Exclusive: Lack of financing for buyers may extend delay in Petrobras refineries bids – sources

By Carolina Mandl and Tatiana Bautzer

SAO PAULO (Reuters) – Lack of financing for the buyers of Brazil’s Petroleo Brasileiro SA refineries may extend the delay in the sale process, three people with knowledge of the matter said.

Petrobras, as the company is known, had already extended the deadline for delivery of binding offers for the eight largest, first lot of refineries from early April to early June, following a plunge in oil prices.

Petrobras referred to the latest filing postponing the bids, in which it didn’tt give a new firm deadline. But at the time, sources with knowledge of the matter said the bidders were given additional 30 to 60 days to deliver the binding offers.

Now, the groups interested in acquiring the refineries are facing tougher financing conditions for their bids, that may be worth more than $10 billion.

Banks are more reluctant to finance deals in the refining business due to uncertainty over fuel demand.

Ultrapar Participaes SA , Raizen – a joint venture between Cosan SA and Royal Dutch Shell , United Arab Emirates’ state investor Mubadala Investment Company and China’s Sinopec presented non-binding offers in the first phase of the sale process.

So far, Petrobras has not changed is still officially keeping the deadline and committing to a sale this year, but the lack of financing may force the company to postpone it again.

Field visits for due diligence in the refineries have also become more difficult due to the risk of the spread of the novel coronavirus, adding to reasons for another extension in the long-awaited sale process.

Earlier this year, before the pandemic, U.S. major Exxon Mobil Corp was in talks to join one bidder group, two people with knowledge of matter said. But the company reported a loss in the first quarter and cut expenses and expansion projects. Exxon declined to comment.

Petrobras has faced challenges in its bid to reduce debt, which was at $87.1 billion at the end of 2019, after oil demand plunged amid worldwide social distancing measures and lockdowns.

Earlier in April, the company scrapped its 2020 debt reduction target due to market volatility.

(Reporting by Carolina Mandl and Tatiana Bautzer; Editing by Bernadette Baum)