Brazil’s state-run oil company Petroleo Brasileiro settled four lawsuits brought by investors including Pacific Investment Management Company after the nation’s biggest-yet corruption case torpedoed the company’s market value.
Petrobras’s board approved agreements with Pimco Total Return Fund, Janus Overseas Fund, Dodge & Cox International Stock Fund and Al Shams Investments, according to a statement filed with Brazil’s securities regulator. Petrobras will include a $353m provision in its third-quarter financial statements to reflect the settlements as well as ongoing negotiations with other plaintiffs, according to the statement.
The world’s most indebted oil producer is labouring to right itself after a multiyear probe revealed a systematic pay-to-play scheme that siphoned money to politicians and corrupt executives. CE Pedro Parente has the tasks of resolving its pending lawsuits, trimming expenses, divesting assets, and making company management more independent to prevent government interference.
The suits Petrobras settled sought to recover losses from 2010 to 2015. Pimco claimed that former members of Petrobras’ top management artificially inflated the stock price by making false statements and omitting adverse information.
Graft Woes
Corruption may have cost Petrobras as much as 42-billion reais ($13bn), according to federal prosecutors. In addition to the settlements, Petrobras faces 23 similar cases and is defending itself in a class-action lawsuit by minority shareholders.
The company could not make “a reliable estimate with respect to the potential outcome of the class action”, Petrobras said in the statement. Terms of the settlements were confidential and intended to eliminate the uncertainties and legal expenses, the company said.
Petrobras on Friday won its first credit rating upgrade in five years, from Moody’s Investors Service, which raised the company one level to B2, five levels below investment grade, with a stable outlook.
Bloomberg