Petrobras Scandal News: Oil Company Reportedly Hires JPMorganChase & Co. to Sell Assets as Corruption Prevents Financing
Brazil's state-controlled oil producer, Petróleo Brasileiro SA, commonly known as Petrobas, has hired JPMorgan to handle $3 billion in planned asset sales this year. JPMorgan Chase & Co. has been tasked with this duty after a corruption scandal blocked financing for the oil company.
Reuters spoke with two sources who said JPMorgan will be responsible for rounding up the largest number of bidders for Petrobas' assets, as well as structuring the sale of said assets. The company's properties and drilling licenses are among the assets up for bidding.
Potential bidders could include Middle East investors, mainly sovereign wealth funds familiar with oil and gas projects.
Petrobas has been forced to take part in asset sales after the Moody's Investors Service stripped the company of its investment-grade rating. Moody's ratings cut was the largest corporate downgrade in terms of the amount of debt impacted in 10 years, and Moody points to the corruption scandal as the reason behind the downgrade.
The firm was one of three that gave Petrobras a failing investment-grade rating. Fitch Ratings and Standard and Poor also gave the company the lowest investment-grade ranking.
Prosecutors allege allies of Brazilian President Dilma Roussef used Petrobas to skim billions of reais through overpriced contracts in political campaign kickbacks for over a decade.
Independent auditors refused to sign off on the company's quarterly earnings reports due to the scandal, thereby cutting Petrobas' access to bond markets.
Chief Executive Officer Aldemire Bendine has made investment cuts and asset divestitures as part of his plan to restore confidence in the drowning company. Bendine is also expected to reduce the company's five-year, $221 billion capital spending plan.
Petrobas previously sold $10.7 billion worth of assets between October 2012 and December 2013 as part of a plan to exit non-core assets to fund its investment program.
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