The shares of root (ROOT4) skidded more than 5% this Monday (30), with the market reaction to the “block trade” (block salein Portuguese) announced that Hédera (former controlling shareholder of Biosev) will sell its entire holding of 330 million shares in the company.
The slice held by Hérdera represents 24.32% of Raízen’s outstanding shares, to be sold for R$ 3.15 each this Wednesday (1st), an amount equivalent to approximately R$ 1.1 billion.
THE XP Investimentos evaluates the total sale of shares held by Hérdera brings a negative view to Raízen.
“It is necessary to clarify whether the reason for the sale of Hédera is due to macro concerns, such as uncertainties regarding Petrobras’ pricing policy, or specific to Raízen”, argue analysts Leonardo Alencar and Pedro Fonseca, in a report sent to clients.
At around 2 pm (Brasília time), Raízen’s common shares sank 5.85% at R$ 3.22 each. At the opening of the day, the shares were worth R$ 3.40 each.
Understand the block trade
Although the company has not yet disclosed a relevant fact about this deal, a report published in the Brazil Journal explains that Hédera’s stake in Raízen was pledged as collateral for a debt owed by LDC (Hédera’s parent company) and its liquidation will be used to amortize this debt.
Creditors include Bradesco, Santander and international banks, according to a source with knowledge of the matter.
Hédera now holds 24.32% of the outstanding shares after Raízen’s acquisition of Bioseva deal that involved the exchange of shares (3.5% of total shares), in addition to the cash payment of R$ 3.6 billion for debt refinancing.
Raízen’s role suffers in part because the market knew that LDC would have to sell at some point.
The vagueness of Petrobras price parity policy (PETR4)allied to the doubt about whether or not the fuel taxes are one of the obstacles to Raízen’s actions, according to XP.
“If taxes on fuels come back, the market still doesn’t know what the policy will be, bringing a high degree of uncertainty for Raízen in the short term“, say the analysts.
The high level of uncertainty combined with the increase in negative assessments in relation to Raízen has kept investors away from the thesis, while new businesses (E2G, Biogas, pellets) still have a high risk of execution around them.
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