Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) has been having quite a lot of problems and the new CEO, Aldemir Bendine, is nearing to overcome just the first one. A banker by profession, the new CEO has been having a hard time getting auditors to approve the first financial results under his tenure. The company now faces the next challenge to repay the oil industries largest debt, while in the process of developing offshore fields. Needless to say the finances for these tasks are not available.
Petrobras had recently been the center point of a great corruption scandal, which saw it being locked out of credit markets. However, the company has been able to gain the spot of Brazil’s best stock, following the news that it will release its FY report next week. The report is being audited by PricewaterhouseCoopers LLP and is to be validated by the board on April 22. The reason why the news had such a huge impact on the stock is that the FY earnings would reveal to the general public how much has been lost to corruption. Additionally, it would display the damage caused by the corruption.
Currently, there are 20 contractors that have been cited in the corruption case, which has made the company halt anymore contracts. The investments have also been slashed by the new head and the production targets are being updated. The scandal comes at a time when the crude prices are at their low and the Brazilian currency grows weaker. These factors have increased the burden on the company, by making it more difficult to generate the required amount. The company is under a debt of $135 billion. How the new officials deal with the upcoming problems? Will decide the fate of company’s stock. At present, it seems as if it is going to face a steep crash.
Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) closed at $8.68, losing a 2.47% on April 16. The company has a huge 7.44 billion shares trading in the market, with a 52-week range of $4.90-$20.94.