Financial Times: Parente rushes to sell BR Distribuidora

247 - The British newspaper Financial Times published a report this Friday, the 6th, about Petrobras' negotiations to privatize BR Distribuidora. 

Read some excerpts: 

Petrobras, Brazil's state-controlled oil company, is accelerating plans for what is expected to be one of the country's biggest privatizations: the listing of its gas station business, to take advantage of favorable market conditions.

Pedro Parente, CEO of Petrobras, said he cannot confirm market expectations for an initial public offering in the last quarter of this year or that the deal would value the company between R$ 30 billion (US$ 9,5 billion) and R$ 40 billion.

But the strong performance of the Brazilian stock market meant that the company was preparing BR Distribuidora to list "as quickly as possible".

"We must always be prepared so that, if the market smiles upon us, we can go there and give it a kiss," said Mr. Parente in an interview.

The listing of BR Distribuidora, owner of Brazil's main network of gas stations, would indicate that Brazil's moribund stock issuance market is recovering.

Appointed last year to turn around Petrobras after the political corruption scandal known as Lava Jato, Mr. Parente is looking at the sale as part of plans to reduce the company's debt.

Brazil's benchmark stock index, Ibovespa, gained 28 percent over the past year as the country recovered from the deepest recession in its history. Petrobras shares rose 16 percent during the same period.

Mr. Parente said that the articles of association for BR Distribuidora were rewritten with plans to list the company on Brazil's Novo Mercado, a market segment reserved for companies with higher governance standards.

(…)

Petrobras' debt is estimated to be among the highest in its sector, at around US$89 billion. Mr. Parente said he intends to reduce the company's leverage from 5,1-5,3 times earnings before interest, taxes, depreciation and amortization in 2015, when the company came close to a standard rate of 2,5 times, when its current term will likely end in December of next year.

To help achieve this, Petrobras will project US$21 billion in revenue from asset sales this year and in 2018, after obtaining US$13,7 billion in divestments last year. Net debt to EBITDA is approximately 3,1-3,2 times. "Today, we can see that we have a completely different company," said Mr. Parente.

Another important step toward achieving this goal was establishing market-oriented pricing based on international oil prices, he added.

This was a break with past governments that maintained political control over price setting in a country with a large population of low-income people who are particularly sensitive to inflation.

"Petrobras does not set prices, it is not a price setter, it is a price receiver because it operates with commodities," he said.

Better-than-expected productivity from Brazil's offshore oil discoveries, known as pre-salt, is also helping to reduce Petrobras' debt. Ten years after their discovery was announced, the fields are producing 30 percent more oil per well than expected, and the wells are taking three months to drill instead of 11, he said. "This is one of the reasons why they are able to reduce capex without reducing production," he added.