Petrobras takes steps to avert a technical default

Joe Leahy in Sao Paulo 

Brazil's embattled state-controlled oil company Petrobras said late on Monday that it expected to release its long-delayed audited financial results for 2014 as early as next Wednesday.

The move would help Petrobras, which has been crippled by a political corruption scandal, avert a technical default on its debt under credit covenants requiring results to be published at latest by the end of next month.

Petrobras said its board of directors would meet on April 22 to review its independently audited financial statements for the third quarter of 2014 and to approve audited results for the year.

"The company expects to release these financial statements after the meeting, subject to a decision by the board of directors," said Petrobras.

Petrobras was thrown into crisis last year when it revealed it was unable to publish third-quarter results for the three months through September, after its independent auditor PwC refused to sign off on them because of corruption allegations.

The delay threw into question the solvency of Brazil's most important company and one of the biggest debt issuers in emerging markets, with creditors demanding the release of the results by the end of this month or at latest by the end of May.

Brazilian prosecutors allege that former directors of Petrobras colluded with contractors and politicians to extract bribes and kickbacks from the company

Some minority shareholders have alleged that as much as $10bn was stolen, much of it to provide donations for Brazil's plethora of political parties.

Petrobras has declined to comment on the investigation or speculation over its losses.

The cash crunch at Petrobras, which has the biggest corporate capital expenditure programme in the world, has also created a liquidity crisis among its equipment and service suppliers. Many of these have been accused of involvement in the corruption scandals, with some of their executives remanded in custody.

The release of the financial results would be a first step towards a process of recovery.

Petrobras is also considering asset sales and other measures to restore its finances, which, aside from the scandal, have been battered by government fuel subsidies.

The company is struggling with the plunge in global oil prices. Its key project, deepwater oil discoveries off the coast of Rio de Janeiro, will not be viable if the lower prices continue in the long term, analysts say.

Petrobras' share price has recovered some of its losses in recent sessions on rumours that the company might soon report its results, climbing 16 per cent in the three days through Monday.

President Dilma Rousseff fuelled the rumours last week when she said in Rio de Janeiro that "Petrobras has cleaned up what needed to be cleaned up and is back on its feet".

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