s financial condition, including the commitment to provide capital to TQPM. Further,
any material adverse effect on the financial condition or results of operations of the Mexican Complex may adversely impact Company’s
financial condition and results of its operations. See “—Braskem Idesa is currently assessing alternatives to optimize
its capital structure, and the outcome of this process, including any potential restructuring or creditor protection measures, is uncertain
and may adversely affect the Company and its stakeholders.” and “Payments on Braskem’s guarantees are junior
to Braskem’s secured debt obligations and effectively junior to the debt obligations of Braskem’s subsidiaries and jointly
controlled companies.”
We source part of our ethane feedstock
from Pemex in Mexico, which we expect to be our primary main source of ethane until the Ethane Import Terminal is operational.
We currently source
part of our supply of ethane, which is the primary feedstock used in our polyethylene production process, from Pemex. Pursuant to the
Amended ESA, ethane prices negotiated under such an agreement are referenced to the Mont Belvieu ethane reference price, which is a U.S.
dollar-based international reference price. As a result, in case one or more of the following events occurs, our production volumes, net
revenue and profit margins would likely decrease, materially adversely affecting our overall financial performance:
· significant damage to Pemex’s gas processing centers or to any of the pipelines connecting our complex to Pemex’s facilities, whether as a consequence of an accident, natural disaster, fire or otherwise;
· any further decrease in the amount of ethane currently being delivered by Pemex to our petrochemical complex;
· any dispute with Pemex (which engages in exploration and production activities) related to the Amended ESA, including the non-recognition or non-payment of shortfall penalties and the decrease or failure to supply the contracted volume of ethane;
· any material default by us or by Pemex to supply ethane in the contractually agreed volumes or qualities negotiated under the ESA;
· any repudiation or termination by Pemex or by us of the Amended ESA, or any repudiation or termination by other Mexican state-owned companies of related supply (including those for the transportation of supplies) agreements, such as Cenagas (Centro Nacional de Control del Gas Natural); or
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· delays in the availability of ethane of acceptable quality, or our inability to obtain acceptable ethane in the quantities and quality that we need, or at all, or at reasonable prices.
As provided in the
Amended ESA, any daily volume rejected by us must be purchased in installments in subsequent deliveries until the deficit has been resolved,
and the same mechanics apply to Pemex delivery obligations. If Pemex delivers to us less than the volumes required under the ESA and fails
to compensate for the shortfall in subsequent deliveries, it needs to pay compensation for shortfall penalties to us.
Furthermore, the
Amended ESA could also be impacted by changes in laws and regulations, terminated or repudiated by Pemex as a result of political pressure
or be subject to expropriation or other adverse measures by the Mexican government or government entities. We may also renegotiate the
terms of the Amended ESA, voluntarily or as a result of changes in laws and regulations, or otherwise.
The provisions for
early termination by Pemex under the Amended ESA include: (i) our failure to pay that continues for more than six months after notice;
or (ii) an emergency stoppage in operations or force majeure event due to which our insurers consider the petrochemical complex to be
a total loss, or after which we cannot or do not resume operations for 48 months.
Delays in the availability
of ethane of acceptable quality, or our inability to obtain acceptable ethane in the quantities and quality that we need or at all, or
at reasonable prices, have in the past and would in the future have a material adverse effect on our business, results of operations and
financial condition.
We may be unable to operate the
Mexican Complex at full capacity or at all if one or more of our sources of ethane is disrupted.
We diversified our
sources of feedstock supply with the Fast-Track Solution (or “Fast Track” ), and we have increased our import capacity by
adding additional discharge stations, and we have increased further with the Ethane Import Terminal start of operation by 2025. In addition,
we cannot guarantee that we will be able to import ethane at current market prices, which could also adversely affect our business, results
of operations and financial condition.
The performance of
the for the importation of ethane, including Fast-Track Solution and the Ethane Import Terminal, may involve significant risks and uncertainties,
such as:
· failure to obtain or maintain requisite approvals and permits from the applicable regulators and governmental entities;
· failure of equipment involved with performance of Fast Track and/or Ethane Import Terminal;
· failure or accidents related to trucks that transport ethane to the Mexican Complex;
· failure to achieve expected operational results;
· no long-term contracted supply for ethane that will cover needs of Mexican Complex, which exposes BI to volatility in ethane prices;
· unanticipated liabilities; or
· failure of vessels to deliver cryogenic ethane at the port in the city of Coatzacoalcos.
The operation of existing
plants and any future projects we are able to complete involves many risks, including, among others, the potential for unforeseen design
flaws, engineering challenges, equipment failures or trucks accidents or the breakdown for other reasons of the import facilities; labor
disputes; fuel interruption; environmental contamination; and operating performance below expected levels. In addition, weather-related
incidents and other natural disasters, pandemics, cyber or other attacks by third parties and other similar events can disrupt storage,
transmission and distribution systems and have other impacts than those that we discuss in this section. The occurrence of any of these
events could lead to our plants being idle for an extended period of time or our plants operating below expected capacity levels, which
may result in lost revenues or increased expenses, including higher maintenance costs and penalties. Any such occurrence could materially
adversely affect our businesses, financial condition, cash flows, results of operations and/or prospects.
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We depend on regulatory authorizations
to import ethane for our production activities in México
We currently import
a significant portion of our ethane supply, which is the primary feedstock used in our polyethylene production process in Mexico. Our
ethane import operations depend on two critical Mexican regulatory authorizations: (i) the Authorization for Customs Clearance at a Location
Other Than the Authorized Port of Entry (Autorización para el despacho en lugar distinto al autorizado, “LDA”), regulated
by the Tax Administration Service (SAT) and the Central Customs Authority and subject to requirements applicable to entities involved
in hydrocarbons, petrochemicals and related products; and (ii) authorizations regulated by the Ministry of Energy (“SENER”)
to import ethane. On November 6, 2023, SENER amended the applicable framework to subject ethane and certain other raw materials to enhanced
import permitting requirements, which may result in delays in permit processing timelines.
