Petrobras Board of Directors approves shareholders’ meeting; end of line for CEO

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In this news, we discuss the Petrobras Board of Directors approves shareholders’ meeting; end of line for CEO

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RIO DE JANEIRO (Reuters) – The board of directors of Brazilian petroleum Petrobras on Tuesday called for an extraordinary general meeting of shareholders, a move that virtually guarantees the departure of current CEO Roberto Castello Branco.

In a statement, Petroleo Brasileiro SA, as the company is officially known, said it called the meeting in response to a request sent by the country’s Ministry of Mines and Energy.

At the meeting, shareholders are expected to formalize the replacement of Castello Branco by Joaquim Silva e Luna, a general chosen by President Jair Bolsonaro.

Petrobras’ statement on Tuesday night largely puts to bed the possibility of a prolonged legal and political fight over the CEO swap. Although seven of Petrobras’ 11 board members are government-appointed, most had remained loyal to classic conservative Castello Branco in recent weeks, even as he came under pressure from Bolsonaro, according to two familiar sources. of the board’s thinking.

But shortly before the meeting, a vote on the re-election of Castello Branco for another term was replaced on the body’s agenda with a vote setting up the shareholders’ meeting, one said. sources.

Petrobras stock closed up 12.17% on Tuesday, after falling 22% the day before.

Bolsonaro slammed Castello Branco last week after a series of fuel price hikes, scaring investors over a possible return to politically motivated fuel pricing that has hammered Petrobras’ earnings over the past decade.

Bolsonaro told supporters on Tuesday that there were “a lot of problems” at Petrobras. “The new CEO will clean things up there,” he added.

Discussions over the massive resignation of the board to protest the replacement of Castello Branco have largely disappeared since Bolsonaro broke the news Friday evening, said sources familiar with the matter.

“The vote count for board members will be an important step, in our opinion,” UBS analyst Luiz Carvalho said in a research note reiterating his “buy” rating on the shares and calling the recent sell off of “overreaction”.

Carvalho pointed to various restraints on the government’s power to dictate fuel strategy and pricing in Petrobras, including an order issued on Monday by a Minas Gerais state judge requiring Bolsonaro and Petrobras to explain the reasons for the change of command in 72 hours.

Luna, who runs the giant Itaipu hydroelectric dam on Brazil’s border with Paraguay, has already signed documents that will initiate the standard ethics review before hiring at state-owned Petrobras.

($ 1 = 5.46 reais)

Reporting by Gram Slattery, Marta Nogueira and Rodrigo Viga Gaier; Additional reporting by Gabriel Stargardter in Rio de Janeiro and Paula Laier in Sao Paulo; Writing by Christian Plumb; Editing by David Goodman and Lisa Shumaker

Original © Thomson Reuters

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