Smaller shareholders fear dilution from giant share issue
Petrobras faces a tricky time this week convincing investors of the value of its oil-for-shares swap with the Brazilian government.
The company has embarked on a roadshow to sell the deal to investors, according to press reports, but faces questions over whether it has overpaid for the right to offshore oil reserves.
The news comes after Petrobras filed for one of the world’s biggest share offerings – worth around $64 bn in new stock – on Friday.
The offer includes a $43 bn swap of oil for shares, announced last Wednesday, in which Petrobras will trade new shares for the right to produce five billion barrels of oil.
Some investors have questioned the $8.51 per barrel price tag agreed between the oil company and the Brazilian government, which is Petrobras’ largest shareholder.
‘The price of the barrel was lower than what the government wanted, but it’s still going to cause a serious dilution and minority shareholders will be forced to spend more than what we think is reasonable to keep their stake in the company,’ commented Edison Garcia, head of Brazil’s Minority Shareholders Association, in an interview with Bloomberg last week.
On Friday, Petrobras revealed in a filing it would offer 2.2 bn common shares and 1.6 bn preferred shares ‘in a global offering that consists of an international offering outside Brazil and a concurrent offering in Brazil’.
Petrobras said it will reveal the price of the new shares on September 23, once ‘the marketing of the global offering has been completed’.
