By Antonio Guerrero
Petrobras, Brazil’s state-controlled oil company, is planning a $25 billion rights issue—one of the largest in history. The company hired Bank of America Merrill Lynch, Bradesco BBI, Citigroup, Itau BBA, Morgan Stanley and Banco Santander to coordinate the deal. Proceeds will be used to fund deepwater drilling of pre-salt oil finds, which hold of as much as 100 billion barrels of crude. Petrobras expects to invest as much as $220 billion through 2014 in the program, which will make Brazil the largest oil producer in Latin America and one of the world’s largest oil exporters. The record share offering will follow two São Paulo stock exchange IPOs in 2009 that were among the world’s largest. These involved a $7 billion deal for the local unit of Spain’s Banco Santander and a $4.3 billion offering for Visanet, a Brazilian credit card company.
Petrobras launches rights issue to fund deepwater drilling
Brazilian meatpacker Marfrig Alimentos will issue $1.39 billion in five-year debentures to finance its acquisition of Keystone Foods, a US-based food processor, for $1.26 billion. The debentures are convertible to shares and offer an annual interest rate of one percentage point above the CDI local interbank rate. Marfrig’s acquisition of Keystone, which posted net revenue of $6.4 billion last year, allows it to compete with rival JBS, a Brazilian meatpacker which acquired a majority stake in Pilgrim’s Pride, a US poultry company, in 2009. Both Marfrig and JBS are engaged in aggressive international expansion drives.
Brazil’s economy grew by a hefty 9% during the first quarter, bringing annualized growth to 11.2% and intensifying concerns over possible overheating (see feature, page 40.) The economy contracted 0.2% last year, but the government predicts GDP will grow by between 6% and 6.5% in 2010. The central bank hiked the benchmark Selic rate by 75 basis points to 10.25% in June, in a bid to ease consumer demand. At the same time, authorities extended tax breaks for industrial products that have lagged the recovery. The cut in the IPI industrial tax on trucks, tractors and capital goods was extended through year-end. Other tax breaks on consumer durables were allowed to expire in March.