Brazilian iron ore producer Vale announced this week it received a final proposal from Valepar, its controlling shareholder, for a proposed restructuring.
According to Vale, the proposal includes a corporate restructuring at the company, as well as changes in the company’s corporate governance, which will allow it to be listed at a different segment in the Brazilian stock exchange, the Novo Mercado. The Novo Mercado segment allows the trading of shares issued by companies that commit themselves voluntarily to adopt corporate governance practices in addition to those that are required by law.
Valepar’s proposal expects to transform Vale into a company “without a defined control” (a controlling shareholder). According to Vale, the proposal should be submitted to Vale’s general meeting, although a date has not yet been determined.
Under the terms of the proposal, Vale’s class A preferential shares would be converted into ordinary shares, at a ratio of 0.9342 ordinary shares for each preferential share. The ratio was based on the average price of both preferential and ordinary shares over the last 30 stock exchange sessions before February 17, 2017.
Vale said Valepar would also be merged into Vale at an exchange ratio that contemplates a “10 percent increase in the number of shares held by the shareholders compared to Valepar's current shareholding interest,” and then representing a dilution of approximately 3 percent of the shareholding interest of other Vale shareholders.