International consortium negotiates USD 8bn Brazilian pipeline acquisition financing

25 January 2019 - 12:00 am UTC

France’s Engie and equity partner CDPQ are in talks with at least seven banks to arrange acquisition financing for a 90% stake in the TAG pipeline in Brazil, Inframation understands.

Multiple sources involved in the deal said they are canvassing BNP Paribas, Crédit Agricole, Société Génerale, MUFG, SMBC, Mizuho and ING to participate in the financing package for the Petrobras subsidiary.

Itaú, Banco do Brasil and Bradesco were also named as potential participants in the financing, according to Reuters.

Petrobras reopened the process this month following the overturning of a judicial challenge from the Federal Regional Court of the 5th Region in Recife by the country’s supreme court.

Petrobras is in exclusive talks with Engie and CDPQ, said two sources briefed on the situation. Its investment banker Santander may also give other bidders a chance to improve its respective offers, said one of those sources. 

Among other interested bidders are EIG Global Energy Partners LLC, United Arab Emirates’ sovereign wealth fund Mubadala and Australia’s Macquarie, as reported.

The TAG stake is valued at around USD 8bn and is the largest asset being sold by Petrobras as part of its ongoing USD 21bn divestment program.

In July, Petrobras suspended the divestment program following a ruling from a Supreme Court judge blocking the privatizations and ruled they could not proceed without Congressional approval.

The Superior Court is due to debate the divestiture program late in the year, according to media reports.

TAG operates 4,500km of gas pipelines mainly in the north and northeastern regions of Brazil as the country’s largest such network.

CDPQ declined comment on the situation.

 

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