Petrobras

Clarification on News: Sale of Braskem

Rio de Janeiro, September 5, 2017 – Petróleo Brasileiro S.A. – Petrobras reports that it received on 9/4/2017, Official Letter No. 303/2017/CVM/SEP/GEA-1, which requests the following clarification:

Official Letter No. 303/2017/CVM/SEP/GEA-1

“Dear Sir,

We refer herein to the news published on 9/4/2017 by Valor Econômico, under the headline “Petrobras inicia venda da Braskem até o fim do ano” [“Petrobras to initiate sale of Braskem by the end of the year”] which includes, in summary, the following statements:

“Petrobras is working to start the sale process of its stake in Braskem still in 2017, Valor found. According to sources familiar with the negotiations, Odebrecht and the state-owned company, which are joint controllers of the petrochemical company, are advancing in the conversations on a new Shareholders’ agreement, which is fundamental for the operation to move forward, and are committed to reach a consensus by the end of the year.

Among the alternatives under study, it is possible that the new agreement is formalized in two steps, a model that would especially please Odebrecht. Firstly, prior to the arrival of one or more partners, the private group assigns certain rights that might make Petrobras’ share more attractive. But the final terms would depend on negotiations between the state-owned company, Odebrecht, and the investor or company already enabled the purchase the stake.

The two controllers reported in mid-July that they had initiated the talks to review the agreement, which in its current format makes the arrival of a new partner difficult. Last week, Petrobras CEO Pedro Parente, reaffirmed that the participation in Braskem will only be sold after the revision of the document, and said that receiving an award for control is “very important.”

On the oil company’s side, said a source, the plan is to have this definition by December, as well as a position of the Federal Court of Accounts (TCU) about the transaction. The Braskem stake is the divestment package announced by Petrobras, to raise US$ 21 billion by next year via Asset Sales. When sought, Petrobras reported that it would not comment on the subject.

Odebrecht holds 50.1% of the voting capital of the petrochemical company, while Petrobras holds 47%. However, although the companies are joint controllers, the Shareholders’ agreement in force grants more rights to Odebrecht, which is responsible for example for nominating the President of the Board of Directors, in addition to the CEO, the CFO, and the Officer of Investments and Portfolio, with three-year tenures.

[…]

Among the models under study, Petrobras is initially most keen on a stock offering in the New York Exchange, with the petrochemical company’s capital being widely held. There are other options on the table, all of which aimed to unlock the petrochemical company’s value, which is traded on the stock exchange at multiples lower than its international peers.

There still is no definition on the transaction that will be carried forward and whether Odebrecht will sell part or even all its shares in Braskem together with the state-owned company. There allegedly is no structured debate within the group on the course of businesses after Operation Car Wash, nor a final decision on the sale of Braskem shares. Nevertheless, the perception among creditor banks is that at least part of the petrochemical company must be sold to ensure Odebrecht’s financial health.

[…]”.

From the above, we request a statement from the company regarding the news and possible impacts on the Company, as well as comments on other information deemed relevant on the subject.”

Clarification

Petrobras confirms that, as set out in the 2017-2021 Business and Management Plan, disclosed on 9/20/2016, it intends to leave the petrochemical sector entirely, a process to be carried out according to the strategy that is most aligned with the generation of value for the Company.

As such, in seeking to improve the corporate governance of Braskem and the corporate relationship between the parties, Petrobras began talks with Odebrecht S.A. to promote the revision of the terms and conditions under Braskem’s Shareholders’ Agreement, as disclosed to the market on 7/18/2017.

These negotiations, as well as the studies regarding the sale of Braskem, are in preliminary stage, with no definitions so far.

Petrobras clarifies that it discloses the onset of its divestment projects via Material Fact, making the teaser, with its main features and conditions, available on the company’s website, pursuant to the disclosure procedure of divestment projects under item 21.4 item of the 2016 Reference Form (Formulário de Referência 2016).

This disclosure method is in line with Petrobras’ divestment method, which was reviewed and approved by the Company’s Executive Office and is aligned with the guidelines of the Federal Court of Accounts (TCU).

Categories: Petrobras

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