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Exclusive: Petrobras to sell stake in Nova Fronteira ethanol venture - source
December 14, 2016 / 6:07 PM / 9 months ago

Exclusive: Petrobras to sell stake in Nova Fronteira ethanol venture - source

The logo of Brazil's state-run Petrobras oil company is seen on a tank in Sao Caetano do Sul, Brazil, September 28, 2016. REUTERS/Paulo Whitaker - RTSPW0D

SAO PAULO (Reuters) - State-controlled Petróleo Brasileiro SA on Thursday will sign a deal to sell its 49 percent stake in Nova Fronteira Bioenergia SA to partner Sao Martinho SA for up to 500 million reais ($150 million), a person directly involved in the transaction said on Wednesday.

Sao Martinho, one of Brazil’s top-five sugar and ethanol producers, currently owns 51 percent of Nova Fronteira, which was founded six years ago and has a state-of-the-art mill in the center-west state of Goiás.

“The company does not comment on market speculation,” a Sao Martinho representative said. Petrobras, as Brazil’s state oil company is commonly known, did not have an immediate comment.

Preferred shares of Petrobras shed 2.4 percent to 15.09 reais while Sao Martinho fell 1.3 percent.

The sale is one of the five ongoing transactions that Brazil’s federal auditing court did not prohibit Petrobras from doing in a recent decision that halted an asset-sale process. Petrobras has set a two-year goal of selling $15.1 billion in assets by the end of this year despite the court’s prohibition.

The Nova Fronteira transaction marks another step in Petrobras’ efforts to get out of the biofuels industry, which for years has soaked up enormous amounts of capital spending and was hurt by government price controls.

Petrobras has stakes in nine sugar and ethanol plants in Brazil, including the joint venture with São Martinho as well as stakes in five biodiesel plants.

Petrobras is also discussing the sale of a combined 45 percent stake in seven mills controlled by sugar producer Tereos SA [TEREO.UL].

($1 = 3.3316 reais)

Additional reporting by Marcelo Teixeira in Sao Paulo; Editing by Guillermo Parra-Bernal and Jeffrey Benkoe

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