Petrobras to use public offer in capital plan–report

* Private share placement called too risky

RIO DE JANEIRO, May 3 (BestGrowthStock) – Brazilian state oil company
Petrobras’ oil-for-shares capitalization plan will be based on a public
share offering rather than a private placement, a company director said in
an interview published in local media on Monday.

The company last week announced changes to the operation that would
speed up the calculation of the value of oil reserves to be used in the
operation as investors grow increasingly concerned that the plan may be
stalled.

Petrobras CFO Almir Barbassa told business daily Valor Economic that
the original plan of a private share placement would be too risky because
the share price would have to be set 60 days prior to the actual offering,
during which time the price could change.

“If that price were fixed and the market, for whatever reason, moved
toward a lower price, the operation would be a failure,” Barbassa said in
the interview.

Under a private placement, existing shareholders would have the first
right to buy the shares being offered. In contrast, a public offering would
not restrict how many shares each shareholder could buy.

The capitalization plan involves the government giving Petrobras
exploration rights to 5 billion barrels of oil in offshore fields in
exchange for company shares. For details, click on [ID:nN15306577].

Barbassa also said the government could provide cash to Petrobras if
Congress does not approve a proposal to transfer the oil rights.

Petrobras is under growing pressure to complete the capitalization
plan, which is pending Senate approval, because it needs new funding to
carry out its exploration of vast subsalt reserves and has ruled out more
borrowing.

The company said the operation will be based on a preliminary estimate
of the value of the oil rights, which could later be adjusted based on a
second study. The original plan, which called for two simultaneous studies
on that value, was modified because of concerns over delays.

Barbassa said he wanted to avoid having the operation take place at the
height of this year’s presidential election campaign.

He said the initial valuation estimate should be ready in June which
would let the company meet its target of carrying out the operation in
July.
Stock Market Report

(Reporting by Brian Ellsworth; Editing by John Picinich)

Petrobras to use public offer in capital plan–report