SAO PAULO, Sept 22 (Reuters) - Rumo SA plans to sell as much as 2.63 billion reais ($829 million) in new shares as the Brazilian transportation and logistics company aims to reduce a heavy debt burden.
The board of Rumo approved the sale of 220 million new common shares in a restricted-efforts offering, according to a Friday securities filing. Affiliate Cosan Logística SA also approved a capital increase of 750 million reais that their parent company, Cosan Ltd, will fully fund.
The decision to raise money from investors comes as analysts expect Rumo’s third-quarter results to be the strongest ever, but speculation of an offering led the company’s shares to lag behind Brazil’s main stock index over the past month. Rumo expects to price the offering on Oct. 4.
About 4.4 billion reais of Rumo’s debt will be due through the end of the decade, on top of a planned 4 billion reais in planned investments in that time. The company hired Banco Bradesco SA, Morgan Stanley & Co, Banco Santander Brasil SA and Banco do Brasil SA to manage the offering, the filing said.
Cosan, a holding company with interests in infrastructure, sugar and ethanol and logistics, has struggled to reduce Rumo’s debt burden in recent years. Analysts estimate that a capital increase similar in size to the stock offering could help reduce net debt to less than three times annual operational earnings.
Shares of Curitiba, Brazil-based Rumo have risen just 0.6 percent in the past month, while the Bovespa index has rallied 8 percent. However, Rumo is up 69 percent this year on expectations about soaring annual earnings before interest, tax, depreciation and amortization.
The stock sale will be in the form of a restricted-efforts offering, which exempts the company from having to request registration of the plan with securities industry watchdog CVM. Only qualified investors can participate in such offerings, which cannot be marketed through road shows or the media.
$1 = 3.1377 reais Reporting by Guillermo Parra-Bernal and Gabriela Mello; Additional reporting by Ana Mano; Editing by Lisa Von Ahn