Terminal Química
Puerto México (“TQPM”) obtained the required LDA authorization on December 17, 2025, with a three-year validity period,
and Braskem Idesa obtained the required SENER authorization to import ethane on December 4, 2025, with a one-year validity period. Although
TQPM and we expect to seek renewals in accordance with applicable timelines, renewal remains subject to regulatory review and discretion
and may depend on continued compliance with evolving requirements as well as the completeness and timeliness of the renewal submissions.
Failure by us or
our contractors to obtain, renew, or comply with either authorization could increase costs, cause operational delays, or result in the
suspension of import operations and potentially production activities, any of which.
The development of the Ethane Import
Terminal may not be successful and may not commence operation as scheduled, be completed within budget or operate at expected levels,
which could have a material adverse effect on our businesses, financial condition, cash flows, results of operations and/or prospects.
We continue to develop
the Ethane Import Terminal. The development, construction and operation of this project involves numerous risks. We may be required to
spend significant sums for permitting, fuel supply, infrastructure development, legal and other expenses.
If the Ethane Import Terminal
is not completed: (i) we may have to impair or write off amounts that we have invested in the development of the Ethane Import Terminal
and never receive any return on these preliminary investments; and (ii) could result in a material adverse effect to the operation of
our Mexico Complex.
Success in developing the
Ethane Import Terminal is contingent upon, among other things:
· our financial condition and cash flows and may be influenced by a number of external factors outside our control, including the global economy and global energy and financial markets;
· any dispute, material default or termination of the engineering, procurement and construction agreement (“TQPM EPC Agreement”), including its renegotiation may result in failures to meet specified deadlines with respect to the Ethane Import Terminal;
· any dispute, material default, termination or failure under the Shareholder Agreement with Advario;
· timely receipt of required governmental permits, licenses and other authorizations, including any required authorizations to import and store ethane, that do not impose material conditions and are otherwise granted under terms we find reasonable, as well as maintenance of these authorizations;
· our contractors and other counterparties’ willingness and financial or other ability to fulfill their contractual commitments;
· timely, satisfactory and on-budget completion of construction, which could be negatively affected by engineering problems, adverse weather conditions or other natural disasters, pandemics, cyber or other attacks by third parties, work stoppages, equipment unavailability, contractor performance shortfalls and a variety of other factors;
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· the existence of hidden defects or inherited environmental liabilities; or
· fast and cost-effective resolution of any litigation or unsettled property rights affecting the Ethane Import Terminal.
Any failures with respect
to the above factors or other factors material to the Ethane Import Terminal could involve significant additional costs to us and otherwise
materially adversely affect the successful completion of the Ethane Import Terminal. If we are unable to complete the Ethane Import Terminal,
if we experience substantial delays, or if construction, financing or other project costs exceed our estimated budgets and we are required
to make additional capital contributions, our businesses, financial condition, cash flows, results of operations and/or prospects could
be materially adversely affected.
The Ethane Import
Terminal started in 2025. The overall investment expected to build such terminal was R$3,592 million (US$580 million) including VAT and
financing costs, the expected investment without VAT and financing costs was R$2,762 million (US$446 million).
Risks Relating To Our Equity And Debt Securities
Our financial statements as of and
for the year ended December 31, 2025 contains a footnote related to a substantial doubt about our ability to continue as going concern.
The consolidated
financial statements included in this Annual Report have been prepared on a going concern basis of accounting, which contemplates continuity
of operations, realization of assets and satisfaction of liabilities and commitments in the normal course of business. However, as discussed
in our audited consolidated financial statements, there is substantial doubt about our ability to continue as going concern
The Company comprehensively
evaluated the internal and external factors capable of potentially impacting the going concern assumption. Based on the information available
and the projections of the approved business plan, we identified a high level of cash usage over the analyzed horizon, considering both
the existing cash balances and the projected inflows from the operating cycle.
Key elements considered
include:
· The prolonged downturn cycle in the petrochemical industry, with structurally compressed spreads;
· Cash consumption associated with debt service, particularly recurring interest payments;
· Cash requirements related to the obligations arising from the Geological Event in Alagoas;
· Cash needs for the maintenance of operating assets, essential for ensuring operational continuity and safety;
· Credit rating downgrade; and
· Maturity of the US$1.0 billion stand-by facility in December 2026, requiring a significant cash outflow, if not renewed.
These factors, as
reflected in the approved business plan, indicate increasing pressure on liquidity and guide management’s actions aimed at continuously
adjusting the Company’s financial position to the current challenges faced by the global chemical industry.
Among the initiatives
currently under development, the planned restructuring of our capital structure is noteworthy, as it depends on variables outside the
Company’s exclusive control. The assessment of capital structure restructuring began in 2025 and in September 2025 the Company disclosed
to the market the engagement of specialized financial and legal advisors to support a comprehensive diagnosis of the available economic-financial
options, with a focus on strengthening liquidity in the capital structure.
In the course of
this assessment, the Company, with assistance of its advisors, is evaluating a range of strategic and financial alternatives, which may
include, among others, potential measures for the protection of the Company against creditors. As of the date of this Annual Report, no
decision has been made regarding which alternative, or combination of alternatives, may ultimately be implemented, and there can be no
assurance as to the timing, feasibility or outcome of this process.
Any restructuring
or similar transaction, if implemented, is expected to have a material adverse effect on the Company’s financial condition, liquidity,
results of operations, capital structure, access to financing, relationships with creditors, suppliers and other stakeholders, as well
as on the value and trading price of the Company’s equity and debt securities. If we are unable to continue as a going concern,
we may have to liquidate our assets and may receive less than the value at which those assets are carried on our audited consolidated
financial statements, and it is likely that investors will lose all or part of their investment. In addition, the uncertainty associated
with this ongoing process may negatively impact the Company’s business operations and strategic planning, and it requires as significant
amount of time of management.
