Petrobras
Azz........
Morgan Stanley 17/11
Petrobras
Risks of Financial Statements
Postponement
Ongoing money laundering and corruption charges
have had an impact on PBR's reputation.The
announcement that auditors cannot sign off on 3Q14
numbers raises new concerns and implies potentially
material adjustments to thefinancials.
The immediate outcome from ongoing investigations, in our view, is a
sizeable asset write-off and lower dividends for voting shares.
Charges of money laundering
will likely lead to a material loss recognition
on PBR's P&L, which we believecould rangefrom ~R$5B (bull case; 24% of
2014e NI) to ~R$12B (basecase; 57% of 2014e NI) to ~R$21B (bear case; 95%
of 2014e NI).
In a worst case scenario, if the investigation extends for a long time
and new accusations are presented, we believe this would also restrict
PBR's access to funding, potentially cause debt acceleration, and
necessitate an equity issuance.
Azz.....21 R billions....