Workers’ Party criticized decision, as unions and minority shareholders filed lawsuits to cancel extraordinary payment

11/04/2022

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Petrobras announced on Thursday afternoon the distribution of dividends worth R$43.68 billion related to the results of the third quarter. The payment was approved in a meeting of the Board of Directors, even after the Association of oil workers and minority shareholders of Petrobras (Anapetro) filed a lawsuit with the Prosecutor General’s Office (PGR) requesting the Federal Supreme Court (STF) to halt the distribution.

The high distribution of dividends by the state-owned company is the target of criticism from members of the Workers’ Party (PT), of President-elect Luiz Inácio Lula da Silva, victorious in Sunday’s election. In the elected government team, the view is that the scenario reduces the company’s investment capacity.

The company Thursday afternoon released a material fact with the announcement of the distribution of R$3.35 per preferred (PN) and common (ON) stock in circulation. The first installment, worth R$1.67445 per stock will be paid on December 20, followed by a second installment, worth R$1.67445 per stock to be paid on January 19, 2023.

Adding dividends and interest on equity capital (IOC), the company has already approved the payment of R$179.98 billion in proceeds related to the results of the first three quarters of 2022. The amount is much higher than last year. During the entire fiscal year 2021, the company paid R$101.39 billion in dividends.

The company’s dividend policy provides that when it has gross debt of less than $65 billion, the company may distribute to its shareholders 60% of the difference between operating cash flow and investments. The policy also provides for the possibility of paying extraordinary dividends, provided that this does not affect the company’s financial sustainability. “There are no investments held back due to financial or budgetary constraints, and the decision to use the surplus resources to remunerate shareholders presents itself as the most efficient for optimizing the allocation of cash,” said the company in the material fact released on Thursday.

About R$20 billion of the amount announced on Thursday may go to the federal government. In a letter sent to the stated-owned companies in July, the Economy Minister had asked for an increase in revenue from dividends to cover the costs of the proposed constitutional amendment that allowed the payment of Auxílio Brasil of R$600, in addition to the handouts for truckers, taxi drivers and cooking gas vouchers.

PT’s president Gleisi Hoffman classified the volume of dividends as a “bloodletting” in the company. “We do not agree with this policy that deprives the company’s investment capacity and only enriches shareholders. Petrobras has to serve the Brazilian people,” she said in a post on social media. In the lawsuit, Anapetro also says that a mixed economy company, such as Petrobras, differs from a 100% private company by using the company’s profits to make “strategic investments” capable of ensuring “sustainability”, as well as the fulfillment of its social function. Instead, it says, the current policy has transformed the company, according to the association, into “a notorious distributor of lucrative dividends that have turned the company into a cash cow of the market.”

The entity also sent a letter to the board of directors of the state-owned company asking the collegiate to abstain from voting on this matter. The association argued that the dividend distribution refers to the company’s financial statements that will be approved in a shareholders meeting to be held only in April next year, after the government transition. In the letter sent to the collegiate, to which Valor had access, the president of Anapetro, Mário Dal Zot, says that the federal government, Petrobras’ controlling shareholder, guides the company to act in a harmful way to the national interest by “not having long-term planning that allows an efficient and timely energy transition.”

Jean Paul Prates — Foto: Edilson Rodrigues/Agência Senado

“We are facing a clear scenario of abuse of rights by Petrobras’ controlling power. If this abuse was already established with the distribution of dividends in this amount, the situation is aggravated by the post-electoral scenario and the generating obligations to the future management of Petrobras,” says the document. Anapetro, together with the Parliamentary Front in defense of Petrobras, chaired by Senator Jean Paul Prates (PT, of Rio Grande do Norte), will file a new lawsuit today in the Federal Court against the dividend distribution announced by the company. Mr. Prates is one of the names listed to assume the presidency of the state-owned company in the future Mr. Lula da Silva’s government.

For André Vidal, head of oil, gas and basic materials of XP, the payment of dividends does not compromise the accounts of the state-owned company, which “keeps generating enough cash” and has been operating under the leverage of its financial policy, which talks about a target of $60 billion of gross debt and may reach $65 billion. At Thursday’s Petrobras board meeting, nine members voted in favor of the dividend payment and two were against, according to sources. Currently, the board has four executives appointed by minority shareholders, a representative of the employees, and six appointed by the federal government, including the CEO of the company, Caio Paes de Andrade.

The Unified Federation of oil workers (FUP) also sent a letter to Mr. Andrade, with a request for the company to engage in the government transition process. In the letter, FUP’s general coordinator, Deyvid Bacelar, asks the company to guarantee the necessary information for the new managers that will take over the company after 2023.

*By Gabriela Ruddy, Fábio Couto, Maria Cristina Fernandes — Rio de Janeiro, São Paulo

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