PetroRio has just announced the acquisition of 100% of Dommo Energia – the former OGX, now controlled by Prisma Capital.
In a model similar to that used by Suzano in the acquisition of Fibria, a 100% subsidiary of PetroRio will incorporate Dommo paying R$1.85 per share.
Dommo shareholders will be able to choose whether they wish to receive cash or PetroRio shares, in an exchange ratio of 1 PRIO3 share for 20 Dommo shares.
Dommo’s only asset is the right to receive 5% of the production from the Tubarão Martelo and Polvo fields in the form of royalty fee. The company received this right in exchange for selling 80% of Tubarão Martelo to PetroRio two years ago.
There is also an additional component: Dommo has accumulated losses of BRL 20 billion, which generate tax credits of around BRL 7 billion.
With this transaction, PetroRio now owns 100% of the economy of the two fields.
The transaction is the final chapter of an operation that Prisma – the asset manager particular situation by Marcelo Hallack, João Mendes and Lucas Canhoto – he started riding years ago, since he bought the obligations from old OSX3.
The manager – who holds 52% of Dommo’s capital – acquired this stake by first converting the obligations, then buy shares directly on the market, and finally buy the position of other creditors to convert them into equity.
When he announced he had taken control of Dommo earlier this year, the stock was trading at R$0.45.
Since then, the share has quadrupled on the expectation that Prisma will add value to the asset through mergers and acquisitions. The stock closed today at R$1.74 – in a rush in the last half hour of the trading session.
The transaction is a win-win-win, João Mendes of Prisma Capital told Brazil Journal. “It’s good for us, for PetroRio and for the minority shareholders of Dommo, who will sell at the same price and under the same conditions as the controlling shareholder.”
The purchase of Dommo “is an important step towards the next phase of the campaign to revitalize the band of Polvo/Tubarão Martelo, which today produces 17,500 barrels per day,” said PetroRio CEO Roberto Monteiro.
Pedro Arbex and Geraldo Samor
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