BofA Is Said to Arrange $6 Billion Loan for Petrobras Unit Bid

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(Bloomberg) -- Bank of America Corp, Itau Unibanco Holding SA and Banco Bradesco SA are arranging financing for a consortium led by Macquarie Group Ltd. so it can bid for Petroleo Brasileiro SA’s natural gas pipeline network in northeastern Brazil, said three people with knowledge of the matter.

The bridge-loan, which could reach $6 billion, will probably be mainly denominated in reais, one of the people said, asking not to be named because the discussions are private. The group may even decide to take the entire loan in reais to remove the need for expensive currency hedges, the person said. This may give Macquarie’s group a competitive advantage over the other two possible bidders since the revenue from Petrobras’ subsidiary known as TAG is all in reais, the people said.

Sao Paulo-based Itausa - Investimentos Itau SA is said to be competing for TAG in association with Sydney-based Macquarie, Canada Pension Plan Investment Board, and Singapore’s GIC Private Limited, said two people with knowledge of the matter earlier this month.

Itausa, Macquarie, CPPIB, BofA, Bradesco and Itau declined to comment. GIC didn’t reply to an email seeking comments.

Two other groups, one led by French utility Engie SA and the other by Mubadala Development, are also competing for Petrobras’ 90 percent stake, people said last month.

Mubadala’s joint offer with EIG Global Energy Partners may go as high as $8 billion for the enterprise value, which includes debt, one of the people said earlier this month. Goldman Sachs Group Inc is arranging financing for Mubadala’s consortium, the people said.

Transportadora Associada de Gas, a 2,800-mile network that spans ten Brazilian states, could be Petrobras’ largest asset sale to date and account for more than a third of the state-controlled energy company’s $21 billion divestment target for the two years through 2018.

Blackstone Group LP and Patria Investimentos Ltda withdrew from the process in December after considering a bid of about $6 billion, said two people familiar with the matter.

In 2016, Petrobras sold Nova Transportadora do Sudeste, a similar but smaller pipeline network in the southeast, for $5.2 billion to a consortium led by Brookfield Asset Management that also includes Itausa.

Itausa is studying if it will participate in the TAG sale but hasn’t made a firm commitment, Chief Executive Officer Alfredo Setubal said Feb. 20 on a conference call with investors. He declined to provide additional details. Engie has also said it is interested.

“Yes, we’re looking” at the asset, and “we’re not the only ones,” Engie’s chief executive officer Isabelle Kocher said at a conference near Paris on March 8.

The TAG sale is expected to surpass NTS in value as its network is more than twice as long. TAG’s debt is larger than the liabilities NTS had which partially accounts for the higher sale price, one of the people said.

Petrobras Chief Executive Officer Pedro Parente is rushing to meet his divestment target before an unpredictable presidential campaign later this year makes it harder to sell assets. Parente said late last year that ideally all deals should be set by the end of the first half of 2018 and be closed by December.

Petrobras has pushed back a deadline to submit bids for TAG until mid-April, said two people with knowledge of the matter last week. The original deadline was the end of this month.

©2018 Bloomberg L.P.

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