2007/11/30 Petrobras

Petrobras restructures its investments in petrochemicals

Petrobras’ investment portfolio restructuring in the petrochemical sector was announced this Friday (11/30) during a press conference held at the company’s headquarters, in Rio de Janeiro. Petrobras’ president, José Sergio Gabrielli de Azevedo, Downstream director, Paulo Roberto Costa, and Investor Relations director Almir Barbassa, detailed the agreements with Braskem and Unipar, in addition to the conclusion of the Suzano Petroquímica acquisition. The operations are in line with the strategy of consolidating Petrobras in the petrochemical sector aiming at establishing more competitive and more integrated companies.

Petrobras’ allocations to Braskem consolidates Brazil’s biggest petrochemical group

Petrobras signed an investment agreement with the Odebrecht Group today (11/30) that foresees the allocation of petrochemical assets belonging to the company and to its Petroquisa subsidiary to Braskem. The move will boost Petrobras’ participation in Braskem’s total capital to 25%, up from 6.8%, and consolidate Brazil’s biggest petrochemical group.
The operation is part of Petrobras’ strategy, kicked off with the Ipiranga and Suzano Petroquimica acquisitions, to reorganize the petrochemical sector through companies that are capable of competing with multinational corporations that perform in the petrochemical product market.
With this operation, which is in tune with its Strategic Plan, Petrobras restructures its investment portfolio in Brazilian petrochemicals, becomes a relevant minority shareholder in Braskem (a company that is controlled by the Odebrecht Group), and gains bigger participation in its decision-making and management processes.

The petrochemical assets that will be allocated to Braskem are Petrobras and Petroquisa’s participations in the following companies: Companhia Petroquimica do Sul (Copesul), Ipiranga Quimica, Ipiranga Petroquimica, and Petroquimica Paulinia. Braskem will now hold 100% of these companies’ voting shares and total capital. Petroquisa will also have the option to allocate up to 100% of Petroquimica Triunfo’s voting shares and total capital to Braskem.
After wrapping the operation up, in the event 100% of Triunfo is actually allocated, Petrobras, which now holds 8.1% of Braskem’s voting shares and 6.8% its total capital, will hold 30% of its voting shares and 25% of its total capital. Asset integration is expected to be completed in up to 6 months, beginning on the date the totality of Ipiranga’s assets are held by Petrobras.
The allocation will allow Braskem to boost its investments and production scale, in addition to giving the company better technological development conditions and global dimensions, accelerating its internationalization process and reinforcing its leadership position in the Latin American petrochemical sector. It will also allow for cash flow generation capacity strengthening and for synergic gains, improving Braskem’s operating efficiency.

Petrobras and Unipar create a large petrochemical company

Petrobras and Unipar (Uniao de Industrias Petroquimicas) concluded the negotiations to establish a petrochemical company today, with 60% participation belonging to Unipar and 40% to Petrobras, which will be the second biggest Brazilian petrochemical group. The company will integrate assets belonging to Petrobras, to its subsidiary Petroquisa, and to Unipar.
The creation of the new company is part of Petrobras’ strategy to restructure the Brazilian petrochemical sector, which commenced with the Ipiranga Group acquisition and aims at establishing more competitive, integrated companies with larger production scales and efficient technology and management.
Unipar is one of Brazil’s most traditional corporate groups. It has performed in the petrochemical segment- chemical product production, storage, and distribution - for upwards of 35 years. The Group was responsible for the deployment of the first Petrochemical pole in Brazil, when it established the Uniao Refinery and, later, with the construction of Petroquimica Uniao.
With this operation, Petrobras restructures its investment portfolio in petrochemicals, in line with its Strategic Plan, and making a decisive contribution to the sector’s consolidation with major possibilities for national expansion.

To establish the petrochemical corporation, Petrobras will contribute with the following assets:
- shareholding participation in Suzano Petroquimica, represented by 97.3 million ordinary shares and 75.2 million preferred shares purchased indirectly from Suzano Holding;
- shareholding participation in Petroquimica Uniao (“PQU”), held by Petroquisa, represented by 8,738,092 ordinary shares and 8,738,094 preferred shares, equivalent to 8.43% of its total joint stock.

Unipar, meanwhile, will contribute with these assets:
- participation in Rio Polimeros S.A. (“RIOPOL”), represented by 423,965,910 ordinary shares and 96 preferred shares, equivalent to 33% of its total joint stock;
- R$380,000,000.00, to be used to acquire the following participation in Riopol:
a) 211,982,955 ordinary shares e 48 preferred shares belonging to Petroquisa, representing the equivalent to 16.66% of its total joint stock; and
b) 203,241,390 ordinary shares and 46 preferred shares belonging to Suzano, representing the equivalent to 15.98% of its total joint stock, for the agreed price of R$0.9152 per share;
- Participation in PQU, represented by 27,478,451 ordinary shares and 23.972.650 preferred shares, equivalent to 51.35% of its total joint stock;
- all of its goods, rights, and obligations in Unipar Divisao Quimica;
- participation in Polietilenos Uniao S.A. (“PU”), represented by 48,224,949 ordinary shares, equivalent to 99.99% of its total joint stock.

