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Brazil’s state-controlled oil company Petróleo Brasileiro said on Thursday that a U.S. court had granted a preliminary approval to the US$3-billion agreement to settle a U.S. class action lawsuit initiated by investors who claimed they had lost money as a result of the corruption scandal that rocked Petrobras and Brazil in 2014.
The ruling of the U.S. District Court for the Southern District of New York to give a preliminary approval to the settlement “is another important step towards resolving the proceedings brought against Petrobras in the SDNY related to crimes against the company that were uncovered by Operation Car Wash,” the Brazilian oil firm said.
In early January, Petrobras said that it had signed an agreement in principle to settle the securities class action lawsuit, agreeing to pay a total of US$2.95 billion to resolve claims in two installments of US$983 million and a last installment of US$984 million.
In both announcements, Petrobras denied any wrongdoing and reiterated that “The agreement does not constitute any admission of wrongdoing or misconduct by Petrobras. In the agreement, Petrobras expressly denies liability.”
In today’s statement, the Brazilian company said that members of the class would now be notified of the terms of the proposed settlement.
The court will decide whether it will grant final approval of the settlement after considering any objections and conducting a hearing to determine whether it is fair and reasonable. The settlement hearing is scheduled for June 1, 2018, Petrobras said.
Although it was said to be the largest such payout in the United States by a foreign entity, the US$2.95-billion settlement was much smaller than many analysts had expected, according to Reuters.
JPMorgan, which had expected a settlement of over US$5 billion, said in January that the agreement eliminated “extremely high uncertainty” regarding the potential liability of Petrobras. The market had anticipated a settlement of between US$5 billion and US$10 billion, according to analysts at Brazilian bank BTG Pactual.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.