Petrobras to merge with two of its subsidiaries

Petroleo Brasileiro SA (Petrobras) has approved mergers with wholly owned subsidiaries Companhia de Recuperacao Secundaria (CRSec) and the spun off portion of Petrobras International Finance Co. (PIFCo).

Petroleo Brasileiro SA (Petrobras) has approved mergers with wholly owned subsidiaries Companhia de Recuperacao Secundaria (CRSec) and the spun off portion of Petrobras International Finance Co. (PIFCo).

Petrobras said both mergers are intended to reduce costs and simplify and streamline the corporate structure of Petrobras Group. The company’s capital will not increase and no new shares will be issued. Shares representing the capital of these subsidiaries will be extinguished.

CRSec operated in the financial structuring of the secondary recovery project for the Campos basin’s Pargo, Congro, Garoupa, Cherne, and Carapeba fields. After liquidating all contractual obligations, Petrobras exercised the call option of all of CRSec shares. The merging process allows for the adequate return of CRSec assets to Petrobras.

Luxembourg-based PIFCo raised capital overseas, facilitating the sale of oil and oil products. Petrobras said successive changes to Brazilian tax legislation prompted the discontinuance of the subsidiary’s activities.

Certain assets and liabilities related to PIFCo’s commercial activities will be transferred to Petrobras. PIFCo will be dissolved after its remaining assets and liabilities, related to capital-raising activities and loan transactions with companies in the Petrobras Group, will be merged into Petrobras Global Finance BV–PGF.

That PIFCo merger will not affect Petrobras’s guarantees and commitments relating to subsidiary-issued bonds, which will continue to be unconditionally and irrevocably guaranteed, Petrobras said.

In 2001, PIFCo priced a $500 million senior note issue. The notes were scheduled to mature in June 2011 (OGJ Online, July 2, 2001).

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