Thursday, September 23, 2010
Petrobras Raises $70 Billion in World's Largest Share Sale
Petrobras, based in Rio de Janeiro, sold 2.4 billion common shares for 29.65 reais each and priced 1.87 billion preferred stock at 26.30 reais apiece, according to a regulatory filing from the company today. That represents a discount of about 2 percent below today’s closing price.
The company is selling stock to fund development of offshore oil fields such as Tupi, the largest discovery in the Americas in three decades, and to preserve its investment grade credit rating. As part of the share sale, Petrobras issued about $42.5 billion of stock to Brazil’s government in exchange for the rights to develop 5 billion barrels of oil reserves.
“It’s positive that they managed to get such strong demand and the price was above market expectations,” said Mirela Rappaport, who helps manage about $100 million at Investport in Sao Paulo, including Petrobras shares. “In the long run, what will be important for Petrobras is if oil prices go up and for how long and at what cost it will take to develop oil reserves”.....Read the entire article.