Petrobras to Sell Argentina, Chile Assets for $1.4 Billionby and
Pampa Energia takes 67.2% stake in unit for $892 million
Southern Cross takes Chilean fuel distribution operations
Petrobras has agreed to sell assets in Argentina and Chile for about $1.4 billion as Brazil’s state-controlled oil producer looks to raise cash and focus on deep-water projects in Brazil.
The Rio de Janeiro-based producer has completed negotiations to sell its 67.2 percent stake in Petrobras Argentina SA to Pampa Energia SA for $892 million, it said Tuesday in a regulatory filing. It also agreed to sell Petrobras Chile Distribucion Ltda. to Southern Cross Group, a private equity company, for about $490 million, it said in a separate filing.
Petroleo Brasileiro SA, as it’s formally known, is scaling back its Latin American operations as it looks to complete a two-year, $15.1 billion asset sale program to reduce leverage and finance development of offshore oil fields in Brazil. The company has slashed investments to help navigate the oil market rout and reduce the largest debt load in the oil industry.
The company will keep a 34 percent stake in the Rio Neuquen natural gas concession in Argentina and full ownership of the Colpa Caranda natural gas fields in Bolivia that belonged to its Argentina unit, known as PESA. The Chilean distribution company has assets including 279 filling stations and eight fuel terminals. Both sales are pending approval from Petrobras’s board and regulators.
Petrobras ADRs rose 1.8 percent to $7.30 at 2:12 p.m. The stock has surged 70 percent this year.
Buenos Aires-based Pampa Energia, born as an investment vehicle created by businessman Marcelo Mindlin to target distressed opportunities after Argentina’s record $95 billion 2001 default, will become the country’s most diversified energy company once the deal with Petrobras is signed and approved by regulators. Its ADRs rose 3.4 percent to $20.54.
"We like the fact that some of the assets of Petrobras Argentina are core assets for Pampa," Juan Manuel Vazquez, head analyst at Puente SA, wrote in an e-mailed report. "Also, we believe that Pampa may want to look at selling PESA’s refining and distribution businesses as well as the petrochemical businesses, as these are non-core businesses."
The price paid by Pampa for the Argentine unit is 13 percent below Raymond James’ valuation of the assets, according to an e-mailed report by analysts including Santiago Wesenack. "The financing structure of the deal, which is unknown at this point in time, will be a key factor in determining the final effect on the company’s valuation," the analysts wrote.
Among implications of the acquisition for Petrobras Argentina’s bondholders, Pampa will have to tender the company’s 2017 notes at $101, in line with the change of control clause included in the indenture of the bond, Puente’s Vazquez said in his report. The outstanding amount of the 5.875 percent notes that mature in May 2017 is $300 million, and Pampa may choose to refinance the bond, Vazquez wrote.