BG Group sells Brazilian firm for over £1bn
BG Group yesterday confirmed that it has signed binding agreements to offload its majority stake in South American firm Comgás for 3.4bn Brazilian reais (£1.1bn).
The deal, originally announced earlier this month, will see its 60.1 per cent stake in the São Paulo-based gas distributor sold to Brazilian energy conglomerate Cosan.
“This transaction, when completed, will release capital of around $2.8bn,” said BG Group chief executive Sir Frank Chapman.
“Along with other planned divestments, it represents significant progress towards our two-year goal to release $5bn of capital from BG Group’s balance sheet.”
The deal will also reduce debt on the BG Group balance sheet by around $1.1bn.
Jonathan Jackson, head of equities at Killik & Co, said that although “the deal was expected” currency movements mean “the total release of capital is slightly lower than that announced [originally]”.
Selling Comgás is part of a programme of disposals that will allow BG Group to focus on more profitable exploration activities rather than the steady returns available from consumer supply.
The cash raised will ease fears that BG could not meet the cost of bringing big fields in Brazil and Australia onstream.
Although the transaction is subject to regulatory approval BG Group now expects the deal to be completed by the end of 2012. As part of the agreement BG Group has agreed to co-operate with Cosnan on the development of gas supply options in Brazil.
Earlier this month BG Group reportedly quarterly profts of $2.2bn.