Petrobras (Rio de Janeiro, Brazil) announced that it has approved the sale of the Landulpho Alves Refinery (RLAM) and its associated logistics assets, in São Francisco do Conde, Bahia, to Mubadala Capital for $1.65 billion. The signing of the sale and purchase agreement will take place soon.
Petrobras approved the sale of its RLAM refinery (Source: Petrobras)
The agreement provides for purchase price adjustment due to changes in net working capital, net debt and investments until the closing of the transaction, and the operation is subject to customary precedent conditions, such as approval by the Administrative Council for Economic Defense (CADE).
The refinery will be the first of the eight that are being divested by Petrobras to have its sale and purchase agreement signed. The sale of RLAM is in line with Resolution no. 9/2019 of the National Energy Policy Council, which established guidelines for the promotion of free competition in the national refining sector, and is reflective of the commitment signed between Petrobras and CADE in June 2019 to open the refining sector in Brazil. Besides RLAM, the divestment processes of the other seven refineries are still in progress, as announced on February 8, 2021.
The RLAM divestment process began in May 2019, therefore approximately 23 months ago, and strictly followed the Methodology of Divestment approved by the Federal Court of Auditors (TCU). The RLAM divestment project was approved in all instances of Petrobras’ corporate governance, from the Statutory Technical Committee formed by executive managers from various areas of the company, passing through the Executive Board and finally by the Board of Directors. Several prior meetings were held with these bodies including the Investment Committee, which advises the Board of Directors.
The RLAM divestment counted on fairness opinions from Citibank, Rotschild, and Santander banks, technical opinions from the global consulting firm IHS-Markit and the Fundação Getulio Vargas, and a legal opinion from Dr. Francisco Costa e Silva, former president of the Brazilian Securities and Exchange Commission and a specialist in Corporate Law.
Roberto Castello Branco, CEO of Petrobras, commented: “Today is a very happy day for Petrobras and Brazil. It is the beginning of the end of a monopoly in an economy still with monopolies in several activities. The divestment of RLAM contributes to the improvement of capital allocation, reduction of the still high indebtedness and to start a process of reducing the risks of political interventions in fuel pricing, which caused so much damage to Petrobras and to the Brazilian economy itself. The transaction undoubtedly satisfies the best interests of Petrobras’ and Brazil’s shareholders.“
The transaction is in compliance with the current strategic plan and it is aligned with the optimization of the portfolio and the improvement of the company’s capital allocation, aiming to generate value for our shareholders.