Brazil oil producer Petrobras expects to narrowly win a supreme court decision that would allow it to proceed with asset sales, according to two company sources involved in the case, freeing up billions of dollars.
In June 2018, Supreme Court Minister Ricardo Lewandowski issued a preliminary opinion saying the “sale of shares in public companies, of mixed capital firms and of subsidiaries requires previous legislative authorization.”
However, key asset sales later got the go-ahead from Brazil’s slightly lower Supreme Judicial Court, or STJ, and from Brazil's solicitor-general.
In May, another Supreme Court (STF) minister, Edson Fachin, issued a decision upholding Lewandowski’s opinion, calling the STJ decision contradictory. That decision was issued in response to a lawsuit brought by a union, irked by Petrobras’ TAG gas pipeline unit, which it agreed to sell to France’s Engie SA in April for $8.6 billion.
The eventual decision, due later on June 5, will have repercussions on the TAG sale, but also on Petrobras’ upcoming divestments, which are likely to be affected given their similarities to the TAG sale.
Since last week, Petrobras representatives and the government of far-right President Jair Bolsonaro have engaged in a full court press with STF ministers in the hope of getting a favorable court decision. Two Petrobras sources involved in the case told Reuters they thought those efforts would pay off.
A loss would be a significant setback to the Bolsonaro administration, which has pledged to trim back the role of government-run firms through a privatization program. It would also be a major blow to Petrobras, which is seeking to use asset sales to trim net debt of 372.2 billion reais (US$96.32 billion).
The company did not immediately respond to a request for comment.
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