By Will Connors And Luciana Magalhaes
RIO DE JANEIRO--The Brazilian government will help beleaguered
state-run oil firm Petroleo Brasileiro SA raise money by
guaranteeing its debt as part of an effort to stave off damage from
falling oil prices and a corruption scandal.
Brazil will guarantee debt issuance of an unspecified amount by
Petrobras, supported in part by $3.4 billion that Petrobras lent
the country's state-run power company, Eletrobras, according to a
spokeswoman for the Ministry of Mines and Energy.
The plan could be announced as early as this week, according to
the spokeswoman.
A Petrobras representative declined to comment.
Petrobras's access to capital markets is restricted until it
reports its audited third-quarter earnings. The company said last
month that it has enough cash on hand to cover investments and
operations for the next six months. Petrobras is expected to issue
unaudited third-quarter results Friday.
Petrobras is in the midst of an ambitious, $221 billion spending
plan over the next five years as it develops offshore oil fields
and ramps up production. But a widespread corruption scandal
involving alleged overpayment for Petrobras contracts could crimp
the company's ability to raise money.
Petrobras delayed reporting its third-quarter earnings last
month after its auditor, PricewaterhouseCoopers, declined to sign
off on the results amid a widespread corruption probe at the
company. A PricewaterhouseCoopers spokeswoman declined to
comment.
Brazilian prosecutors said during a press conference Thursday
that at least 35 people, including two former Petrobras executives
and more than a dozen executives from the country's biggest
construction firms, participated in an alleged scheme to pay bribes
for Petrobras contracts. At least 12 of those construction-industry
executives were indicted this week on charges of money laundering,
fraud and corruption, according to a person familiar with the
investigation.
The U.S. Securities and Exchange Commission and the U.S.
Department of Justice are conducting their own investigations of
alleged wrongdoing at Petrobras because the company's shares trade
in the U.S.
Petrobras executives have said previously that they are
cooperating with authorities on the investigation and have set up a
compliance division at the company to address the alleged
corruption.
Shares in Petrobras were down 3.7%, to $7.46, on the New York
Stock Exchange at midday. Shares are down 57% over the last three
months.
Write to Will Connors at william.connors@wsj.com and Luciana
Magalhaes at Luciana.Magalhaes@dowjones.com
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