The implementation
of any such measures would be subject to a variety of factors, many of which are beyond the Company’s control, including market
conditions, creditor engagement, shareholders and judicial approvals and other external considerations.
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The Company is currently assessing
alternatives to optimize its capital structure, and the outcome of this process, including any potential restructuring or creditor protection
measures, is uncertain and is expected to adversely affect the Company and its stakeholders.
As disclosed in
the material fact dated September 26, 2025, the Company engaged financial and legal advisors to assist in the preparation of a comprehensive
assessment of strategic and financial alternatives to optimize its capital structure. As of the date hereof, this assessment remains ongoing,
and the Company, together with its advisors, has been making progress toward the formulation of a comprehensive capital structure plan,
including negotiations with advisors representing Company’s financial creditors. Please see the Company’s consolidated financial
statements as of and for the year ended December 31, 2025 included in this Annual Report.
In the course of this
assessment, the Company, with the assistance of its advisors, is evaluating a range of strategic and financial alternatives, which may
include, among others, potential measures for the protection of the Company against creditors. As of the date of this Annual Report,
no decision has been made regarding which alternative, or combination of alternatives, may ultimately be implemented, and there can be
no assurance as to the timing, feasibility or outcome of this process.
Any restructuring,
credit protection measure or similar transaction, if implemented, is expected to have a material adverse effect on the Company’s
financial condition, liquidity, results of operations, capital structure, access to financing, relationships with creditors and other
stakeholders, as well as on the value and trading price of the Company’s equity and debt securities. In addition, the uncertainty
associated with this ongoing process may negatively impact Company’s business operations and strategic planning.
The implementation
of any such measures would be subject to a variety of factors, many of which are beyond the Company’s control, including market
conditions, creditors’ engagement, shareholders and judicial approvals and other external considerations.
All of the shares issued by Braskem
and owned by NSP Inv. are secured for the benefit of certain secured creditors of the Novonor Group.
Pursuant to a shares
fiduciary assignment agreement (alienação fiduciária em garantia) entered into by the Novonor Group and some
non-bankruptcy creditors (credores extraconcursais) on November 27, 2013, as amended on May 13, 2016, July 19, 2016, April 24,
2017, May 23, 2018, March 29, 2019 and October 9, 2020, all ordinary and preferred shares issued by Braskem and held by NSP Inv. are secured
for the benefit of certain secured creditors of the Novonor group in connection with certain financing agreements entered into by Novonor
and certain of its subsidiaries. In the event that Novonor and certain of its subsidiaries default on such financing agreements, or if
such financing agreements are accelerated, or if creditors consolidate the ownership of the shares and dispose them (assuming that Petrobras
does not exercise its preemptive rights to acquire such shares) we may be subject to a change of control following statutory, legal and
procedural formalities required pursuant to our shareholders’ agreement. A change of control under these circumstances may adversely
affect us.
On December 15, 2025,
we received a correspondence sent by Novonor S.A – Em Recuperação Judicial and Shine I Fundo de Investimento em Direitos
Creditórios de Responsabilidade Limitada, represented by its manager Vórtx Capital Gestora De Recursos Ltda. (“FIDC”),
advised by IG4 Sol. Ltda., informing about the execution of (i) a definitive binding agreement between the FIDC and the creditor banks
of NSP Investimentos S.A. (“NSP Inv.”) and other entities of the group Novonor S.A. – Em Recuperação Judicial
(“Grupo Novonor”) to acquire all the credits held by the aforementioned banks against Novonor guaranteed by, among others,
fiduciary assignment constituted on the shares issued by the Company held by NSP Inv. (“Transaction”); and (ii) exclusivity
agreement with an initial term of sixty (60) days between FIDC and Novonor regarding a potential transaction involving the shares issued
by Braskem held by NSP Inv. On March 6, 2026, the Administrative Council for Economic Defense (CADE) General Superintendence (Superintendência
Geral) issued a decision (despacho), through which it decided to approve, without restrictions, the Transaction.
The foreclosure
or sale of our shares held by NSP Inv. - whether in the Novonor Judicial Restructuring Proceedings or agreements entered into within the
context of the Novonor Judicial Restructuring Proceedings may result in a change of our control. As we do not have the ability to consent
to or otherwise influence or control the Novonor Judicial Restructuring Proceedings or the acquirer of the shares from any such disposal,
we may be subject to a change in our corporate control in the foreseeable future.
Holders of our class A preferred
shares or the ADSs may not receive any dividends or interest on shareholders’ equity.
As permitted by
Brazilian Corporate Law, our by-laws specify that 25% of our Adjusted Net Income for each fiscal year must be distributed to shareholders
as mandatory dividends, or the Mandatory Distribution of Dividends. Under our by-laws, our class A and class B preferred shareholders
are entitled to an annual non-cumulative preferential dividend, or the Minimum Preferred Dividend, equal to 6% of their pro rata share
of our capital before dividends may be paid to our common shareholders. The Brazilian Corporate Law allows a publicly traded company like
ours to not distribute the Mandatory Distribution of Dividends in any particular year if our board of directors informs in connection
with an annual shareholders’ meeting that such distributions would be incompatible with our financial condition, provided that such
suspension does not affect the Minimum Preferred Dividend, which is still payable to the holders of preferred shares. However, the shareholders,
including the holders of our class A preferred shares or the ADSs, may not receive any dividends or interest on shareholders’ equity
in any given year if we do not record a profit. The non-payment of dividends may frustrate expectations of cash return on the part of
our investors and may lead to a loss in the value of our shares in the market.
In addition, according
to Law No. 15,270, dated November 26, 2025, the levy of Withholding Income Tax (IRRF) on dividends was established at a 10% rate when
paid to beneficiaries resident abroad. It should be noted, however, that the effects of this legislation enter into force only as of January
1, 2026. With regard to Interest on Equity (JCP), Complementary Law No. 224/2025, published on December 26, 2025, increased the IRRF rate
applicable to the payment or credit of JCP, raising it from 15% to 17.5%.
