New Vale pact seeks dispersed share ownership in six years: sources – by Tatiana Bautzer and Guillermo Parra-Bernal (Reuters U.S. – Janaury 19, 2017)

SAO PAULO – Leading shareholders of Vale SA are close to endorsing a plan to turn the world’s No. 1 iron ore producer into a company with dispersed share ownership within six years, two people familiar with the talks said.

Bradespar SA, Mitsui & Co and several Brazilian pension funds are negotiating a new shareholder accord that would give Vale dispersed share ownership – where no major shareholder controls decision making at the company – once the agreement expired in six years time, according to the people, who asked for anonymity since talks are underway. Negotiations could be concluded by late February or early March, these people said.

The current 20-year shareholder accord expires in April. Holding company Bradespar (BRAP4.SA) and pension fund Previ [PREVI.UL] proposed the conversion of Vale’s different types of stock into a single common one as the first step towards transforming the mining giant into a company with dispersed share ownership, the first person said.

By changing Vale’s corporate structure radically, Bradespar and Previ want to boost the company’s allure to investors. The plan could result in enhanced transparency and limited government meddling – an aspect that weighed down Vale’s stock during President Dilma Rousseff’s five years in office that ended with her impeachment last year.

“The situation is advantageous to the controlling bloc, because the shareholders acknowledge that there is so much value to be captured with this initiative,” said the first person.

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