August 14, 2017 / 3:43 PM / a year ago

UPDATE 2-Vale works to speed up listing in strictest Brazil market

(Updates with details, share performance)

By Guillermo Parra-Bernal and Marta Nogueira

SAO PAULO/RIO DE JANEIRO, Aug 14 (Reuters) - B igger-than-expected shareholder backing for Vale SA’s stock conversion plan could lead the world’s No. 1 iron ore producer to speed up the listing of common shares in Brazil’s strictest market to lure a broader investor base.

Chief Executive Officer Fabio Schvartsman told investors in a Monday conference call that the conversion plan, which ended last week, was “a success.” A total 1.66 billion Vale preferred shares, or 84.4 percent of that class of stock in circulation, joined the plan, topping a minimum 54.09 percent threshold.

Chief Financial Officer Luciano Siani said on the call that Vale was not considering cash incentives to buy back stock from investors who did not swap their preferred shares into common ones.

While the company expected to join the São Paulo Stock Exchange’s Novo Mercado, the bourse’s strictest chapter, by 2020, the move could come as early as this year, the executives said.

By merging Vale’s different classes of stock into a single, common one, the company may become more attractive to Asian investors and specialized mining and metal investment firms, Siani told the Reuters Latin American Investment Summit last week.

“We are working with our legal advisers to do the Novo Mercado listing as quickly as possible,” Schvartsman said.

The new share structure represents a milestone in a country long hobbled by corporate governance abuses and reorganizations that hampered minority investors. Reuters reported the plan on Jan. 19, citing people familiar with it.

The plan limits politicians’ involvement in Vale, something that weighed on the company’s stock during former President Dilma Rousseff’s five years in office. Still, the government will keep a golden share, allowing it to fend off hostile takeover attempts and shape strategic decisions.

Common shares of Vale were up 2 percent at 31.40 reais in late morning trading, extending the stock’s gain this year past 26 percent. The preferred shares rose 1 percent to 29.02 reais.

Vale’s common American depositary receipt added 0.9 percent to $9.775 in New York.

Schvartsman said Vale would absorb its former controlling entity, Valepar SA, on Monday. The takeover of Valepar is part of a reorganization aimed at transforming Vale into a company with dispersed share ownership. (Editing by Lisa Von Ahn)

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