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Our class A preferred shares and
the ADSs have limited voting rights and are not entitled to vote to approve corporate transactions, including mergers or consolidations
of our Company with other companies, or the declaration of dividends.
Under the Brazilian
Corporate Law and our by-laws, holders of our class A preferred shares and, consequently, the ADSs underlying these shares are not entitled
to vote at meetings of our shareholders, except in very limited circumstances. These limited circumstances directly relate to key rights
of the holders of class A preferred shares, such as modifying basic terms of our class A preferred shares or creating a new class of preferred
shares with superior rights. Holders of preferred shares without voting rights are entitled to elect one member and his or her respective
alternate to our board of directors and our fiscal council, depending on specific requirements provided in the Brazilian Corporate Law.
Holders of our class A preferred shares and the ADSs are not entitled to vote to approve corporate transactions, including mergers or
consolidations of our Company with other companies, or the declaration of dividends. However, if we do not pay dividends for three consecutive
years, holders of our class A preferred shares and the ADSs will be granted voting rights.
Holders of the ADSs may find it
difficult to exercise even their limited voting rights at our shareholders’ meetings.
Under Brazilian Corporate
Law, only shareholders registered as such in our corporate books may attend our shareholders’ meetings. All class A preferred shares
underlying the ADSs are registered in the name of the depositary. ADS holders may exercise the limited voting rights with respect to our
class A preferred shares represented by the ADSs only in accordance with the deposit agreement relating to the ADSs, which provides that
voting rights are only available to ADS holders at our discretion. There are practical limitations upon the ability of ADS holders to
exercise their voting rights due to the additional steps involved in communicating with ADS holders. For example, we are required to publish
a notice of our shareholders’ meetings in certain newspapers in Brazil. To the extent that holders of our class A preferred shares
are entitled to vote at a shareholders’ meeting, they will be able to exercise their voting rights by attending the meeting in person,
voting by proxy or by remote voting, if applicable. By contrast, holders of the ADSs will receive notice of a shareholders’ meeting
by mail from the depositary following our notice to the ADS depository requesting the ADS depository to do so. To exercise their voting
rights, ADS holders must instruct the depositary on a timely basis. This noticed voting process will take longer for ADS holders than
for holders of class A preferred shares. If it fails to receive timely voting instructions for all or part of the ADSs, the depositary
will assume that the holders of those ADSs are instructing it to give a discretionary proxy to a person designated by us to vote their
ADSs, except in limited circumstances.
In the limited circumstances
in which holders of the ADSs have voting rights, they may not receive the voting materials in time to instruct the depositary to vote
the class A preferred shares underlying their ADSs. In addition, the depositary and its agents are not responsible for failing to carry
out the voting instructions of the holders of the ADSs or for the manner of carrying out those voting instructions. Accordingly, holders
of the ADSs may not be able to exercise their voting rights, and they will have no recourse if the class A preferred shares underlying
their ADSs are not voted as requested.
If holders of the ADSs exchange
them for class A preferred shares, they may risk temporarily losing, or being limited in, the ability to remit foreign currency abroad
and certain Brazilian tax advantages.
The Brazilian custodian
for the preferred shares underlying the ADSs must obtain an electronic registration number with the Central Bank to allow the depositary
to remit U.S. dollars abroad. ADS holders benefit from the electronic certificate of foreign capital registration from the Central Bank
obtained by the custodian for the depositary, which permits it to convert dividends and other distributions with respect to the class
A preferred shares into U.S. dollars and remit the proceeds of such conversion abroad. If holders of the ADSs decide to exchange them
for the underlying preferred shares, they will only be entitled to rely on the custodian’s certificate of registration with the
Central Bank for five business days after the date of the exchange. Thereafter, they will be unable to remit U.S. dollars abroad unless
they obtain a new electronic certificate of foreign capital registration in connection with the preferred shares, which may result in
expenses and may cause delays in receiving distributions.
Also, if holders
of the ADSs that exchange the ADSs for our Class A preferred shares do not qualify under the foreign investment regulations, they will
generally be subject to less favorable tax treatment of dividends and distribution on, and the proceeds from any sale of, our preferred
shares.
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Restrictions on the movement of
capital out of Brazil may impair the ability of holders of our shares, ADSs and debt securities to receive payments on their respective
obligations or guarantees and may restrict our ability to make payments in U.S. dollars.
In the past, the
Brazilian economy has experienced balance of payment deficits and shortages in foreign exchange reserves, and the government has responded
by restricting the ability of Brazilian or foreign persons or entities to convert reais into foreign currencies. The
government may institute a restrictive exchange control policy in the future. Any restrictive exchange control policy could prevent or
restrict our access to U.S. dollars, and consequently our ability to meet our U.S. dollar obligations under our shares, ADSs and the guarantees
we granted pursuant to our outstanding debt securities and could also have a material adverse effect on our business, financial condition
and results of operations.
The foreign exchange policy of Brazil
may affect the ability of Braskem to make money remittances outside Brazil in respect of our equity securities or debt securities.
Under current Brazilian
regulations, Brazilian companies are not required to obtain authorization from the Central Bank in order to make payments under guarantees
in favor of foreign persons, such as the holders of our shares, ADSs or our outstanding debt securities. We cannot assure you that these
regulations will continue to be in force in the event that Braskem is required to perform its payment obligations under its shares, ADSs
or the guarantees under our outstanding debt securities. If these regulations or their interpretation are modified and an authorization
from the Central Bank is required, Braskem would need to seek an authorization from the Central Bank to transfer the amounts under such
obligations out of Brazil or, alternatively, make such payments with funds held by Braskem outside Brazil. We cannot assure you that such
an authorization will be obtained or that such funds will be available. If such authorization is not obtained, we may be unable to make
payments to holders of our shares, ADSs or the applicable debt securities in foreign currency. If we are unable to obtain the required
approvals, if needed for the payment of amounts owed by Braskem through remittances from Brazil, we may have to seek other lawful mechanisms
to effect payment of amounts due under the shares, ADSs or debt securities. However, we cannot assure you that other remittance mechanisms
will be available in the future, and even if they are available in the future, we cannot assure you that payment on the outstanding debt
securities would be possible through such mechanism.
