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Material Fact - Partial and disproportional spinning off of Downstream


PETRÓLEO BRASILEIRO S.A. - PETROBRAS
Public Company

PRESS RELEASE

Partial and disproportional spinning off of Downstream

 


(Rio de Janeiro, August 2, 2005). – PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA], a Brazilian international energy company, announces that the Board of Directors approved the prerequisite conditions for the Partial and Disproportional Spinning Off of Downstream Participações Ltda. (“Downstream”) and the Incorporation of the Divested Portion by PETROBRAS. The Board also authorized the convening of an Extraordinary General Meeting of Shareholders on August 30 2005 to examine and approve the matter.

The purpose of the partial and disproportional spinning off of “Downstream”, a privately held company, wholly owned by PETROBRAS and Petrobras International Braspetro B.V. (“PIB BV”), is to segregate 100% (one hundred percent) less one quota of the investment which Downstream holds on its balance sheet in 5283 Participações Ltda.

The Divested Portion to be spun off from Downstream corresponding to 100% (one hundred percent) less one quota of the investment in 5283 Participações Ltda., will be incorporated into PETROBRAS.

With the exception of the Divested Portion, to be transferred to Petrobras, all Downstream’s remaining assets and liabilities, rights and duties shall remain registered in the company’s accounts.

Petrobras, jointly with Downstream, will only assume responsibility for the rights and duties relative to the Divested Portion, for the purposes of adhering to the provisions of sole paragraph to Article 233 of Law 6,404/76.

This spin-off to be followed by incorporation will not imply any alteration in Petrobras’ capital stock and will not have any material impact on the Company’s shareholders. This initiative is designed to reorganize the assets of the company such that its participation in “5283”, an asset related to the international area, is segregated from Downstream’s other assets linked to the domestic activities of the Company’s downstream business unit.

 

 

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