05/15/2024 – 12:28
Petrobras lost almost 50 billion reais in market value this Wednesday, after the announcement of the departure of the company’s CEO, Jean Paul Prates, with preferred shares falling more than 8% at the worst moment, while common shares collapsed close to 10% at the minimum in the first deals.
The Ministry of Mines and Energy appointed Magda Chambriard, former director general of the National Agency for Petroleum, Natural Gas and Biofuels (ANP), as a replacement. Sources told Reuters that the state-owned company’s Corporate Affairs director, Clarice Coppetti, is the most likely to take over on an interim basis.
At around 11:55, the preferred shares fell 5.97%, to 38.43 reais, and the common shares lost 7.1%, to 39.88 reais, the biggest falls of the Ibovespa, which lost 0.69%, with the investors worried about greater political interference in the company after the change, which could affect its dividends.
At the minimum, PNs reached 37.5 reais and ONs reached 38.82 reais, equivalent to a loss of 49.5 billion reais in market value.
For Goldman Sachs analysts, the news is negative.
“Based on our conversations with investors, we believe the market saw Mr. Prates as a good conciliator between the interests of investors and the government. Furthermore, we believe that the announcement could reignite concerns regarding potential political intervention in the company’s operations”, stated Bruno Amorim and team.
In a report to clients, they mentioned that Petrobras’ command changed several times in the past following disagreements between the company’s management and the government, leading to weak shares in the days following the events. However, they noted, prices have recovered, with solid fundamentals and better governance as a result of changes initiated in 2016.
“Finally, we believe it will be important for investors to monitor whether any aspects of governance will change following the announcement. Current laws and Petrobras statutes in force would make it challenging for a new administration to significantly change capital allocation and fuel pricing policies.”
The announcement of the change in command at Petrobras came one day after the release of the company’s first quarter results, whose profit fell 38% year-on-year, to 23.7 billion reais. Before, however, there was already dissatisfaction in the government with the company’s direction and with Prates’ own management.
Analysts Conrado Vegner and Vinícius Andrade, from Safra, cited in a report to clients that the market’s negative reaction stems mainly from the greater perceived risk of possible political interference in the company’s decisions, rather than a negative opinion about Chambriard itself.
“This announcement was unexpected and occurs in a context of high political pressure”, reinforced XP analysts Regis Cardoso and Helena Kelm, in a report sent to clients.
“In our view, the change in management adds uncertainty to the investment case and increases investors’ perception of risk. This context will likely raise concerns from minority investors about the possible risk of interference by the majority shareholder — that is, the government — in the management of the company.”
They also said that Chambriard must take command of Petrobras in a challenging context of significant external pressure. On the other hand, they highlighted that it will find the company with strong free cash flow generation, an unleveraged balance sheet and a solid investment portfolio.
XP explained that, according to the company’s statute, the new CEO of Petrobras must first be elected as a member of the company’s board of directors. The name must be approved by the council’s People Committee, to comply with several eligibility rules, before being put to a vote by the board.
“The quickest path to appointment is for one of the current board members to resign so that the new appointee can be designated as a replacement on the board and subsequently elected CEO — which we believe will happen in this case,” the analysts said.
Petrobras reported that it received a request from Prates on Tuesday for the state-owned company’s board of directors to meet to consider the early termination of his term as CEO. The meeting, which could approve his departure, is scheduled for this Wednesday.
In a message to friends obtained by Reuters, Prates stated that President Luiz Inácio Lula da Silva asked for his position, adding that he should “appoint Magda”. He also mentioned that the ministers of Mines and Energy, Alexandre Silveira, and the Civil House, Rui Costa, were satisfied with her departure.
(By Paula Arend Laier)
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