Holders of the ADSs may face difficulties
in protecting their interests because we are subject to different corporate rules and regulations as a Brazilian company and our shareholders
may have fewer and less well-defined rights than under the laws of other jurisdictions, including in a jurisdiction in the United States.
Holders of the ADSs
are not our direct shareholders and are unable to enforce the rights of shareholders under our by-laws and the Brazilian Corporate Law.
Our corporate affairs
are governed by our by-laws and the Brazilian Corporate Law, which differ from the legal principles that would apply if we were incorporated
in a jurisdiction in the United States, such as the State of Delaware or New York, or elsewhere outside Brazil. Even if a holder of ADSs
surrenders its ADSs and becomes a direct shareholder, its rights as a holder of the class A preferred shares underlying the ADSs under
the Brazilian Corporate Law to protect its interests relative to actions by our board of directors may be fewer and less well-defined
than under the laws of those other jurisdictions.
Although insider
trading and price manipulation are crimes under Brazilian law and are the subject of continuously evolving regulations promulgated by
the Brazilian Securities Commission, or the CVM, the Brazilian securities markets are not as highly regulated and supervised as the U.S.
securities markets or the markets in some other jurisdictions. In addition, rules and policies against self-dealing or for preserving
shareholder interests may be less well-defined and enforced in Brazil than in the United States and certain other countries, which may
put holders of our class A preferred shares and the ADSs at a potential disadvantage when compared to holders of shares of companies incorporated
in other jurisdictions. Corporate disclosures also may be less complete or informative than for a public company in the United States
or in certain other countries.
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Holders of the ADSs may face difficulties
in serving process on or enforcing judgments against us and other persons.
We are a corporation
(sociedade por ações) organized under the laws of Brazil, and all of our directors and executive officers and our
independent public accountants reside or are based in Brazil. Most of our assets and those of these other persons are located in Brazil.
As a result, it may not be possible for holders of the ADSs to effect service of process upon us or these other persons within the United
States or other jurisdictions outside Brazil or to enforce against us or these other persons judgments obtained in the United States or
other jurisdictions outside Brazil. In addition, because a substantial portion of our assets, and all of our directors and officers reside
outside the United States, any judgment obtained in the United States against us or any of our directors or officers may not be collectible
within the United States. Because judgments of U.S. courts for civil liabilities based upon the U.S. federal securities laws may only
be enforced in Brazil if certain conditions are met, holders may face greater difficulties in protecting their interests in the case of
actions by us or our directors or executive officers than would shareholders of a U.S. corporation.
Judgments of Brazilian courts enforcing
Braskem’s obligations under our equity securities, debt securities or related guarantees would be payable only in reais.
If proceedings are
brought in the courts of Brazil seeking to enforce our obligations under our equity securities, ADSs, the guarantees under our outstanding
debt securities or our other indebtedness, we would not be required to discharge our obligations in a currency other than reais.
Any judgment obtained against us in Brazilian courts in respect of any payment obligations under such equity securities, ADSs, guarantees
or other indebtedness would be expressed in reais. We cannot assure you that this amount in reais will afford
the holders of the shares, ADSs, notes or our other indebtedness full compensation of the amount sought in any such litigation.
Actual or anticipated sales of a
substantial number of class A preferred shares could decrease the market prices of our class A preferred shares and the ADSs.
Sales of a substantial
number of our class A preferred shares could negatively affect the market prices of our class A preferred shares and the ADSs. If substantial
sales of shares are made through the securities markets by our controlling shareholder or other class A preferred shares, the market price
of our class A preferred shares and, by extension, the ADSs may decrease significantly. As a result, holders of the ADSs may not be able
to sell the ADSs at or above the price they paid for them.
Holders of the ADSs or class A preferred
shares in the United States may not be entitled to the same preemptive rights as Brazilian shareholders have, pursuant to Brazilian legislation,
in the subscription of shares resulting from capital increases made by us.
Under Brazilian law,
if we issue new shares in exchange for cash or assets as part of a capital increase, subject to certain exceptions, we must grant our
shareholders preemptive rights at the time of the subscription of shares, corresponding to their respective interest in our share capital,
allowing them to maintain their existing shareholding percentage. We may not legally be permitted to allow holders of ADSs or class A
preferred shares in the United States to exercise any preemptive rights in any future capital increase unless (1) we file a registration
statement for an offering of shares resulting from the capital increase with the SEC, or (2) the offering of shares resulting from the
capital increase qualifies for an exemption from the registration requirements of the U.S. Securities Act of 1933, as amended (the
“Securities Act”). At the time of any future capital increase, we will evaluate the costs and potential liabilities associated
with filing a registration statement for an offering of shares with the SEC and any other factors that we consider important in determining
whether to file such a registration statement. We cannot assure the holders of the ADSs or class A preferred shares in the United States
that we will file a registration statement with the SEC to allow them to participate in any of our capital increases. As a result, the
equity interest of such holders into us may be diluted.
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Brazilian tax laws may have an adverse
impact on the taxes applicable to the disposition of our ADSs and preferred shares.
According to Law
No. 10,833, of December 29, 2003, if a nonresident of Brazil disposes of assets located in Brazil, the transaction will be subject to
taxation in Brazil, even if such disposition occurs outside Brazil or if such disposition is made to another nonresident. Dispositions
of our ADSs between nonresidents, however, are currently not subject to taxation in Brazil. Nevertheless, in the event that the concept
of “disposition of assets” is interpreted to include the disposition between nonresidents of assets located outside Brazil,
this tax law could result in the imposition of withholding taxes in the event of a disposition of our ADSs made between nonresidents of
Brazil. Due to the general and broad scope of Law No. 10,833/2003, and the absence of judicial precedent, we are unable to predict whether
an interpretation applying such tax laws to dispositions of our ADSs between nonresidents could ultimately prevail in Brazilian courts.
