Brazil's Petrobras hires JPMorgan, Citi to manage BR Distribuidora offering -sources

By Tatiana Bautzer and Carolina Mandl

SAO PAULO, April 16 (Reuters) - State-run oil company Petroleo Brasileiro SA has hired nine banks to manage an offering of shares in its fuel distribution unit Petrobras Distribuidora SA, three sources with knowledge of the matter said.

The offering will be led by the investment banking units of JPMorgan Chase & Co and Citigroup Inc, along with the investment banks owned by Itau Unibanco Holding SA , Banco Bradesco SA, Bank of America Corp , Credit Suisse Group AG, Banco do Brasil SA , Banco Santander Brasil SA and HSBC Holdings Plc.

BR Distribuidora, as the company is known, is among the assets that Petrobras intends sell to reduce its debt and increase investments in oil exploration.

Chief Executive Officer Roberto Castello Branco took the helm of the company in January with an ambitious divestment program.

Petrobras, Citi, JPMorgan, BB, BofA and HSBC did not immediately comment. Bradesco, Itau, CS and Santander declined to comment.

Petrobras has not decided yet if the offering will mean a privatization of BR Distribuidora, added the sources, who spoke on Monday and Tuesday. They asked for anonymity because the talks were private.

If Petrobras decides to sell 22 percent or more of the company, the share offering will effectively privatize the fuel distribution unit.

A sale of a 20 percent stake would be worth around 5.3 billion reais ($1.3 billion), based on market prices as of Tuesday afternoon. The company's market capitalization is 26.7 billion reais.

But the company is still discussing if a privatization through a share offering would need to be submitted to Brazil's audit court, although Castello Branco has said his initial intention is to privatize the fuel distribution arm. Currently, Petrobras holds a 71.25 percent stake in BR Distribuidora.

The timing of the offering is still under discussion, but it will likely occur after the sale of a stake owned by state lender Caixa Economica Federal in Petrobras, the sources added. Caixa hired the banks for the offering last week. ($1 = 3.9020 reais) (Reporting by Tatiana Bautzer and Carolina Mandl in Sao Paulo Editing by Matthew Lewis)