Banco ABN-AMRO Real S.A. evaluated both Petrobras and Unipar’s assets based on the discounted cash flow criterion, without control premium. The following schedule illustrates the assets’ economic values:

(1) Minority shareholders have 23.4% of SZPQ; the value of R$1,371 million for SZPQ does not take monetary values that total R$495 Million, relative to excess cash flow, into account;
(2) Total UNIPAR ASSETS: R$2,455 million; total PETROBRAS ASSETS: R$1,636 million

Stages involved in establishing the petrochemical corporation
As a preliminary step to establish the new company, Unipar will allocate its assets to a corporation under its control (SPE). Petrobras, in turn, will allocate the participation held by Petroquisa in PQU for the respective equity value, in a corporation controlled by Petrobras and used as a means to acquire the Suzano shares. During the general meeting held to approve the increase in the capital to allocate the mentioned shareholding participation, deliberations will be made concerning converting part of the ordinary shares belonging to Petrobras into redeemable preferred shares for a value equivalent to R$495 million.
The SPE formed with Unipar’s assets will acquire 211,982,955 ordinary shares and 48 preferred shares held by Petroquisa, as well as 203,241,390 ordinary shares and 46 preferred shares held by Suzano, all of which issued by RIOPOL, in cash, for the total agreed price of R$380,000,000.00, corresponding to R$0.9152 per share. The incorporation of the SPE by the new company will be submitted to the approval of the respective shareholders and Unipar and Petrobras will then hold the respective participations of 60% and 40%, respectively.
Via the new company, in no more than 30 days, Unipar will request the Securities Exchange Commission (CVM) register the public offering for the acquisition of the shares issued by PQU seeking to cancel its registration as a publicly traded
Million, relative to excess cash flow, into account; (2) Total UNIPAR ASSETS: R$2,455 million; total PETROBRAS ASSETS: R$1,636 million.
(1) Minority shareholders have 23.4% of SZPQ; the value of R$1,371 million for SZPQ does not take monetary values that total R$495
corporation. The offering will be made for the price of R$15.9682 per share. It will also request the registration of a public offering for the acquisition of Suzano’s shares on account of Petrobras’ purchasing control over it, for up to R$13.27 per ordinary share and of up to R$10.61, per preferred share.
Suzano’s incorporation by the new company will be submitted to both group’s shareholders. On a date yet to be set, the new petrochemical company will submit the proposal to incorporate PQU, PU and RIOPOL to its shareholders, by this integrating its petrochemical activities into a single company.
Petrobras believes that the integration of their assets will result in the creation of a highly competitive global-scale petrochemical company capable of producing, in 2008, some 1.9 million tons of polyolefins, integrated to the production of 2.4 million tons of basic petrochemicals and with an excellent geographical location in the Mercosur, given its assets’ proximity to the biggest consumption center and to the main sources of raw materials in the region.

Petrobras concludes Suzano Petroquimica acquisition

Petrobras informs it will conclude the purchase of the shareholding control over Suzano Petroquimica, with the transference to Petrobras of ordinary shares representing the totality of that company’s controlling corporation’s joint stock. Petrobras will pay the selling shareholders the overall total of R$2,100,402,215.96, corresponding to R$13.27 per ordinary share and R$10.61 per preferred share.
The total impact of the adjustments made for the contractual provisions implied in a reduction in the order of 2.54% in the acquisition price for the shares issued by Suzano Petroquimica compared to that informed to the market on August 03 2007. The fact shareholders that were signatories of the Petroflex shareholder agreement exercised their right to preference caused a reduction of R$68,466,276.60 in the value. No adjustments were made to the acquisition price as a result of the due diligence process.
Petrobras will make a public offering for the acquisition of Suzano Petroquimica ordinary and preferred shares, belonging to the remaining shareholders, for R$13.27 per ordinary share and R$10.61 per preferred share, which will result in a disbursement estimated at R$563,951,234.97.
Suzano Petroquimica will remain a legal entity that is distinct of Petrobras, maintaining its normal operations and its personnel, agreements and operations in effect and that it will use the “Nova Petroquimica” brand associated to Suzano Petroquimica’s current corporate name until the integration has been wrapped up.

Dec 24, 2007 (financialwire.net via COMTEX)

Petrobas In Talks To Acquire Remaining 50 Percent Stake In Texas Refinery

Brazil's state-run oil company, Petrobras is in talks to buy out the remaining 50 percent stake in the Pasadena, Texas, refinery from Astra Holding USA Inc.
Last month, Petrobras bought control of the Nansei Sekiyu refinery on the southern Japanese island of Okinawa from Exxon Mobil Corp. for $50 million. Petrobras has two refineries in Brazil and plans to build another two.
Astra is the U.S. refining subsidiary of Belgium's Compagnie Nationale a Portefeuille. Petrobras bought the initial 50 percent stake in the Pasadena Refinery System Inc for $360 million in September 2006. It plans to double its capacity to 200,000 barrels per day by 2010 and configure it to process high-density oil.
Petrobras is trying to boost its refining capacity overseas to add value to its rising exports of heavy crude from Brazil.