Petrobras shares plummet 13.6% in the US after change in command of the state-owned company

Investors reacted very badly to the new change in charge of Petrobras, determined by the Jair Bolsonaro government this Monday (23). The oil company’s shares collapsed this Tuesday (24) up to 13.6% in the US and fell to 3.06% in Brazil, after the government announced the replacement of the current president, José Mauro Coelho, who had taken office just 39 years ago. days.

In the United States, the decrease of 13.6% occurred in ADRs (American Depositary Receipt) which correspond to preferred securities; in the case of ordinary, it was 12.5%.

On the Brazilian stock exchange, the oil company’s preferred shares fell by 3.06%, while its common shares fell by 2.96%. The broad stock index Ibovespa ended the session with a slight increase of 0.21%.

Coelho began to suffer frying after the company announced a readjustment in the price of diesel, in early May.

President Jair Bolsonaro (PL) has criticized both the company’s readjustments and Petrobras’ R$44.5 billion quarterly profit, which he called “rape” this month.

In a note about the exchange announced the day before, the government says that the country is going through a challenging time and that it is necessary to work for a “balanced scenario in the energy area”. Bolsonaro should appoint Caio Mário Paes de Andrade, secretary to Minister Paulo Guedes, to assume the presidency of the company.

Investors’ association says that the government lacks maturity in the management of the state-owned company

According to an assessment by Amec (Association of Investors in the Capital Market), the management of companies with mixed capital has been conducted as a policy of ministerial extension, where arbitrariness in decision-making has prevailed in a way that is incompatible with the relationship required in listed companies. in Stock Exchange.

“The controlling partner lacks maturity in the articulation with the other shareholders and in the choice of names for the main executive positions”, says a note signed by the president of the investor association, Fábio Coelho.

Amec also points out that the change of executives is not related to the company’s operational and management performance, “which impresses those accustomed to better governance practices and maturity in the relationship with the market.”

“The official note released by the Ministry of Mines and Energy mentions that ‘the government renews its commitment to respect the company’s governance, maintaining compliance with the normative and legal precepts that govern Petrobras’, which sounds like something dissociated from the reality of the facts”, points out the association.

Guide analysts endorse in a report that, although expected, the exchange is bad for the company, as it affects again the issue of corporate governance, given the interference in the state company.

“In addition, we expect questions from investors about the ability of the nominee to proceed with the strategic plan that had been followed by the former presidents”, say the analysts.

The XP team says that, although the news is negative, due to the assessment that such turnover is not healthy for any company, the change should not generate changes in Petrobras’ fuel price policy.

“First, because we still see the State-owned Companies Law and the Petrobras statute shielding the company from subsidizing fuels as in the past, regardless of who the CEO is. Secondly, Mr. Caio is strongly linked to Paulo Guedes, who is not in favor of changes in Petrobras’ fuel price policy”, point out XP analysts, adding that, despite the political noise, they maintain the buy recommendation for the state-owned shares.

“We believe that this news should increase the volatility in the paper. However, the company has generated around 40% of its market value in cash flow. That is, an investor in Petrobras could have its capital remunerated via dividends in approximately 3 to 4 years”, say Genial’s analysts.

Next steps of the change in command of Petrobras

• The company calls a shareholders’ meeting to elect a new board, which must take place within a minimum period of 30 days after the call
• Government and minority shareholders present their candidates for 8 of the 11 vacancies; 3 of them, elected by separate vote, do not need to be renewed
• After the meeting, with names already approved by the shareholders, a new board of directors meets to appoint the company’s president.

If you want to change pricing policy

• It is unclear how or if the government will propose a formal change in the company’s pricing policy.
• If this occurs, analysts assess that a change in the bylaws may be necessary to remove restrictions on loss-making operations by determination of the controlling shareholder.
• The change in the bylaws also depends on approval at the shareholders’ meeting.