The decision from the Brazilian state-run oil company comes after an approval of the plans by its board of directors.
BR is into distribution and marketing of petroleum derivatives and biofuels in Brazil and Latin America.
Petrobras stated: “Partial split-off of BR, which consists in the separation of the receivables held by BR resulting from debt acknowledgement agreement with the Eletrobras System that have been collateralized by payables from the Brazilian Energy Development Account (Conta de Desenvolvimento Energético – CDE) and the receivables held by BR with other societies of the Petrobras System.”
The oil company revealed that the spun-out unit will be merged into Downstream Participações, which will be owned by it. However, it said that the incorporation of Downstream will be based on deliberation by the competent corporate entities.
Petrobras plans to fully use the funds created by the capital contribution towards pre-payment of debts, which were earlier contracted by BR and secured by Petrobras.
The execution of the operation is not expected to generate any relevant impact in the equity of shareholders in Petrobras and BR.
Petrobras stated that the operation would need the approvals from BR shareholders and the partners of Downstream among other conditions.
In December last year, Petrobras signed agreements to divest certain noncore business assets for $587m in a bid to reduce debts. It also signed an agreement to divest certain petrochemical assets to Mexican petrochemical company Alpek for $385m.
The two deals are part of Petrobras Strategic Plan, which provides for business portfolio optimization upon full withdrawal from petrochemical interests, the company said.
