Petrobras to Sell Liquigás Distribution Network on the Stock Market

03/02/2018 - 10h23

Petrobras has decided to sell Liquigás on the stock market after the Administrative Council for Economic Defense (Cade) vetoed Ultragaz's acquisition of the company's gas distribution network on Wednesday (the 28th).

The state-owned company, which owns 100% of Liquigás, is studying the possibility of an initial public offering (IPO) along with secondary public offerings of shares.

The strategy was agreed upon during a company board meeting. Sources who participated in the talks mentioned the possibility of raising over R$ 2.8 billion (US$ 862 million), which is the amount that was offered by Ultragaz.

In theory, Petrobras could put the entire company on the stock market, but will most likely opt for a step-by-step approach, thus avoiding the possibility of more aggressive investors from acquiring more than 50% of its shares in a single offer.

In order to avoid the latter scenario, which would scare away interested parties, the idea is to make secondary offerings and to do so in stages. In these scenarios, offerings are not primary because the capital is retained by the company as opposed to being in the hands of the controller.

The possibility of finding a strategic partner who could acquire a minority stake before the company goes public has not been ruled out yet.

DEBT

Liquigás is one of several companies that Petrobras has decided to put for sale in order to tackle its debt which is expected to reach US$ 21 billion by the end of the year.

Following Operation Lava Jato, which revealed corruption schemes, along with the drop in terms of international oil prices, Petrobras plunged into a financial crisis.

Translated by THOMAS MATHEWSON

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