Bloomberg News

Vale Said to Hire BTG, BofA for $1 Billion Logistics Sale

November 13, 2012

Vale SA (VALE3), the world’s biggest iron- ore producer, hired Banco BTG Pactual SA and Bank of America Corp. (BAC:US)’s Merrill Lynch to sell a stake in its logistics unit for about $1 billion, according to two people with direct knowledge of the matter.

The VLI business, or Valor da Logistica Integrada SA, has attracted interest from foreign investors who are considering buying a stake, said one of the people, who asked not to be identified because the negotiations are private. The person declined to name the potential investors.

Vale is trimming investments and selling assets as the Rio de Janeiro-based company works with “more conservative premises” about its business prospects, Chief Financial Officer Luciano Siani said Oct. 25 on an earnings conference call. The company suspended projects, announced asset sales of about $1.2 billion and cut output of premium pellet products this year as weaker demand in China and Europe, its two biggest markets, triggered a decline in metal and mineral prices.

A Vale press official in Rio said the company declined to comment on a possible stake sale for the unit, as did an official at Sao Paulo-based BTG. Kerrie McHugh, a spokeswoman for Charlotte, North Carolina-based Bank of America, also declined to comment.

Vale controls port, maritime and railroad assets to support its mining activities in countries including Brazil, Argentina, Mozambique, Indonesia and Oman, according to the company’s website. The firm also provides freight-transportation services and operates passenger trains on the Vitoria-Minas and Carajas railroads.

Share Price

Shares of Vale declined 0.8 percent to 36.30 reais at the close in Sao Paulo trading. The stock lost 4 percent this year, underperforming the Brazilian benchmark Bovespa index, which rose 1.3 percent in the same period.

Vale, the world’s third-largest mining company, agreed to sell 10 vessels for $600 million and lease them back from South Korea’s Polaris Shipping Co. as part of a strategy of “improving capital allocation and further strengthening of the balance sheet,” it said on Aug. 31. The announcement followed the sale this year of a thermal-coal project in Colombia for $407 million, ferromanganese alloy operations in Europe for $160 million and a kaolin mineral business in Brazil for $30.1 million.

The company has also received and is analyzing offers from firms interested in acquiring oil and gas assets, Siani told reporters last month. Vale, which hired Citigroup Inc. (C:US) and Bank of Nova Scotia (BNS) as advisers on that transaction, still hasn’t made a decision on the sale, he said.

To contact the reporters on this story: Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net; Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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