The relative volatility and liquidity
of the Brazilian securities markets may adversely affect holders of our class A preferred shares and ADSs.
The Brazilian securities
markets are substantially smaller, less liquid and more volatile than major securities markets in the United States and other jurisdictions
and may be regulated differently from the manner in which U.S. investors are accustomed. Factors that may specifically affect the Brazilian
equity markets may limit the ability of holders of the ADSs to sell class A preferred shares underlying ADSs at a price and at a time
when they wish to do so and, as a result, could negatively impact the market price of the ADSs themselves.
Economic developments and investor
perceptions of risk in other countries, including both in developed or emerging market economies, may adversely affect the trading price
of Brazilian securities, including our common shares and ADSs, as well as any outstanding debt securities.
The market value
of securities of Brazilian issuers is affected in varying degrees by economic and market conditions in other countries, including in developed
countries, such as the United States and certain European countries, and in emerging market countries. Although economic conditions in
such countries may differ significantly from economic conditions in Brazil, the reaction of investors to developments in these other countries
may have an adverse effect on the market value of securities of Brazilian issuers. The price of shares traded in the Brazilian capital
markets, for example, has been historically subject to fluctuation of interest rates in the United States and the variation in the main
U.S. stock exchanges. In addition, crisis in other emerging countries may diminish investor interest in securities of Brazilian issuers,
including our shares and ADSs and our debt securities. This could adversely affect the market price of our shares, ADSs and outstanding
debt securities and could also make it more difficult for us to access capital markets, affecting our ability to finance our operations
on acceptable terms.
We are exposed to
disruption and volatility of global financial markets due to their effects on the economic and financial environment, particularly in
Brazil, such as economic downturn, increased unemployment rate, decreased purchasing power of consumers and unavailability of credit.
In addition, the
market value of securities of Brazilian issuers, including our shares and ADSs and our debt securities.
These disruptions
or volatility in global financial markets may increase even further the negative effects on the Brazilian economic and financial environment,
adversely affecting us.
We rely on cash generated from operations
and external sources to fund our ongoing capital needs. Our level of indebtedness and cash consumption could adversely affect our liquidity
position and ability to raise additional capital to fund our operations, limit our ability to react to changes to general market and economic
conditions and changes in our industry, and prevent us from meeting our obligations under our agreements (including financing agreements).
We require significant
capital to operate our business. In addition, interest payments, the geological event in Alagoas, and capital expenditures for our current
business and other business opportunities that we may choose to pursue may also require significant amounts of capital.
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Since the second half
of 2022, our business, financial condition and results of operations have been adversely affected by the deterioration of chemical and
petrochemical spreads, mainly due to a combination of a relevant increase in the global supply of chemical and petrochemical products
and an expressive decline in growth of global demand. Moreover, the geological event in Alagoas has required us and may continue to require
the use of a significant amount of cash to meet settlement and other obligations that have arisen from such event.
While we have taken
and are continuing to take mitigating measures to improve our business performance and liquidity position, such material and adverse conditions
may persist for the foreseeable future or a longer period of time, including due to events that are outside of our control, which in turn
could lead to further deterioration of our business, financial condition and results of operations. Further, while the industry outlook
may improve in the future, such improvement may not lead to a sufficient recovery of our cash flows to meet our ongoing capital needs.
Any continuing adverse effect on our financial
condition or the deterioration of our level of indebtedness or our leverage, together with potential negative changes to our ratings and
those of our debt securities by the main credit rating agencies, are expected to have certain material consequences to us, including the
following:
· limit our ability to fulfill our capital needs obligations;
· limit our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, business opportunities and general corporate or other purposes;
· limit our ability to pay dividends;
· limit our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors that have less debt; and
· we may become vulnerable in a general economic downturn and during an extended tight petrochemical cycle.
As disclosed
in the material facts notice dated September 26, 2025, the Company engaged specialized financial and legal advisors to assist in the preparation
of a comprehensive assessment of economic and financial alternatives aimed at optimizing its capital structure. This assessment remains
ongoing, and the Company, together with its advisors, has been making structured progress toward the formulation of a comprehensive capital
structure plan, including through negotiations with advisors representing the Company’s creditors.
Our access to
the credit and capital markets, and the pricing of our capital are dependent upon our financial condition, our credit ratings and those
of our debt securities from credit rating agencies, and the state of the capital markets generally. If we need further external financing,
there can be no assurances that we would be able to incur indebtedness, and it is possible that the cost of any financings could increase
significantly, thereby further increasing our expenses. In October 2025, the Company fully the amount of US$1.0 billion (or R$5,502 million),
which was available under the stand-by credit facility. The credit facility matures in December 2026. If we are unable to generate sufficient
cash flow or raise adequate external financing, our financial condition would be adversely affected, and we could become unable to meet
in full our debt service and repayment obligations and, as a result, could be forced to restrict our business and operations.
In the event of a default under our credit
facilities or any of our outstanding senior notes, we could be required to immediately repay all of our outstanding borrowings, which
we may not be able to do. Any event of default under any of our credit arrangements could cause a cross-default or cross-acceleration
under many of our other credit agreements and debt instruments. Without waivers from lenders that are a party to those agreements, any
such default could have a material adverse effect on our business, financial condition and results of operations.
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Any downgrade in the ratings of
Brazil, our Company or our debt securities would likely result in increased interest and other financial expenses related to our borrowings
and debt securities that could reduce our liquidity.
