August 13, 2018 / 8:01 PM / a month ago

UPDATE 1-Brazil's Bradespar sells debt to pay for Dantas judgment -source

(New throughout, adds source saying what proceeds will be used for, adds background)

By Tatiana Bautzer

SAO PAULO, Aug 13 (Reuters) - Brazilian holding company Bradespar SA, one of the largest shareholders in miner Vale SA, announced a 2.4 billion real ($616 million) commercial paper sale on Monday, and a source with knowledge of the matter said the company plans to use proceeds to pay for a large court award in a dispute with other Vale shareholders.

Bradespar, controlled by Banco Bradesco SA, and Litel Participações SA, another big Vale investor comprising a handful of large pension funds, are on the hook for a 4 billion-real judgment awarded by a Rio de Janeiro court in May to fellow shareholder Elétron SA, a holding company controlled by veteran banker Daniel Dantas.

Elétron, part of a group that bid in an auction to privatize Vale in 1997, won the award after suing Bradespar and Litel over an option to increase its stake in Vale years ago, Bradespar has said in recent filings, adding that its appeals so far have not been successful.

The dispute began 10 years ago, based on an option that Elétron had to acquire Vale shares. Both holding companies are appealing the decisions, but an injunction required Bradespar and Litel to deposit guarantees for the payment to Eletron by Tuesday.

Bradespar said in a filing last month that the amount awarded to Elétron was incorrectly calculated. Dantas has a history of court disputes in Brazil’s largest companies. In 2006, Citigroup Inc. sued him after disputes regarding his management of a private investment fund, which had a stake in one Brasil Telecom SA, which later was merged into Oi SA.

$1 = 3.8964 reais Reporting by Tatiana Bautzer; editing by Jonathan Oatis and David Gregorio

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