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
bank.

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
Cassidy)

Brazil to pump $11 bln into state companies-report