LatinFinance - July/August 2015 - 17

observer says of the Petrobras 100-year bond. "The previous
managers were a little more conservative, and there was no need to
be bold and make that kind of statement."

Ups and downs
Petrobras in numbers, 2014 - 2015

Share price (PETR3, March 31)

Q1, 2014

Q1, 2015

BRL16.04

BRL9.58

Adjusted Ebitda

BRL14.3bn

BRL21.5bn

Total debt

BRL307.9bn

BRL400.4bn

Revenue

BRL81.5bn

BRL74.4bn

Gross profit

BRL19.2bn

BRL22.4bn

Source: Petrobras

The average order size was $30 million, and around 85% of the
demand came from the US.
The deal reflected the capital markets style of incoming chief
financial officer Ivan Monteiro, said one source familiar with the
company's management.
Monteiro joined Petrobras at the same time as Bendine; the pair
were brought in from Banco do Brasil. At the state bank, Monteiro
had led a number of similarly daring capital markets transactions.
Perhaps most notable was a deeply subordinated new-style hybrid
instrument sold in January 2012. The security gave the borrower
flexibility to change some of the terms to fit Brazil's still-forming
Basel III rules.
"I doubt that that type of trade would have been done under the
previous administration, it's just a different style," a debt market

Too big to bail
While senior debt may be available to the company, equity remains
elusive. A capital injection would substantially ease leverage
worries.
"They still don't have a liquidity issue with their creditors, but
they are very leveraged," says Antunes. "It would be important to
have some equity support and reduce its debt, through some asset
sales (BR Distribuidora, etc) or new equity injection. But of course
this is a very tricky situation, and it would cost some political effort
internally here in Brazil to do something like that right now."
The company's share price has recovered since it ended the
delay to its financial reporting, rising from a low of 8.04 reais on
January 30. But the price on July 7 of 13.24 reais was still far from its
31.23 reais price of five years earlier, making a sale of fresh equity
unappetizing for shareholders.
It is also unlikely the government would step in with an equity
boost. Many believe Petrobras is ultimately too important for
the government to cut off if it really hit trouble. But with the
administration struggling to limit its own spending, a splurge on
Petrobras seems remote- the company has also ruled out such an
option. "There is no possibility of capitalization of the company,"
Bendine said firmly when presenting the business plan in late June.
Generating more cash to pay down debt is the only way forward,
he concluded. As it cuts costs and its suppliers struggle, that will be a
long path. LF

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July/August 2015 - L ATINFINA NCE.COM 17
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Table of Contents for the Digital Edition of LatinFinance - July/August 2015
