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Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) Sorts Out its Costs for FY2015

Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) is one Brazilian company that has its finances for the year all set out. The company has approved a funding of $6.12 billion in credit and cost of sales for the year. The announcement, however, came after the company failed to report its 3Q2014. PBR stated that the delay was due to the inability to calculate losses from the corruption scandal.

Petrobras has secured a loan of $3.1 billion from the Brazilian state banks. The remaining $3 billion would be obtained from Standard Chartered PLC, through a sale and leaseback deal. However, taking loans is not always the best way to go for a company in Petrobras’s position. All is not lost though; the company has also decided to sell its Austral assets in Argentina. The sale has been estimated to be worth $101 million. Petrobras announced that the sale was part of its 2015-2016 divestment plan. The company aims to raise $13.7 billion through the plan.

Additionally, after recently coming out from a corruption scandal, the company is hoping to recover $423 million from the construction companies involved in the suit. The companies are believed to have stolen money from the company’s accounts in the corruption and bribery scheme that went rampant in the oil producer’s management.

So far, Petrobras has filed two lawsuits, one against Engevix and the other against Mendes Junior. The two suits demand that the company be compensated for monetary damages of $150 million. There are other moral damage compensations involved as well, but the exact amount for that is still unknown. The overpayments to different companies had led to Petrobras writing of $2.05 billion in its FY2014. The compensation from the lawsuits and the sale of the Austral assets would result in some compensation that can be used to pay back the large loans the company has recently acquired.

Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) closed at $9.63, after losing 1.13% on May 11. The company has 7.44 billion shares being traded in the market, with a 52-week range of $4.90-$20.94.

Published by Pamela Garcia

Pamela Garcia is a keen follower of U.S. stock market



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