MercoPress. South Atlantic News Agency

Cosan buys BG stake in Brazil’s largest gas distribution company for 1.7bn dollars

Cosan board Chairman Marcos Marinho Lutz, “strategic to complete our portfolio in the energy area”

British natural gas firm BG Group Plc said on Tuesday it had signed a definitive binding agreement to sell its entire 60.1% stake in Comgas to Brazilian energy company Cosan S.A. for 3.4 billion Brazilian Reais, which is about $1.7 billion at current exchange rates.

The definitive agreement follows BG Group's signing of a memorandum of understanding with Cosan in early May. Comgas is Brazil's largest gas distribution company. The transaction is likely to close by the end of this year. BG Group said the deal will reduce its debt by about 1.1 billion dollars.

Sir Frank Chapman, chief executive of BG Group said, “This transaction, when completed, will release capital of around 2.8 billion dollars which, along with other planned divestments, represents significant progress towards our two-year goal to release 5 billion of capital from BG Group's balance sheet.”

“The acquisition of Comgas is strategic to complete our portfolio in the energy area and consolidates us as an infrastructure group with presence in different segments” said Cosan board Chairman Marcos Marinho Lutz.

Of the total operation 3.3bn Reais will be financed by Itaú and Bradesco banks, with a financing period of 8 years and two before payment of principal.

Apart from BG Group's stake, Shell holds an 18.1% interest in Comgas. The remainder is held by public through a listing on the Sao Paulo stock exchange.

In addition, BG Group and Cosan have agreed to co-operate on evaluating and developing gas supply options in Brazil after the completion of the deal. BG Group and its partners are developing oil discoveries offshore in the Santos Basin in Brazil.

The current announcement comes just months after BG Group announced its decision to divest its 40% stake in Chilean LNG terminal, GNL Quintero SA, to Spanish company Enagas SA for a total consideration of 352 million dollars.