Petrobras – Investor Relations

Petrobras

Investor Relations

Petrobras seals acquisition of Eletrobolt thermal generato

(Rio de Janeiro, May 12, 2005). – PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA], a Brazilian international energy company, announces that it has concluded the process for the acquisition of Sociedade Fluminense de Energia – SFE, owner of the Eletrobolt thermoelectric power generating plant located in Seropédica, state of Rio de Janeiro. The power plant has nominal capacity of 388 MW and is one of the three merchant plants with which Petrobras signed Consortium Contracts in 2001 and 2002, which included clauses establishing contingent liabilities for payment of taxes, rates and tariffs, operating costs and maintenance and capacity investments, in the event the plant was unable to generate sufficient revenues to cover these items.

The previously agreed payment structure provided for 30 fixed monthly payments totaling US$159 million and a final US$30 million payment at the end of the seventh year. Petrobras renegotiated the payment terms with the 17 commercial banks at that time the owners of SFE, paying US$65.1 million for the shares in SFE and assuming debt of US$98.9 million.

Concomitant with the acquisition of SFE, Petrobras signed documentation extinguishing the Consortium Contract, relieving it of any obligation to make the contingent payments provided for therein and leaving it free to benefit from any gains from the plant's operations.
 
The conclusion of these negotiations is part of the Company's strategy for the power sector, which provides for limiting any increase in its thermal generation capacity to the conclusion of projects already being executed or to acquisitions that signify reductions in contingency payments.

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