Most holders want Sete Brasil to file for creditor protection, sources say

Banco Bradesco

26/02/2016 08:01

* Rig leaser shunned Petrobras proposal made this week 
    * Filing seen as way to improve Petrobras contract offer 
    * Sources see some shareholders abstaining from ballot 
 
    By Guillermo Parra-Bernal 
    SAO PAULO, Feb 26 (Reuters) - Most shareholders in Sete 
Brasil Participações SA plan to endorse a proposal for the 
ailing rig leaser to seek bankruptcy protection after efforts to 
secure a long-term contract with sole client Petróleo Brasileiro 
SA failed, four sources familiar with the situation said on 
Friday. 
    Partners holding a combined 95 percent stake in Sete Brasil 
through an investment vehicle will hold a conference call at 10 
a.m. (1300 GMT) in which they will vote on the creditor 
protection plan, said the sources, who requested anonymity to 
discuss the issue freely. 
    Votes equivalent to about 85 percent of Sete Brasil's 12 
partners in the FIP Sondas vehicle endorse filing for bankruptcy 
protection, said the first source. But some could still abstain 
from voting on the plan because of their dual role as lenders 
and equity holders, the second and third sources said. 
    The ballot would give management of Rio de Janeiro-based 
Sete Brasil power to decide when and where to file for court 
protection, the first source said.  
    This week, state-controlled Petrobras  PETR4.SA , as Sete 
Brasil's sole client is known, sent a proposal that failed to 
assure the rig leaser's survival, the sources said. Under terms 
of the proposal, Petrobras would rent 10 rigs for five years, 
instead of 19 for 15 years originally, as well as cut lease 
rates by one-third.  
    The fate of Sete Brasil, which Petrobras, pension funds and 
other partners created in 2008 to manage the world's biggest 
deepwater drilling fleet, with orders of $89 billion, hinges on 
Petrobras' willingness to sign a long-term rent contract. 
Management of Sete Brasil recommended shunning the proposal, the 
sources said.  
    Sete Brasil did not comment. Petrobras did not have an 
immediate comment. 
    A bankruptcy filing by Sete Brasil is seen as a way to press 
Petrobras into signing a more favorable contract for the rig 
leaser. Petrobras Chief Executive Officer Aldemir Bendine and 
officials at the company's exploration and production division 
are at loggerheads over the Sete Brasil contract, with the 
latter wanting a collapse of the rig leaser, the sources added. 
    In turn, a collapse of Sete Brasil would be devastating not 
only for the investors that backed the project, but for dozens 
of shipbuilders supplying the company. More than 800,000 local 
shipbuilding jobs could be lost, triggering 40 billion reais 
($10.1 billion) in losses, industry estimates show. 
     
    TUSSLE 
    Petrobras, which owns 5 percent of Sete Brasil, will not 
participate in the vote, the sources said.  
    The government-backed project began to sour in 2014 when 
Petrobras and Sete Brasil became engulfed in a huge corruption 
scandal in Brazil. Fallout from the so-called Operation Car Wash 
scandal deprived Sete Brasil of long-term financing, forcing 
Brazil's top lenders to roll over about 14 billion reais in 
loans for the past 1-1/2 years. 
    Sete Brasil owes about 18 billion reais to banks, a national 
workers' severance fund and suppliers. 
    Members of FIP Sondas include pension funds Previ, Funcef 
and Petros, lenders Grupo BTG Pactual SA  BBTG11.SA  and Banco 
Bradesco SA  BBDC4.SA , and investment firms such as EIG Global 
Energy Partners and Luce Venture Capital. 
    Other Sete Brasil shareholders include Caixa's workers 
pension fund, Funcef, and Fundação Valia, the workers' pension 
fund of mining company Vale SA  VALE5.SA . None could be reached 
for comment outside working hours. 
    The tussle has forced BTG Pactual and creditors, which 
include Itaú Unibanco Holding SA and Bradesco, to write off part 
of the value of their investments and loans to Sete Brasil. 
    This month, Itaú  ITUB4.SA , Bradesco, Banco Santander 
Brasil SA  SANB11.SA  and state lenders Caixa Econômica Federal 
 CEF.UL  and Banco do Brasil SA  BBAS3.SA  agreed to renew 
almost 15 billion reais' worth of standstill loans until May in 
exchange for access to 4.3 billion reais in collateral at 
government-backed naval fund CDFMM, sources said last week. 
    ($1 = 3.9546 Brazilian reais) 
 
 (Editing by Peter Cooney) 
 ((guillermo.parra@thomsonreuters.com; +55-11-5644-7714; 
+55-119-8346-7153; Reuters Messaging: 
guillermo.parra.thomsonreuters.com@reuters.net)) 
 
Keywords: BRAZIL CORRUPTION/PETROBRAS SETE BRASIL