If the state-run company approves distribution of retained dividends, government could receive about R$32.6bn

06/18/2024

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Move may pave the way for Petrobras to decide on distribution of R$21.9 billion in extraordinary dividends from 2023 retained as capital reserve — Foto: Leo Pinheiro/Valor

Petrobras’s board of directors approved on Monday the payment of R$19.8 billion related to a negotiated agreement with Brazil’s Federal Revenue and the Attorney General’s Office of the National Treasury (PGFN) in ongoing cases at the Administrative Council of Tax Appeals (CARF). The board held an extraordinary meeting to vote on ending the company’s disputes with CARF over remittances abroad for chartering (a type of leasing) of oil exploration vessels. This measure may pave the way for the state-run oil company to decide, before December, on the distribution of R$21.9 billion in extraordinary dividends from 2023 retained as capital reserve funds.

The agreement had been under negotiation since CEO Jean Paul Prates’s administration and is part of the so-called “large tax thesis transaction” being carried out by the Federal Revenue and PGFN, one of the Ministry of Finance’s main strategies to eliminate the primary deficit this year.

The agreed amount represents a 65% discount from Petrobras’s original liability of R$44.79 billion. Of this amount, R$6.65 billion will be paid with deposits in court already made in the cases, and R$1.29 billion will be transferred using tax loss credits from subsidiaries.

The remaining R$11.85 billion will be paid in installments, with R$3.57 billion due at the end of June and six monthly installments of approximately R$1.38 billion each, starting in July, adjusted by the Selic policy interest rate. “In the net profit for the second quarter of 2024, the after-tax effects will be approximately R$11.87 billion,” the state-run company said in a notice of material fact.

According to Petrobras, about 13% of the total is the responsibility of “various partners” in the exploration and production (E&P) consortia. Petrobras said that it is negotiating the terms for reimbursement of amounts related to such participation and that the agreement brings “economic benefits.”

“Maintaining judicial discussions would imply a financial effort to provide and maintain judicial guarantees, in addition to other costs and expenses,” Petrobras said.

Sources consulted by Valor believe that the approval of the agreement with CARF may indicate that the government will not wait until December to decide on distributing to shareholders the funds retained as capital reserve. In April, the company’s shareholders approved in an extraordinary general meeting (AGE) the payment of R$21.9 billion, corresponding to 50% of the extraordinary dividends from 2023, amounting to R$43.9 billion. Of the total, the government received about R$8.1 billion, with just over R$6.3 billion going to the National Treasury and around R$1.7 billion to the Brazilian Development Bank (BNDES).

The other half was retained as a capital reserve to be evaluated by the company by the end of the year, with the possibility of distribution as interim dividends. If Petrobras decides to distribute it, the government could receive an additional R$6.3 billion this year.

This way, the government could receive approximately R$32.6 billion in extra funds from Petrobras this year, including the agreement with CARF, the distribution of retained dividends, and the amount approved by the AGE, which is being paid. Shareholders received the first installment of the R$21.9 billion authorized in May, and the second installment is expected to be released in the coming days.

The government needed at least two votes in addition to the six it already held on the board, as the majority shareholder of the oil company. According to the board’s internal regulations, operations involving the government require approval by two-thirds of the directors. In case of a tie, the regulations say that the chairman would have the casting vote.

The agenda was approved in the meeting by a vote of 10 to 1. Since the government has six representatives on Petrobras’s board, which comprises 11 seats, the matter needed at least eight votes to be approved. The only dissenting vote came from the representative of minority shareholders, Marcelo Gasparino, according to a source.

*Por Kariny Leal, Fábio Couto — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/