Petrobras (PBR) Stock Falls Today as Brazilian Prosecutors Investigate Current, Former Governor
NEW YORK (TheStreet) -- Shares of Petrobras (PBR) - Get Report fell 4.22% to $4.99 in morning trading Friday after a Brazilian high-court judge allowed prosecutors on Thursday to investigate the current governor and a former governor of Rio de Janeiro state as the ongoing corruption scandal at the Brazilian state-owned energy company deepened.
Federal prosecutors suspect current governor Luiz Fernando Pezão and his predecessor, Sérgio Cabral, of soliciting and receiving 30 million Brazilian reais, or approximately $9.5 million, in 2010 from construction firms contracted by Petrobras to construct a large refinery in Rio state. The prosecutors will investigate the two for money laundering and public administration violations.
Petrobras' former refining director, Paulo Roberto Costa, outlined the alleged payments last year under a cooperation agreement with prosecutors. But because of Brazilian rules regarding the prosecution of public officials, the nation's vice attorney general needed to request authorization from a high court in Brasília to move forward with the investigation.
Insight from TheStreet's Research Team:
commented on Petrobras in a recent post on
. Here is what Cramer had to say about the stock:
Petrobras and Intel (INTC) - Get Report. Those are my two worries -- and I am worried.
Petrobras? This company used to be worth $350 billion not long ago. Now it is a tenth of that. But it has billions upon billions of dollars in debt and it is struggling mighty to pay the interest. When I see a company this big flailing, I want to know who owns the debt and how vulnerable those holders are. Did they reposition into some strength today, or are they going to be the next Long Term Capital, a levered hedge fund that almost brought down the U.S. banking system 17 years ago?
- Jim Cramer, 'Why Petrobras and Intel Have Me Worried' originally published 3/12/2015 on RealMoney.com.
Want more information like this from Jim Cramer BEFORE your stock moves? Learn more about RealMoney.com now.
Separately, TheStreet Ratings team rates PETROBRAS-PETROLEO BRASILIER as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PETROBRAS-PETROLEO BRASILIER (PBR) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins."
You can view the full analysis from the report here: PBR Ratings Report