Petróleo Brasileiro SA will decide the structure of a stake sale in fuel distribution unit BR Distribuidora SA before the end of the month, a sign that Brazil’s state-controlled oil producer is trying to speed up $14.4 billion in targeted asset sales to cut debt.
In a Monday securities filing, Petrobras (PETR4.SA) said that it is analyzing several proposals for BR Distribuidora, which owns Brazil’s No. 1 network of fuel stations. Neither the board nor management of Petrobras have decided whether to share or surrender control of the subsidiary, the filing added.
Chief Executive Officer Pedro Parente, who took office in June, wants to sell assets and cut debt depriving Petrobras of money-making units. Reuters reported in March that Parente’s predecessors favored surrendering control of BR Distribuidora after bidders failed to emerge for a minority stake.
According to UBS Securities analysts led by Luiz Azevedo, a full sale of BR Distribuidora could deprive Petrobras of about $900 million in earnings before interest, tax, depreciation and amortization a year. EBITDA, as the indicator is known, is a widely followed gauge of operational profitability.
The asset sale target, which goes to the end of 2017, is seen as a key tool to help Petrobras reduce its debt burden, which at about $130 billion is the largest of any global oil company.
The struggle to sell a stake in BR Distribuidora underscores how gasoline price caps and the fallout from a massive corruption probe inside the company are keeping potential bidders wary. The flaws in corporate governance standards at Petrobras that the probe highlighted have also put the brakes on a stake sale at the unit, bankers have told Reuters.
Analysts and bankers said selling a majority stake would help Petrobras lure more bidders, prop up the value of the unit during a more competitive process and avert another failed auction.
Preferred shares of Petrobras, the company’s most widely traded class of stock, gained 4.8 percent to 11.55 reais on Monday. The stock is up about 72 percent this year.
(Reporting by Guillermo Parra-Bernal; Editing by Jonathan Oatis).