Brazilian ministers say Petrobras' extra dividends will be kept in reserve
Recasts and writes through
By Rodrigo Viga Gaier
RIO DE JANEIRO, March 11 (Reuters) -Two Brazilian cabinet members said on Monday that a proposed extra dividend suddenly axed by state-run Petrobras PETR4.SA would be kept in a reserve for future disbursement - keeping alive investor hopes that they would gain expected returns.
On Thursday, Petrobras Chief Executive Jean Paul Prates proposed to the oil company's board that shareholders be paid 50% of a potential 44 billion reais ($8.8 billion) extraordinary dividend as per the company's bylaws, but government-appointed board members voted to withhold the money.
The move blindsided investors, who expected an extraordinary dividend of $3 billion or more in addition to a routine payout of 14.2 billion reais ($2.9 billion).
A day later, two energy ministry sources told Reuters that Brazilian President Luiz Inacio Lula da Silva's government intended to revise the rules governing the reserve so it could be used for reinvestment.
Following a meeting with Lula, Prates and Finance Minister Fernando Haddad, Energy Minister Alexandre Silveira told reporters that the reserve fund's purpose was the distribution of dividends "at the right moment".
Haddad said that Petrobras' board would reevaluate in the coming "weeks and months" how the extraordinary dividends might be distributed.
But prior to the meeting, Lula said in an interview with TV channel SBT that Petrobras should be a motor for economic growth and job creation over shareholder returns.
Petrobras shares, which dove nearly 11% on Friday erased a meager recovery to fall about 1% after Lula's remarks were broadcast.
His comments contrasted sharply with remarks by Prates to Reuters earlier on Monday that Lula had not interfered with the company's dividend decision and that the board could still approve an extra dividend at an April shareholder meeting.
After the meeting, Prates told local newspaper O Globo that he was not planning to leave his role over the issue.
($1 = 4.9791 reais)
Reporting by Rodrigo Viga; Additional reporting by Andre Romani and Victor Borges; Writing by Fabio Teixeira; Editing by Brad Haynes, Bill Berkrot and Edwina Gibbs
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
