March 13, 2019 / 11:11 PM / 6 days ago

Petrobras asks to participate in Supreme Court case on state divestments

BRASILIA, March 13 (Reuters) - Brazilian state-run oil firm Petroleo Brasileiro SA has formally requested the right to participate in an ongoing legal dispute that could have implications for its multibillion-dollar divestment program, a document seen by Reuters shows.

According to the legal document, the company filed a request on Wednesday that would allow it to present arguments and defend its points of view regarding a major case before Brazil's Supreme Court, which concerns the sale of subsidiaries by state-run firms.

Petrobras press representatives declined to comment.

In July, Petrobras, as the firm is widely known, suspended the sale of certain refineries, a gas pipeline network known as TAG and a fertilizer plant, after Supreme Court Justice Ricardo Lewandowski issued a provisional ruling that state-owned firms needed congressional approval for certain types of divestments.

However, in January, Brazil's solicitor-general issued an opinion arguing that those divestments could in fact go ahead.

Petrobras is now deep into the divestment process for its TAG pipeline unit, which is expected to fetch several billion dollars. The three groups interested in the pipeline may present new bids through April 2.

Executives have said they are also drafting terms for the sale of two groups of refineries.

Still, Lewandowski, the Supreme Court justice, has yet to issue a final ruling, which is expected to uphold or modify his previous injunction. The contents of the final ruling could impact divestments not only by Petrobras, but also by other state-run companies, such as banks Caixa Economica Federal and Banco do Brasil SA.

Among the arguments that Petrobras makes in the filing is that a previous presidential decree allows for the kinds of divestments the firm is carrying out. It also argues that the firm needs autonomy regarding certain divestments in order to remain competitive.

"The freedom to enter into ownership of a company is worth nothing if the company cannot get out, especially if remaining generates losses or immobilizes resources that could be applied more efficiently in other business areas," the company said in the document. (Reporting by Ricardo Brito and Brad Haynes; Writing by Gram Slattery, Editing by Rosalba O'Brien)

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