SAO PAULO (Reuters) - Brazilian mining company Vale SA on Friday said 84.4 percent of current shareholders agreed to swap their preferred stock into common shares, guaranteeing the success of the country’s largest ever corporate reorganization, at $21 billion.
In a securities filing, Vale said a total of 1.660 billion preferred shares -- which comprise company stock traded in Brazil and the United States -- joined the plan. The company had set a minimum 54.09 percent threshold to approve the share conversion, whose deadline for shareholders was Friday.
The change represents a milestone in a country long hobbled by corporate governance abuses and reorganizations that hampered minority investors in most cases. Reuters reported the plan on Jan. 19, citing people familiar with it.
The reorganization puts a limit to the meddling of politicians in Vale, an aspect that weighed on its stock during former President Dilma Rousseff’s five years in office. Still, the government will keep a golden share, allowing it to fend off hostile takeover bids and shape strategic decisions.
By merging Vale’s different classes of stock into a single, common one, the miner could lure more Asian investors and specialized mining and metals funds as shareholders, Chief Financial Officer Luciano Siani told the Reuters Latin American Investment Summit on Monday.
According to two people with direct knowledge of the situation, the share conversion will allow a rapid adjustment in the weightings of several indexes in which Vale is included -- by transferring the share of the company’s preferred stock in the index to the common shares in a proportional way.
Morgan Stanley & Co and Banco Bradesco SA advised Vale and its controlling bloc on the deal, which has helped carry both banks to the top of the Brazilian mergers and acquisitions rankings this year.
Reporting by Marcelo Teixeira and Guillermo Parra-Bernal; Editing by Clarence Fernandez