* Blackstone, Patria to pay $657 mln for 70 pct stake
* Deal to help Gafisa reduce debt burden, boost investment
* Gafisa to end up with 30 pct stake in Alphaville
* Expects regulatory approval by end of next year
(Adds Gafisa CFO's comment, company background, share prices)
By Asher Levine
SAO PAULO, June 7 Brazilian homebuilder Gafisa
SA agreed to sell a 70 percent stake of its high-end
Alphaville unit to private equity firms Blackstone Real Estate
Advisors LP and Patria Investimentos Ltda, Gafisa said on
Under the deal, Blackstone Group LP and Patria agreed
to pay 1.4 billion reais ($657 million) in cash for the stake.
Gafisa, which had held 80 percent of Alphaville, also said
it acquired the remaining 20 percent from the company's founders
for 367 million reais, leaving it with a 30 percent stake in
Alphaville, its unit aimed at affluent customers.
Gafisa shares jumped nearly 5 percent shortly after market
open, before slipping into negative territory later in the
session as part of a broader market selloff.
The cash will provide relief for the heavily indebted
homebuilder, which has been forced to slash new projects in
recent years as operational troubles choked cash flow.
In October 2011, Gafisa embarked on a turnaround after a
rapid expansion into unfamiliar markets led to huge cost
overruns, sales cancellations, big quarterly losses, and a debt
burden among the highest in Brazil's construction sector.
Selling the stake in Alphaville, Gafisa's most profitable
unit, will help the company reduce its
debt-to-shareholder-equity ratio from 94 percent at the end of
the first quarter to about 53 percent, according to a securities
Gafisa booked a worse-than-expected first-quarter net loss
of 55 million reais last month, compared with a 31.5
million-reais loss a year ago. Much of the loss was due to sales
cancellations at its low-cost Tenda unit and mid-range Gafisa
"It's clear that the objective is to increase investment in
Gafisa and Tenda," Gafisa's chief financial officer, Andre
Bergstein, told Reuters on Friday. "We are on the right track
for both companies. This resource is just another big push so we
can increase investment and increase the speed at which we
return these companies to profitability."
The private equity firms will maintain Alphaville's
management team, the filing said, and Gafisa will hold two spots
on the company's six-seat board.
Gafisa will discuss any potential initial public offering of
Alphaville with its new partners at some point in the future,
The transaction is subject to regulatory approval, which
Gafisa expects to occur by the end of the year.
Gafisa shares were down 4.9 percent at 3.87 reais at midday
on Friday, off an earlier high at 4.27 reais.
Blackstone shares were up 4.4 percent at $21.93 on the New
York Stock Exchange.
($1 = 2.13 Brazilian reais)
(Additional reporting by Alberto Alerigi Jr.; editing by Lisa
Von Ahn and Matthew Lewis)