RIO DE JANEIRO (Dow Jones Newswires), Sep. 24, 2010
Petrobras late Thursday finalized the terms for the world's largest share offer, setting its sights on turning the Latin American country into one of the world's top oil producers.
Petrobras said in a regulatory filing that it priced the issue of about 4.08 billion voting and preferred shares, raising approximately
The share sale is a key step in Petrobras' plans to develop offshore oil fields estimated to be the largest discovered in the past 30
Despite the technical challenges and heavy costs associated with the developing oil reservoirs 4 miles deep, the promise of the new fields has made demand for the share offer "enormous," said Don Gimbel, a fund manager at Carret & Co., echoing enthusiasm in the market. "This is a huge opportunity to participate in a very large deposit."
Demand for the offer was about $87 billion, a market participant with knowledge of the deal told Dow Jones Newswires. Another person
The cash generated from the share offer will also reduce Petrobras' net debt-to-equity ratio, which had bumped up against the company's self-imposed 35% limit. The fresh capital will once again allow the company to raise more money on the debt markets. Last year, Petrobras borrowed a record $30 billion, including debt issues, bank loans and an oil-for-loan deal with China Development Bank.
Petrobras' preferred shares closed sharply higher Thursday on the Sao Paulo stock exchange, advancing just over 4% to BRL27.05 Brazilian reals ($15.74). The company's American Depositary Receipts closed 3.6% higher at $35.97 on the New York Stock Exchange.
Petrobras shares have tumbled this year amid uncertainty about the size and timing of the offer, and concerns that the government will
The share offer's success comes after months of delays as lawmakers bickered over the bill approving the share sale and the company
The government will purchase about $43 billion of the new shares in exchange for ceding rights to 5 billion barrels of oil. As a result,
Some investors see the government's growing role as a reversal of the partial privatization of Petrobras in the late 1990s, a transaction
Rogerio Freitas, who manages $100 million for Rio de Janeiro-based investment fund Teorica Investimentos, said he was planning to sit out the offer because he believes greater state participation in Petrobras will hurt the company's productivity. A price above BRL26.00 a share wasn't likely to be a good deal for investors, he said.
The joint global coordinators for the deal are Bank of America Merrill Lynch, Morgan Stanley, Citigroup, Banco Itau, Banco Bradesco and Banco Santander.
Petrobras will sell 2.29 billion voting shares at BRL29.65 apiece and 1.79 billion preferred shares at BRL26.30, the company said in a
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