State-owned company sent a document to the SEC in which it assesses the risk of “material changes” in the distribution to shareholders
A Petrobras admitted a possible change in the dividend distribution policy in a document sent to SEC, the United States Securities and Exchange Commission, on Wednesday (29.Mar.2023). Here’s the full (27 MB).
According to the state-owned company, changes in the composition of its Board of Directors and board of directors may result in “changes or closure” of the dividend policy. It also says that the collegiate can change or terminate the policy at any time.
Petrobras also states that there is a possibility that the changes in the policy will lead to “paying less or no dividends in the future”.
In 2022, the state-owned company paid BRL 215.8 billion in dividends to shareholders – the largest amount in its history. The company adopts a compensation policy that establishes the payment of 60% of the difference between operating cash flow and investments, if the gross debt is less than US$ 65 billion. Last year, the distribution surpassed this floor.
“The payment of dividends above the legal and statutory minimum in prior periods is not a guarantee of future payments and does not serve as a benchmark“, he wrote.
Known as “Form 20-F”, the document is mandatory for foreign companies listed in the United States. In it, companies provide financial and operational information, in addition to assessing the risks to which they are submitted.
It is precisely in the “risks” segment that Petrobras evaluates the possibility of changes in the dividend distribution policy. This topic does not appear in the previous 2022 edition of the form.
The president Luiz Inacio Lula da Silva (PT) is critical of the dividend distribution policy adopted by the government of his predecessor, former president Jair Bolsonaro (PL).
Lula’s management claims that Petrobras should direct its cash flow to investments. As shown the Power360the state-owned company was one of the oil companies that invested the least in 2022.
sale of refineries
In the document, Petrobras also admits the possibility of revising the term of cessation of conduct signed with the Where (Administrative Council for Economic Defense) in 2019. The agreement obliges the state-owned company to sell 8 of its refineries, which represents approximately 50% of its refining capacity.
“It is possible that our Board of Directors or administrators seek to revise the term of commitment with CADE, changing the obligations of the current agreement”, wrote the company.
Tug of war with the government
Petrobras referred to the request of the Ministry of Mines and Energy for the state-owned company to suspend the sale of assets for 90 days. He said he was evaluating the ongoing processes, the terms of commitment already assumed and “the consequences of any suspension or cancellation, which could have a material impact on us”.
On Wednesday (March 29), the company’s Board of Directors reviewed the ministry’s request again. The collegiate understood that the suspension requires a review of the company’s strategic plan for 2023 and stated that it will study the government’s request if the new board decides to propose a review of the plan.
“It is worth noting that this review should not include divestments already in the contract signing and closing phase, in order to fully comply with the rights and obligations already assumed by the Company”, wrote Petrobras in a note. According to the state-owned company, some sales processes have dates set for the 4 quarters of 2023.
On Wednesday (March 29), the Ministry of Mines and Energy sent a letter to Petrobras requesting that the new board of the state-owned company re-analyze the suspension of the sale of assets.
The government had requested the suspension of sales, for 90 days, on March 1st. On March 17, Petrobras responded that its board carried out preliminary studies and did not find reasons for suspending the signed contracts.
Last week, the Board of Directors elected the new executive board of the state-owned company, with a mandate until April 13, 2025. Due to the change, the government requested a new analysis of the request.
The folder defends the suspension of the processes due to the “reassessment of the National Energy Policy currently underway” and the new composition of CNPE (National Energy Policy Council).
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