ANNEX
A Guide for Foreign Investors
Sales on the Stock Exchange
Up to now, Brazil's privatization program has been executed through the sale of the government's majority ownership in state enterprises, or the sale of minority shares in private enterprises. These transactions are made through auctions on the stock exchange, through public offerings, and through special sales to employees.
In these auctions, the shares are generally divided into lots of approximately $500 each. Those participating in the auction can make their offers for one or more lots. As long as the number of lots requested is larger than the number offered, the auctioneer raises the price until demand equals supply. This system permits there to be more than one buyer per firm and gives each participant the chance to purchase exactly the number of shares desired. Participants in the auction must establish their identity and reliability before the auction takes place.
Limits on Foreign Participation
In general, foreigners can purchase 100% of a company being sold by the PND. However, a decree setting the terms of sale for a specific firm can impose a limit on foreign participation because of legal or other important considerations.
Proof of Financial Resources
For each auction, a maximum bid is established in Brazilian national currency for every participant in accordance with his demonstrated financial resources. The participant planning to bid can assign to the auction authorities the currency to be used in their privatization bids — including foreign debt instruments — or deposit a guarantee bond. He can then participate in the auction up to an amount equal to what he has assigned or deposited.
Privatization Currency
- The PND allows several types of currency to be used to purchase the shares of corporations being privatized. These currencies are:
- Brazilian currency (reais)
- agricultural debt instruments (TDA)
- obligations of the National Development Fund (OFND)
- Siderbrás debentures
- privatization certificates (CP)
- re-negotiated (securitized) debts
- foreign debt certificates and credits
- mortgage bonds of the Caixa Econômica Federal
- Federal Treasury notes
Participants in the auction must be aware that, in each privatization, a minimum percentage of the sales price must be paid in Brazilian currency (reais). The foreign investor can pay for the auction by using any of the currencies accepted in the privatization program. However, only foreign debt certificates and credits can be purchased outside of the country. The other currencies mentioned above are part of domestic debt and thus are negotiated on the local financial market.
Foreign Debt Certificates and Credits
The definition of foreign debt certificates and credits, as well as their use in the privatization program, is contained in Resolution No. 2062 dated April 12, 1994, of the National Monetary Council; in Decree No. 435 dated July 28, 1994, of the Ministry of Finance; and in Circular No. 2459 dated August 4, 1994, of the Central Bank.
Further inquiries about Brazil's privatization program can be addressed to:
José Pio Borges
Diretor of Privatization and Infrastructure
BNDES
Avenida República do Chile, 100 - 10º floor
20139-900 Rio de Janeiro- RJ - Brazil
Phones: 55 21 277.7050/ 277.7059/ 220.6898
Fax: 55 21 533.1538
CONSOLIDATED SALES
ACCOUNTS
AUGUST/95 - 1991/95
SECTOR |
COMPANY |
% TOTAL EQUITY |
PROCEEDS OF SALES |
TRANSFERED DEBT |
TOTAL PROCEEDS |
|
OFFERED |
SOLD |
|||||
| I. SALE OF STATE – OWNED COMPANIES AND RELEVANT STAKES | ||||||
| STEEL | USIMINAS CSN AÇOMINAS ACESITA COSIPA (*) CST PIRATINI COSINOR TOTAL |
86,1% 90,8% 99,9% 74,0% 72,6% 89,5% 72,5% 99,8% |
86,1% 90,8% 99,9% 74,0% 72,6% 89,5% 72,5% 99,8% |
1941,2 1495,3 598,5 485,4 585,6 353,6 106,7 15,0 |
369,1 532,9 121,9 232,2 884,2 483,6 2,4% 0,0 |
2310,3 2028,2 720,4 697,6 1469,8 837,2 109,1 15,0 |
5561,3 |
2626,3 |
8187,6 |
||||
| PETROCHEMICAL | COPENE (*) COPESUL PQU PETROFLEX POLIQUEFINAS ÁLCALIS PPH POLISUL OXITENO POLITENO NITRIFLEX COPERBO CIQUINE POLIALDEN ACRINOR CBE TOTAL |
11,8% 82,1% 58,9% 100,0% 31,5% 100,0% 19,0% 31,0% 15,2% 24,9% 40,0% 23,0% 31,4% 13,6% 17,7 23,0% |
11,8% 82,1% 50,3% 100,0% 31,5% 100,0% 19,0% 31,0% 15,2% 24,9% 40,0% 23,0% 31,4% 13,6% 17,7% 23,0% |
253,8 861,5 287,5 234,1 87,1 81,4 59,4 56,8 53,9 44,9 26,2 25,9 23,7 16,7 12,1 10,9 |
342,6 9,2 40,9 20,7 0,0 5,7 35,0 131,0 2,0 28,4 9,2 5,8 6,3 1,5 0,7 0,0 |
596,4 870,7 328,4 254,8 87,1 87,1 94,4 187,8 55,9 73,3 35,4 31,7 30,0 18,2 12,8 10,9 |
2136,0 |
639,0 |
2775,0 |
||||
| FERTILIZERS | ULTRAFÉRTIL FOSFÉRTIL GOIASFÉRTIL ARAFÉRTIL INDAG TOTAL |
100,0% 88,3% 100,0% 33,3% 35,0% |
100,0% 88,3% 100,0% 33,3% 35,0% |
205,6 182,0 13,1 10,8 6,8 |
20,2 44,0 9,3 1,8 0,0 |
225,8 226,0 22,4 12,6 6,8 |
418,2 |
75,3 |
493,5 |
||||
| ELECTROCITY | ESCELSA (*) | 50% |
50% |
385,7 |
2,0 |
387,7 |
| OTHERS | EMBRAER CELMA MAFERSA SNBP (*) CARAÍBA TOTAL |
50,5% 89,1% 100,0% 100,0% 100,0% |
50,5% 89,1% 100,0% 90,0% 100,0% |
192,1 91,1 48,8 12,0 5,8 |
263,4 4,5 0,5 0,0 0,0 |
455,5 95,6 49,3 12,0 5,8 |
349,8 |
268,4 |
618,2 |
||||
TOTAL I |
8851,1 |
3611,0 |
12462,2 |
|||
| II. SALE OF MINORITY SHAREHOLDINGS (DECREE 1.068) | ||||||
| ASSORTED | TOTAL II |
395,5 |
395,5 |
|||
GRAND TOTAL I + II |
9246,7 |
3611,0 |
12857,7 |
|||
% |
71,9% |
28,1% |
100,0% |
|||
(*) NOT YET CONCLUDED
