Brazilian oil company, Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) has announced a plan to evaluate the corporate governance and administration rules. This decision was reviewed and approved by Petrobras’board and announced during a securities filing on Wednesday.
Aldemir Bendine, who is Petrobras’ chief executive, will preside over the project. The project is expected to aid the company’s governance in familiarizing to a reviewed investment strategy, as well as new and changing commercial environments.
The announcement is meant to appease shareholders who have been threatening to pull out due to the poor performance of the company and shares losing value. The decision to review the company’s management policy is long overdue especially considering the bribery incident by company’s officials.
Additionally the company’s performance has continuously been pushed down by increasing inflation. Another problem being faced is the inability to release third quarter earnings. Unfortunately, Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) has been unable to do so because the company’s auditor, Price Waterhouse Coopers has refused to release the audits due to the corruption allegations.
Without the release of audits, the company will not be able to secure finances through bonds issue. This is bad news for the company as Petrobras is deep in debt. If the company is unable to issue bonds, it will be unable to pay its bondholders. Petrobra’s poor performance has led to devaluation of the company and credit rating companies regarding its bonds at the lowest grade status.
With pressure being pushed upon the company to review its management structure as well as improving its business strategy, the company has its hands full.
However, Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) maintains that it still has hopes with petroleum reserves and a skilled team with great exploration knowledge. In addition, the new leadership with Aldemir Bendine at the helm is expected to influence positive changes to the company’s performance. Perhaps the close watch by the government and probing eyes of critics as well as current all-time low conditions will push the company to rise from rock bottom.