Currently,
Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc., or Standard & Poor’s, and Fitch Ratings Ltd., or
Fitch, maintain our ratings on a global and national basis. On a global basis, our current ratings by : (i) Standard & Poor’s
are CCC-with a negative outlook and (ii) Fitch Ratings are CC. Our ratings are lower than the Brazilian sovereign rating by these two
main rating agencies. On a national basis, our curent ratings by: (i) Standard & Poor’s
are brCCC- with a negative outlook and (ii) Fitch Ratings are CC(bra) with a stable rating outlook.
On December 12,
2023, we decided to cancel the corporate credit rating on a global scale issued by the Moody’s Investors Service, Inc., or Moody’s.
Our credit rating is sensitive to any change in the Brazilian sovereign credit rating. The credit rating of the Brazilian federal government
was maintained in June 2025 at BB by Fitch, and BB by S&P.
Any decision by
these rating agencies to downgrade the Brazilian sovereign credit rating, our ratings and the ratings of our debt securities in the future
would likely result in higher interest rates and other financial expenses related to the loans and debt securities, and the inclusion
of financial covenants in the agreements regulating such new debts, which may significantly reduce our ability to raise funds under satisfactory
conditions or in the amounts necessary to ensure our liquidity, as well as force us to issue cash collateral as a result of our covenants,
or letters of credit to back collaterals given by us.
Because Braskem Netherlands Finance
B.V. and Braskem America Finance Company have no operations of their own, holders of our outstanding debt securities issued by Braskem
Netherlands Finance B.V. or Braskem America Finance Company depend on Braskem to provide Braskem Netherlands Finance B.V., respectively,
with sufficient funds to make payments on these debt securities when they become due.
Braskem Netherlands
Finance B.V., or Braskem Netherlands Finance, an indirect wholly-owned subsidiary of Braskem incorporated under the laws of The Netherlands,
and Braskem America Finance Company, a direct wholly-owned subsidiary of Braskem America, and an indirect wholly-owned subsidiary of Braskem,
incorporated under the laws of the State of Delaware, have no operations of their own other than the issuing and making of payments on
their respective debt securities and other indebtedness, and using the proceeds therefrom as permitted by the agreements governing these
issuances, including lending the net proceeds of the debt securities and other indebtedness incurred by Braskem Netherlands Finance and
Braskem America Finance Company to Braskem and subsidiaries of Braskem. Accordingly, the ability of Braskem Netherlands Finance and Braskem
America Finance Company to pay principal, interest and other amounts due on the outstanding debt securities issued by it and other indebtedness
will depend on our financial condition and results of operations and those of our subsidiaries that are debtors of Braskem Netherlands
Finance or Braskem America Finance Company, respectively. In the event of an adverse change in our financial condition or results of operations
or those of our subsidiaries that are debtors of Braskem Netherlands Finance or Braskem America Finance Company, these entities may be
unable to service their indebtedness to Braskem Netherlands Finance or Braskem America Finance Company, as the case may be, which would
result in the failure of Braskem Netherlands Finance or Braskem America Finance Company, as the case may be, to have sufficient funds
to repay all amounts due on or with respect to the respective outstanding debt securities.
Payments on Braskem’s guarantees
are junior to Braskem’s secured debt obligations and effectively junior to the debt obligations of Braskem’s subsidiaries
and jointly controlled companies.
The outstanding debt securities are fully
guaranteed by Braskem. The Braskem guarantees constitute senior unsecured obligations of Braskem. The guarantees rank equal in right of
payment with all of Braskem’s other existing and future senior unsecured indebtedness. Although the guarantees provide the holders
of the debt securities with a direct but unsecured claim on Braskem’s assets and property, payment on the guarantees is subordinated
to the secured debt of Braskem to the extent of the assets and property securing such debt.
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Upon any liquidation
or restructuring of Braskem, any right of the holders of the debt securities, through enforcement of Braskem’s guarantees (i) to
participate in the assets of Braskem, including the capital stock of its subsidiaries and jointly controlled entities, will be subject
to the prior claims of Braskem’s secured creditors, and (ii) to participate in the assets of Braskem’s subsidiaries and jointly
controlled entities will be subject to the prior claims of the creditors of such subsidiaries and jointly controlled entities. While the
indentures and credit agreements relating to the outstanding debt of Braskem include a covenant limiting the ability of Braskem and its
subsidiaries to create liens, this limitation is subject to significant exceptions.
As of December 31,
2025, Braskem had (1) consolidated corporate debt, of R$51,821 million (US$9,418 million), and (2) consolidated Braskem Idesa debt related
to our Mexico Complex (including TQPM) of R$14,308 million (US$2,600 million).
Braskem conducts a portion
of its business operations through subsidiaries and jointly controlled companies. In servicing payments to be made on its guarantees
of the outstanding debt securities, Braskem may rely, in part, on cash flows from its subsidiaries and jointly controlled companies,
mainly in the form of dividend payments. The ability of these subsidiaries and jointly controlled entities to make dividend payments
to Braskem will be affected by, among other factors, the obligations of these entities to their creditors, requirements of Brazilian
corporate and other laws, and restrictions contained in agreements entered into by or relating to these entities. In the event that these
subsidiaries and jointly controlled entities are unable to make dividend payments to Braskem due to insufficient cash flows, Braskem
may be required to utilize its own cash flows to service payments. Further, if these subsidiaries and jointly controlled entities are
unable to pay their debt, they may become subject to bankruptcy or insolvency proceedings. Any bankruptcy or insolvency proceedings of
these subsidiaries and jointly controlled entities may have an adverse effect on our financial condition and results of operations.
Braskem’s obligations under
the guarantees of the outstanding debt securities are subordinated to certain statutory preferences.
Under Brazilian law,
Braskem’s obligations under the guarantees of the outstanding debt securities are subordinated to certain statutory preferences.
In the event of a liquidation, bankruptcy, or judicial restructuring of Braskem, such statutory preferences, including post-petition claims,
claims for salaries, wages, social security, taxes and court fees, and expenses and claims secured by collateral, among others, will have
preference over any other claims, including claims by any investor in respect of the guarantees. In such event, enforcement of the guarantees
may be unsuccessful, and holders of the outstanding debt securities may be unable to collect amounts due under the outstanding debt securities.
