Saturday, February 27, 2021

Petrobras: US $ 560 billion British manager warns the board and asks for independence

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“The return to the past would be a setback in Petrobras’ credibility reconstruction trajectory and an improvement observed in recent years, putting at risk not only the current strategy, but also all the country’s efforts to attract private investments for the development of the oil industry and its value chain. ”

The above message was forwarded to the chairman of the board of directors of Petrobras, Eduardo Bacellar Leal Ferreira, and other members for the resource manager Aberdeen Standard Investments, owner of a position of approximately R $ 1.8 billion in shares of the state-owned company. The house, the largest in the United Kingdom and the second largest in Europe, has US $ 560 billion in assets under management and has several applications in the country. In addition, it has already engaged in defining the future of several companies in Brazil, such as forming a new board of directors in Brazil. BRF, at the time of the end of the management Abilio Diniz and Tarpon Investimentos.

The expectation is that the pressure on the current board of directors of the company and also on the government will increase in the coming days, given the expectation that the management would show a strong commitment to a liberal agenda, which presupposes the non-interference in the state-owned companies listed in the exchange – that is, mixed economy.

The document was sent yesterday and is signed by Devan Kaloo and Eduardo Figueiredo, global leader of shares of the manager and director of operations in Brazil, respectively.

“We also emphasize that decisions on the appointment or replacement of executives should be the sole responsibility of the company’s board of directors, with the active participation of independent members, undergoing an objective analysis of qualifications, in line with best practices.”

On Friday, the mere expectation that the government would interfere in Petrobras, with a change of leadership, caused the shares to collapse and the oil company to lose R $ 28 billion in market value in a single trading session. The company ended the day valued at R $ 355 billion, compared to R $ 383 billion on Thursday, the 18th.

The state-owned company is B3’s second largest company, behind only Vale, and accounts for about 10% of the composition of the Bovespa Index.

After the markets closed, Planato announced, through the Ministry of Mines and Energy, the appointment of Joaquim Luna e Silva as the new president of Petrobras, in place of Roberto Castello Branco. The reason President Jair Messias Bolsonaro decides to change the company’s management is due to the increase in fuel prices.

As the EXAME IN pointed out in the matter next Friday, the 19th, the replacement of the president will require the replacement of the entire board of directors. The oil company’s bylaws, in its article 20, determine that the company’s executive president must be a board member. Luna e Silva is not part of the current collegiate. As the group was elected by multiple vote, any modification requires the call for a complete new election.

Check below the full letter, obtained by EXAME IN:

“São Paulo, February 20, 2021

Dear Mr. Eduardo Bacellar Leal Ferreira and members of the board of directors,

We write on behalf of Aberdeen Standard Investments, which holds approximately 67.3 million Preferred shares of Petrobras, equivalent to 0.5% of the company’s total share capital through various investment vehicles.

After a challenging 2020, we would like to congratulate the company’s management for this year’s achievements. The delivery of 2.4% production growth, the advancement of important pre-salt asset development projects, in addition to conducting the divestment plan in line with the company’s long-term strategy must be celebrated in any environment, but if make it even more remarkable in the face of a scenario of facing the impacts of the pandemic, with its implications from the point of view of flexibility in capital management, prioritizing the health and safety of its employees and in parallel advancing the transparency and adaptation to better agenda. international practices such as the TCFD – Task Force on Climate-Related Financial Disclosure.

We are fully aware that as long as Petrobrás maintains its monopolistic position in the Brazilian refining industry, the reconciliation of divergent interests of the company’s stakeholders will be challenging. However, we support executives to ensure that, above all, import price parity prevails in the company’s fuel pricing policy as a fundamental principle.

We were shareholders of Petrobras when the company was managed contrary to this principle; it is our view that the return to the past would be a setback in the company’s credibility reconstruction trajectory and improved governance observed in recent years, putting at risk not only the company’s current strategy, but also all of the country’s efforts to attract investment for the development of the oil and gas industry and its value chain.

We firmly support our view that changes in the current executive body of the company, without due rational and rigorous process, will be taken as negative. We also emphasize that decisions on the appointment or replacement of executives must be the sole responsibility of the company’s board of directors, with the active participation of independent members, undergoing an objective analysis of qualifications, in line with best practices.

Deviations from the precepts elaborated above will jeopardize the credibility reconstruction efforts of the investor community, with negative impacts not only for Petrobras but also for Brazilian assets more broadly.

We remain attentive and vigilant to these developments and support the company’s board of directors in fulfilling their assignment by protecting the company from undue interference and we trust that the protection mechanisms implemented after negative experiences in the past will prevail.

We thank the board members and the executives for their attention and openness to collaboration with Aberdeen Standard Investments in our interactions.

Devan Kaloo – Global Head of Equities Aberdeen Standard Investments

Eduardo Figueiredo – Director, Head of Brazilian Equities Aberdeen Standard Investments”

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Al-Ministers: Increasing the value of industrial production to 942.4 billion pounds during 2019-2020

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Petrobras: US $ 560 billion British manager warns the board and asks for independence