Change in statute does not free Petrobras from following the State Law, says Prates – 10/25/2023 – Market

The president of Petrobras, Jean Paul Prates, stated this Tuesday (24) that the proposed change in the state-owned company’s statute “makes zero difference” as it does not free the company from following rules determined by the State-Owned Companies Law.

Approved on Friday (20) and communicated to the market on Monday (23), the proposal dropped the state-owned company’s market value by R$32.3 billion in just one day, due to fear of political interference and a reduction in dividend distribution.

The measure was questioned by representatives of minority shareholders on the state-owned company’s board and led senator Alessandro Vieira (MDB-SE) to request an investigation by the CVM (Securities Commission). Government allies, oil workers unions, on the other hand, celebrated.

“This proposed change sought to align Petrobras’ bylaws with the changes in the State Law”, said Prates, in a video released on social media, according to him, to try to clarify the issue.

He was referring to the injunction issued by the then minister of the STF (Supreme Federal Court) Ricardo Lewandowski, who suspended some restrictions on appointments to positions in state-owned companies, such as 36-month quarantines for party or union leaders.

The president of Petrobras said that the suppression of an article in the statute that lists the prohibitions provided for in the law does not weaken the state-owned company’s governance. The topic, however, has not yet been deliberated in plenary by the STF.

“If the Judiciary’s decision is to maintain the articles in the law, they will be valid in themselves, as the law is for everyone and Petrobras will automatically be obliged to comply,” he stated. “Whether or not it is repeated in the statute makes zero difference.”

Prates stated that the company could “have better communicated the proposal”, which was initially released without details on Monday morning. And he confirmed that he abstained from the vote, as he understood that the topic deserved deeper analysis.

The proposal was taken by the president of the council, the Secretary of Oil and Gas of the MME (Ministry of Mines and Energy), Pietro Mendes, who had his appointment challenged by the committee that analyzes CVs for state-owned companies, with the recommendation that he resign from his position in the government to avoid conflict of interests.

The four councilors representing the minority shareholders voted against the proposal, approved with votes from five of the government’s nominees and the workers’ representative on the board, Rosângela Buzaneli.

Petrobras’ statute is seen by the market as an additional barrier to protect the company against political interference, in the event of changes to the State Law, which has been debated in Brasília since the Jair Bolsonaro (PL) government.

Still, it was unable to stop the nomination of candidates considered ineligible by internal governance bodies neither under Bolsonaro nor at the beginning of the Luiz Inácio Lula da Silva (PT) government.

In his first renewal of the council, Lula elected Mendes, the executive secretary of the MME, Efrain Cruz, and the former union leader Sergio Machado Rezende. The first two were questioned due to conflict of interest. The third, for non-compliance with the quarantine.

The video released by Prates is part of an effort to contain the damage caused by the proposal, which the president of the state-owned company tried to overturn at the council meeting, but was defeated by the governing body of the collegiate, appointed by the Minister of Mines and Energy, Alexandre Silveira.

In this Tuesday’s video, he also comments on the proposal to create a profit reserve, seen by the financial market as a sign that the company may not distribute extraordinary dividends, in addition to the 45% of free cash flow provided for by the company’s remuneration policy. state-owned.

“I want to emphasize right away that the shareholder remuneration policy continues to apply,” he stated. “The reserve to be created, if the board’s proposal is approved by shareholders, only makes it feasible.”

According to him, the objective is, after the distribution of dividends, to save resources to ensure future payments of dividends, interest on equity, repurchase of shares or incorporation of capital.