Blog Coverage Petrobras Concludes its Biggest Ever Divestiture Deal with Brookfield
LONDON, UK / ACCESSWIRE / September 9, 2016 / Active Wall St. blog coverage looks at the headline from Petroleo Brasileiro S.A. ("Petrobras") (NYSE: PBR) as the company announced on September 08th, 2016 that it has concluded negotiations over the sale of natural gas pipeline unit Nova Transportadora do Sudeste to a consortium led by Brookfield Asset Management Inc. (NYSE: BAM). Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.
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The Details
The acquiring group comprises of Brookfield Asset Management and Chinese and Singaporean sovereign wealth fund GIC, private equity firm First Reserve, and China Investment. Petrobras did not divulge any detail of the value of the transaction, stating that the final terms and conditions of the transaction will be submitted for deliberation by the Company´s statutory bodies and, if approved, will be timely disclosed to the market. According to local media, the value of the transaction could reach about $5.2 billion.
Mountain of Debt
Petrobras, the Brazilian state-controlled company, has set a $15.1 billion asset sale target for the two years through 2016 to reduce the largest debt load in the industry. Petrobras ended the second quarter with a total debt of $123.92 billion. The company was only able to manage a mere $700 million of assets in 2015; however the pace of divestiture has accelerated since Pedro Parente who was appointed as CEO in May 2016.
Source: Bloomberg
Petrobras has so far divested its assets in Argentina, Chile and Brazil. On July 29th, 2016, Petrobras made its biggest oil field sale ever to Statoil ASA, after its Board of Directors approved the sale of the company's 66% stake in exploration block BM-S-8, offshore license in the Santos basin. The acquisition includes a substantial part of the Carcara oil discovery, one of the largest discoveries in the world in recent years. The base price negotiated for the stake in the BM-S-8 was US$ 2.5 billion. In May 2016, Petrobras sold $5 billion five-year notes to yield 8.625% and $1.75 billion of 10-year notes to yield 9%, record-high interest rates, to buy back bonds due in 2018.
Stock Performance
Following the announcement, Petrobras' stock price surged 3.04%, to finish the trading session on September 08th, 2016, at $10.18. A total of 24.37 million of the company's shares were exchanged during the trading session. The company's stock price has gained 17.01% in the past one month, while it has more than doubled by 136.74%, since the beginning of the year.
On the other hand, Brookfield Asset Management's shares declined marginally by 0.88% during the trading session, closing at $33.89. The stock is trading at a PE ratio of 25.99 and has a dividend yield of 1.53%.
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