Petrobras Chairman Dissents on Fuel Unit Sale

By Jeb Blount and Guillermo Parra-Bernal

RIO DE JANEIRO/SAO PAULO, Aug 18 (Reuters) - Petrobras Chairman Murilo Ferreira dissented in a recent vote to sell a stake of at least 25 percent in the Brazilian state- controlled company's BR Distribuidora SA fuel distribution unit to help reduce debt, board meeting minutes showed.

The 10-member board of Petróleo Brasileiro SA, as the oil producer is formally known, approved the proposal 8-2 on Aug. 8, according to minutes published late on Monday.

Reuters previously reported that Petrobras was considering listing BR Distribuidora, which controls Brazil's largest gasoline, ethanol and diesel service-station network, before the end of the year.

The board authorized Petrobras management to seek approval from Brazil's CVM securities industry watchdog for an initial public offering, which could expand beyond the minimum 25 percent threshold through the placement of additional and supplementary allotments, the minutes showed.

UBS Securities analysts recently valued BR Distribuidora at about $10 billion. A source with direct knowledge of the plan told Reuters last week that the size of the listing has yet to be decided.

The IPO is part of an effort to dispose of $15.1 billion of assets considered as non-essential by the end of next year to help reduce Petrobras' $132 billion of debt, the largest of any oil company. Board member Deyvid Bacelar, who represents unionized workers at Petrobras, also opposed the motion.

Ferreira, who is also chief executive officer of miner Vale SA, said he opposed the transaction because additional decisions needed to be made before considering a sale. These included hiring professionals with experience in sales and marketing and outlining a long-term business plan for BR Distribuidora, the minutes showed.

Bacelar said market conditions were not right for a sale, according to the minutes. He said BR Distribuidora could deliver improved returns to Petrobras should the board revamp management or seek out partnerships instead of placing shares of the unit with investors.

The same source said Petrobras had hired Citigroup Inc to advise on strategic options for BR Distribuidora. Citigroup will work on a potential IPO with the investment-banking units of Banco Bradesco SA (BBDO), Itaú Unibanco Holding SA , Banco do Brasil SA, Morgan Stanley & Co and Bank of America Corp.