June 17, 2020 / 8:24 PM / 23 days ago

Brazil's Petrobras expects to sell stake in fuel distributor in 2nd half, sources say

SAO PAULO- (Reuters) - Brazilian state-controlled oil company Petroleo Brasileiro SA is resuming plans to unload its remaining stake in the country’s top gas station operator, Petrobras Distribuidora SA, two people with knowledge of the matter said.

Petrobras will try to conclude the offering during the second half of the year, the sources added, speaking on condition of anonymity because the talks are private.

BR Distribuidora, as the company is informally known, was privatized last year through a share offering. Now, Petrobras wants to sell as much as possible of its 37.5% remaining stake in the company, which operates some 7,700 service stations throughout Brazil.

Petrobras did not immediately comment on the matter.

Both sales are part of a wider push by Petrobras to sell up to $30 billion in assets by 2024 to reduce its hefty debt load. Those plans have been slowed of late by coronavirus-related market turbulence, leading the company to scrap its debt reduction target for the year.

At current market prices, Petrobras’ stake is worth 9.7 billion reais ($1.84 billion). Petrobras Distribuidora shares tanked when restrictions to contain the novel coronavirus’ spread began. The shares were down 50% in mid-April and have recovered, but are still down 25% this year.

Petrobras Distribuidora press representatives denied the company has decided to issue new shares and add a primary portion to the offering. Sources had said the company was considering raising capital by issuing new shares to strengthen its cash position, in a much smaller portion than the Petrobras divestment.

The exact timing of the sale will depend on the share price, which Petrobras expects to recover further as Brazil reopens its economy, the sources added.

In January, Petrobras hired the investment banking units of Morgan Stanley, JPMorgan Chase & Co, Goldman Sachs Group Inc, Itau Unibanco Holding SA, XP Inc, Bank of America Corp and Citigroup Inc to manage the offering.

Reporting by Tatiana Bautzer, additional reporting by Sabrina Valle in Rio de Janeiro; Editing by Christian Plumb, Marguerita Choy and Leslie Adler

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