[44] PETROBRAS [10] DEMISSÃO DE GRAÇA FOSTER E DIRETORIA DA PETROBRAS REPERCUTE NOS GRANDES MERCADOS FINANCEIROS MUNDIAIS - BLOOMBERG NEWS REPORT

BLOOMBERG NEWS REPORT

Petrobras CEO [Graça Foster] Draws Agitators as Investors Await Replacement

Source / Fonte: Portal BLOOMBERG NEWS

David Biller & Peter Millard

February 4, 2015; 2:00 AM BRT.

http://www.bloomberg.com/news/articles/2015-02-04/petrobras-ceo-draws-agitators-to-doorstep-as-resignation-looms

Blog editor note: This photo (found in Google images) was not part of the original Bloomberg's publication and is placed here just to illustrate the matter, without any other purpose.

(Bloomberg) [February 4, 2015; 2:00 AM BRT] - The day after Petroleo Brasileiro SA’s embattled Chief Executive Officer Maria das Gracas Foster met with Brazil’s president and dozens of protesters picketed her house, she is out of a job.

Foster, 61, and five members of her management team resigned Wednesday, state-run Petrobras said in a one-sentence statement.

The oil producer, once a source of national pride and symbol of Brazil’s arrival as an emerging-market powerhouse, gained almost $6 billion in market value Tuesday on speculation Foster would be replaced, and continued to rally Wednesday after the company confirmed her departure.

“The president is fully committed to trying to avoid Petrobras being a drag on growth and potentially to diminishing her own political liability,” Christopher Garman, head of emerging-markets research at political risk consultancy Eurasia Group, and dual citizen of Brazil and the U.S., said by phone from Washington before the resignations were announced. “Turnover in leadership kind of mitigates both of those risks.”

Dozens banged pots, blew whistles and waved flags in front of Foster’s apartment a block from Copacabana beach Tuesday evening to demand she step down. The people, mainly from nearby upscale neighborhoods, were protesting Brazil’s biggest graft scandal as police stood to the side and a huddle of security guards barred the entrance.

The Rio de Janeiro-based oil company said it will hold a board meeting Feb. 6 to elect replacements for Foster and the five managers, whom it did not name. Petrobras’s press office declined to comment further when contacted by telephone.

 

Corruption Warnings

Federal police are investigating allegations that a cartel of construction companies fixed bids on the producer’s contracts and bribed executives during a span stretching back to when President Dilma Rousseff served as Petrobras chairwoman from 2003 to 2010.

Foster, a frequent guest at the Alvorada presidential palace in Brasilia, is confronting allegations she ignored corruption warnings from subordinates. The prosecutor general and opposition politicians have called for her to step down.

“I’m indignant,” said Rizzia Arrieiro, a 35-year-old dentist who helped organize the protest in front of Foster’s home. “Petrobras was the pride of Brazil, and now it’s transforming into a company that lost its value completely. We’re here to demand Gracas Foster be fired and a new board be instituted.”

Foster said in December she had offered to resign three times and would wait on a decision from Rousseff.

One protester in an orange jumpsuit, like the uniform used on Petrobras’ deep-water rigs, alternated between sporting a clown nose and a Rousseff mask that some Carnival revelers are wearing during this month’s festivities.

 

Ruling Party

Residents peered out from windows of neighboring buildings, some banging on pots themselves and chanting “Get out, P.T.!” as the ruling Workers’ Party, or Partido dos Trabalhadores, is known.

As a plunge in Petrobras’ stock, delays in reporting graft-related writedowns and debt-rating cuts has made Petrobras one of the most volatile major oil stocks, Luiz Moraes, a retired public servant, is concerned rising gasoline prices will stoke inflation and leave ordinary folk to pay the bill.

“The entire world is lowering gasoline prices, but not here,” said Moraes, 60. “It’s absurd.”

Petrobras has said it will maintain fuel prices this year despite cheaper imports to help preserve cash until it regains access to international debt markets. The government recently introduced a fuel tax it had temporarily suspended in 2014, increasing prices at the pump.

Disrupted Routine

The biggest corruption scandal in Brazil’s history has handicapped Petrobras’ ability to carry out routine functions such as releasing financial results and borrowing from international debt markets.

Auditors are waiting for independent investigators to calculate the size of graft-related losses before signing off on 2014 financial statements. The company can’t sell bonds until it reports the results, prompting it to cut investments by about a third this year.

Petrobras’ stock rose 15 percent to 10 reais in Sao Paulo Tuesday, the steepest increase since September 1998, paring to 27 percent its decline since the November arrests of about two dozen people suspected of money laundering and other crimes in the corruption scandal. It was up 6.3 percent to 10.63 reais at 10:44 a.m. local time.

The company’s $2.5 billion of notes maturing in 2024 climbed 1.1 cents to 91 cents on the dollar, even as Fitch Ratings lowered Petrobras’ rating to the lowest investment grade.

 

‘Big Name’

“Clearly news of Graca replacement is causing short-covering. From the fundamentals point of view, without knowing her substitute, my opinion is that if is not a very big name, there will be frustration,” Fabio Oliveira, the chief investment officer at GPS Investimentos Financeiros, which oversees $6.8 billion, said in an e-mail reply to questions. “I think the move on Petrobras’s shares is very speculative.”

Foster, 61, became CEO of Petrobras in 2012 after serving as secretary of oil and natural gas when Rousseff was energy minister under President Luiz Inacio Lula da Silva.

Initial enthusiasm for Foster among investors waned after she failed to eliminate fuel subsidies that caused more than $44 billion in operating losses from 2011 through the first half of last year. The government controls Petrobras’ board through a majority of voting shares.

The oil producer released unaudited third-quarter earnings Jan. 29 showing a 9 percent drop in profit and said it couldn’t account for the financial impact of the corruption probe. The losses calculated so far for the period between January 2004 and April 2012 stand at 4.06 billion reais ($1.5 billion), the company said in a presentation.

To contact the reporters on this story:

·         David Biller in Rio de Janeiro at: dbiller1@bloomberg.net;

·         Peter Millard in Rio de Janeiro at: pmillard1@bloomberg.net

To contact the editors responsible for this story:

·         James Attwood at: jattwood3@bloomberg.net

·         Jim Efstathiou Jr.,

·         Tina Davis