Petrobas settles lawsuits after corruption case
Brazil’s state-run oil company Petroleo Brasileiro settled four lawsuits brought by investors including Pacific Investment Management Company after the nation’s biggest-yet corruption case torpedoed the company’s market value.
Petrobras’s board approved agreements with Pimco Total Return Fund, Janus Overseas Fund, Dodge & Cox International Stock Fund and Al Shams Investments, according to a statement filed with Brazil’s securities regulator. Petrobras will include a $353m provision in its third-quarter financial statements to reflect the settlements as well as ongoing negotiations with other plaintiffs, according to the statement.
The world’s most indebted oil producer is labouring to right itself after a multiyear probe revealed a systematic pay-toplay scheme that siphoned money to politicians and corrupt executives. CE Pedro Parente has the tasks of resolving its pending lawsuits, trimming expenses, divesting assets, and making company management more independent to prevent government interference.
The suits Petrobras settled sought to recover losses from 2010 to 2015. Pimco claimed that former members of Petrobras’ top management artificially inflated the stock price by making false statements and omitting adverse information.
GRAFT WOES
Corruption may have cost Petrobras as much as 42-billion reais ($13bn), according to federal prosecutors. In addition to the settlements, Petrobras faces 23 similar cases and is defending itself in a class-action lawsuit by minority shareholders.
The company could not make “a reliable estimate with respect to the potential outcome of the class action”, Petrobras said in the statement. Terms of the settlements were confidential and intended to eliminate the uncertainties and legal expenses, the company said.
Petrobras on Friday won its first credit rating upgrade in five years, from Moody’s Investors Service, which raised the company one level to B2, five levels below investment grade, with a stable outlook. AT&T said on Saturday it agreed to buy Time Warner for $85.4bn, the boldest move yet by a telecommunications company to acquire content to stream over its high-speed network to attract online viewers.
The biggest deal in the world in 2016 will, if approved by regulators, give AT&T control of cable TV channels HBO and CNN, film studio Warner Bros and other coveted media assets. The tie-up will likely face intense scrutiny by US antitrust enforcers worried that AT&T might try to limit distribution of Time Warner material.
AT&T will pay $107.50 per Time Warner share, half in cash and half in stock, worth $85.4bn billion overall, according to a company statement.
AT&T said it expected to close the deal by the end of 2017.
Dallas-based AT&T said the US justice department would review the deal and that it and Time Warner were determining which Federal Communications Commission licences, if any, would be transferred to AT&T in the deal.
US legislators were already worried about cable company AT&T, whose main wireless phone and broadband service business is showing signs of slowing, has already made moves to turn itself into a media powerhouse. It bought satellite TV provider DirecTV in 2015 for $48.5bn. It had about 142-million North American wireless subscribers as of June 30, and