Petrobras CEO Is Shutting Up Critics But Big Challenges Remain

(Bloomberg) -- For Petrobras investors battered by years of mismanagement, a new chief executive officer went from villain to hero in a matter of weeks. The critical question now: Can he keep his reformist streak going -- and with it a strong rally in Petrobras shares?

President Dilma Rousseff’s choice on Feb. 6 of Aldemir Bendine to guide Brazil’s national oil company through a corruption scandal and a mountain of debt was met with bitter disappointment in the market. The stock plunged as much as 9.5 percent that day, with the career state banker seen as a government stooge sent to run a company that badly needed independence.

Bendine, aided by Ivan Monteiro, his chief financial officer who has emerged as his right-hand man, is squelching those concerns by moving decisively on several fronts.

He restored access to credit markets, ending an impasse over graft writedowns by getting independent auditors to approve long-delayed financial results; he secured a $10 billion series of loans from China that will help the company avoid a cash crunch; and he’s floated the idea of raising more cash by selling some of Petrobras’ prime offshore oilfields.

On a Roll

The 47 percent recovery in Petrobras’s share price since Feb. 6 is driven not only by what Bendine has accomplished but also by expectations of what he will deliver later this month: a road map for downsizing the dysfunctional behemoth and its $125 billion debt load. He’s already moving rapidly with a radical restructuring of internal management aimed at streamlining operations while paring salary costs.

“So far so good, but he just started,” Deyvid Bacelar, the Petrobras board member representing workers, said in an interview at a Petrobras shareholders meeting May 25. “We need to wait.”

Bendine raised eyebrows with a move approved at that board meeting that awarded 1 billion reais ($323 million) in bonuses to Petrobras employees but skipped a dividend for investors. Petrobras hasn’t paid a dividend for a year.


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