Brazilian insolvency laws may be
less favorable to holders of our shares, ADSs, and outstanding debt securities than bankruptcy and insolvency laws in other jurisdictions.
If we are unable
to pay our indebtedness, including our obligations under the shares, ADSs, and guarantees under the outstanding debt securities, then
we may become subject to insolvency proceedings in Brazil.
The Brazilian insolvency
laws currently in effect allow Brazilian companies in a situation of insolvency to be the target of bankruptcy requests by creditors and/or
to initiate legal measures aiming to resolve their debts, thus maintaining their activities, preserving value and promoting their social
purpose. In cases of bankruptcy decree, payments of the debts must be made in accordance with a legal order provided for by law. In cases
of judicial reorganization or a request for ratification of an extrajudicial recovery plan, payments of debts subject to such procedures
would be made in accordance with the provisions of the judicial or extrajudicial recovery plan.
The insolvency laws
of Brazil currently in effect are significantly different from, and may be less favorable to creditors than, those of certain other jurisdictions.
For example, holders of our outstanding debt securities may have limited voting rights at creditors’ meetings in the context of
a court reorganization proceeding. In addition, any judgment obtained against us in Brazilian courts in respect of any payment obligations
under the guarantees normally would be expressed in the real equivalent of the U.S. dollar amount of such sum at the exchange
rate in effect: (1) on the date of actual payment; (2) on the date on which such judgment is rendered; or (3) on the date on which collection
or enforcement proceedings are started against us. Consequently, in the event of our bankruptcy, all of our debt obligations that are
denominated in foreign currency, including the guarantees, will be converted into reais at the prevailing exchange rate on
the date of declaration of our bankruptcy by the court. We cannot assure you that such a rate of exchange will afford full compensation
of the amount invested in our outstanding debt securities plus accrued interest.
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Braskem Idesa is currently assessing
alternatives to optimize its capital structure, and the outcome of this process, including any potential restructuring or creditor protection
measures, is uncertain and is likely adversely affect the Company and its stakeholders. There is substantial doubt as to the ability of Braskem Idesa
to continue as going concern.
The deterioration of Braskem Idesa’s
economic and financial condition is set within an adverse operating environment observed over recent years, primarily characterized by
a significant compression of petrochemical spreads, resulting from a prolonged industry downturn, driven by weaker-than-expected global
demand and global oversupply, largely attributable to China and the USA, as well as an increase in the reference price of ethane related
to the original contract with Braskem Idesa’s local supplier. In addition, Braskem Idesa faced material constraints in access to
ethane in Mexico, the main feedstock for its production process, which limited operational flexibility, reduced capacity utilization rates,
and increased exposure to import feedstocks with lower economic competitiveness. Taken together, these factors resulted in operating cash
generation consistently below the level required to support Braskem Idesa’s existing indebtedness, contributing to liquidity imbalance
and an increased financial risk profile.
As a result, in September
2025, Braskem Idesa announced that, with the objective of reviewing its current capital structure and liquidity conditions, it had engaged
financial and legal advisors (Lazard Inc., Cleary Gottlieb Steen & Hamilton LLP and Sainz Abogados) to support Braskem Idesa in assessing
a broad range of economic and financial alternatives for its capital structure.
In November 2025,
Braskem Idesa defaulted on interest payments related to the bond maturing in 2029. As of December 31, 2025, the outstanding balance of
such interest, recorded in current liabilities, amounted to R$230 million (US$42 million). As a result of this non-payment, the full outstanding
balance of interest and principal of the bond 2029 may be accelerated by the bondholders, subject to the applicable contractual quorum.
Since the decision to accelerate the debt is not under Braskem Idesa’s control, and it does not have the ability to defer these
payments for at least 12 months after the reporting date, the balance of this obligation as well as other long-term borrowings that contain
cross-default clauses in their contracts were reclassified to current liabilities.
In December 2025,
Braskem Idesa provided certain holders of the bond 2029 and the bond 2032 (the ad-hoc group or “AHG”) with non-public information
in the context of a potential reorganization of its capital structure. After the parties were unable to reach a consensus on the proposal
submitted by Braskem Idesa, such information was subsequently disclosed to the market, including the discussion materials and the proposals
presented.
Additionally, in February
2026, Braskem Idesa announced the non-payment of the interest due on the bond 2032. The bond 2032 has also been reclassified as a current
liability.
Finally, in light
of the context presented, Braskem Idesa remains engaged in negotiations with the AHG, with a view to reorganizing its capital structure
through judicial measures (e.g., Chapter 11 under U.S. Law), which is likely to have impacts on the Company and on the shareholding control
of Braskem Idesa. These events and conditions indicate that a material uncertainty exists that may cast substantial doubt on Braskem Idesa’s
ability to continue as a going concern and equity ownership of Braskem Idesa.
A restructuring or
similar transaction of Braskem Idesa is likely to be implemented whether or not an agreement is reached with the AHG. Any restructuring
or similar transaction is expected to have a material adverse effect on the Company’s reputation, relationships with creditors,
suppliers and other stakeholders, as well as on the value and trading price of the Company’s equity and debt securities. A restructuring
of Braskem Idesa may also lead to our forfeiture of the equity interest the Company holds in Braskem Idesa, as well claims of Braskem
Idesa against the Company to the extent it is identified any credit or asset that Braskem Idesa may hold against the Company. If we are
unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are
carried on our audited financial statements, and it is likely that investors will lose all or part of their investment. In addition, the
uncertainty associated with this ongoing process may negatively impact the Company’s business operations and strategic planning.
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The implementation of
any such measures would be subject to a variety of factors, many of which are beyond Braskem Idesa’s and the Company’s control,
including market conditions, creditor engagement, shareholders and judicial approvals and other external considerations.