Brazil to pump $11 bln into state companies-report

* Gov’t uses complex financial engineering for plan

* Seeks to avert dilution in state-run firms, Estado says

* Controls 45 companies through state banks, trusts

SAO PAULO, June 30 (BestGrowthStock) – Brazil’s government is using
state assets and company stakes as well as lending from its
development bank BNDES to raise 20 billion reais ($11 billion)
in fresh capital for state-controlled companies, a move that is
likely to dilute minority shareholders, Valor Economico
newspaper reported on Wednesday.

In what is seen by market analysts as a “complex financial
engineering structure,” the National Treasury is allowing some
state-run companies to convert old debts into equity stakes, or
take on new credit with the BNDES [BNDES.UL] that could be
repaid with shares after a few years, Valor reported.

The most notable aspect of this new stance is the planned
participation of the government in the capitalization of oil
company Petrobras (PETR4.SA: ), the newspaper reported, citing
unnamed bankers. Under terms of the capital plan, the
government is offering Petrobras deep-sea oil reserves that
could only be tapped in the future in exchange for shares.

The government is planning to pump fresh funds into
Eletrobras (ELET6.SA: ), Brazil’s largest electricity holding
company; Telebras (TELB3.SA: ), the former state telephony
monopoly, and; Banco do Brasil (BBAS3.SA: ), the nation’s largest

Minority shareholders risk seeing some of their stakes in
those companies diluted, the newspaper reported, citing
analysts. According to Barclays Capital, minority shareholders
could suffer up to a 23 percent dilution.

The government is a majority shareholder in 45 companies,
of which 23 are jointly owned by private and state investors,
Valor said. The government is a minority shareholder in 76
other firms.

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($1=1.80 reais)

(Reporting by Guillermo Parra-Bernal; Editing by Padraic

Brazil to pump $11 bln into state companies-report