Petrobras Said to Meet Friday to Discuss Results Deadlock

Petroleo Brasileiro SA’s board will discuss this week writedowns for costs associated with a corruption investigation that has prevented it from releasing audited results, said a person with knowledge of the agenda.

The board is seeking to resolve a deadlock with auditor PricewaterhouseCoopers about how to calculate the amount of graft-related costs, said the person, who declined to comment because the information isn’t public. The meeting comes three days after a newly-earned junk rating is putting pressure on new Chief Executive Officer Aldemir Bendine to resolve the accounting delays and restore access to capital markets.

PwC declined to comment in an e-mailed response to Bloomberg. Petrobras didn’t immediately reply to messages seeking comment on the meeting or the topics under discussion.

Moody Investors Services said prolonged delays in reporting audited results could lead to a bond default when it cut Petrobras to Ba2, two levels below investment grade. The scandal engulfing Petrobras, a decade-old story of alleged kickbacks, bribes and inflated construction contracts, has transfixed Brazil and left President Dilma Rousseff struggling to contain the damage.

Petrobras is ready to publish audited third-quarter financial results as soon as an internal probe by two law firms is complete, Valor Economico reported Wednesday, without saying where it got the information.

“The new CEO has a monumental task ahead of him as he oversees another impairment assessment and clears it with auditors,” Christopher Garman, head of emerging-markets research at consulting firm Eurasia Group, said in a note on Wednesday. “The downgrade raises the sense of urgency in the government to accelerate constructive overtures to the company in the coming months.”

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