A Brazilian federal court has suspended state-controlled firm Petroleo Brasileiro’s (Petrobras) proposed deal to divest 90% stake in its natural-gas pipeline unit to a group of investors led by Canada's Brookfield Asset Management for $5.2bn.
In November, Petrobras shareholders approved the sale of 90% stake in the natural gas pipeline unit, Nova Transportadora do Sudeste (NTS), in a bid to reduce its debt amid low energy prices.
The Petrobras’ stake in NTS, which operates 2,048km natural gas pipeline network in Brazil, was to be sold to a group led by Brookfield’s publicly-traded subsidiary, Brookfield Infrastructure Partners.
It partners in the deal include British Columbia Investment Management (BCIMC), CIC Capital and GIC Private (GIC).
However, a Regional Federal Court has ordered suspension of Petrobras’ stake divestment in NTS, saying that the sale was not adequately "publicized" to boost competition, reported Bloomberg.
Necessary legal steps are being undertaken by Petrobras to protect its interests and those of its shareholders, the firm said.
NTS supplies gas to industrialized states of Sao Paulo, Rio de Janeiro and Minas Gerais.
Brookfield earlier said that the acquisition will provide stable, inflation-linked cash flows backed by long-term, fixed-price, off-take agreements.
Brookfield Infrastructure CEO Sam Pollock earlier said: "This is a unique opportunity to invest in a large-scale, high quality utility business and participate over time in Brazil's growing gas industry.
“We are very pleased to be significantly expanding our utilities business in a sector and geography that we know well and that we believe will offer opportunities to deploy further capital at attractive risk-adjusted returns."
Brookfield noted that the deal also allows it to participate in a natural gas market, which is expected to substantially grow by 2030.
Image: NTS supplies gas to industrialized states of Sao Paulo, Rio de Janeiro and Minas Gerais. Photo: courtesy of supakitmod/FreeDigitalPhotos.net.