Petroleo Brasileiro, the Brazilian oil and gas giant, on Thursday raised 120.36 billion reais in the largest share issue ever, arming it with the cash needed to realize an ambitious offshore development plan.
The $69.97 billion offering will go toward financing the state-run company’s $224 billion business plan to develop so-called pre-salt fields off Brazil’s Atlantic coast, as the country seeks to tap deeper deposits and join the world’s top oil producers.
Petrobras said in a regulatory filing Thursday, almost a year after it announced plans for the issue, that its board had approved the sale of ordinary shares at 29.65 reais for each of the 2.4 billion ordinary shares sold, and 26.30 reais for each of the 1.87 preferred shares.
With a little over a week until the Brazilian presidential elections, the offering has political overtones, as President Luiz Inácio Lula da Silva has made a policy of strengthening government control over the oil industry and is supporting the campaign of his chief of staff and heir apparent, Dilma Rousseff.
Indeed, the stock exchange announced that Lula would preside over a special ceremony Friday marking the offering that has propelled Petrobras up the ranks of the largest oil and gas companies in terms of market capital.
The government, which held nearly a third of Petrobras stock before the offering, and exercised more than half of its voting shares, was expected to increase its share in the company, Petrobras said in its prospectus this month.
Lengthy negotiations over the summer delayed the offering, set for June, as the government negotiated over the purchase of rights to 5 billion barrels of oil equivalent in the area known as Tupi, which in 2007 was the site of the largest oil discovery in Latin America since Mexico’s Cantarell fields were found in 1976.
Petrobras share issue is the largest since NTT, the Japanese telecommunications firm, made a $36.8 billion offering in 1987, and far surpass the initial public offering by the Agricultural Bank of China this summer.
Petrobras shares rose 0.82 reais, or 3.156 percent, to 26.8 percent on Thursday in Sao Paulo.
The new shares are set to trade for the first time on Friday in New York, and on Monday in Sao Paulo.
Banco Bradesco lead the offering, with Bank of AmericaMerrill Lynch, Citigroup, Banco Itau and Morgan Stanley acting as global bookrunners.
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