Petrobras to pay $3 billion to settle class action suit in U.S.

Brazil’s state-owned oil company Petrobras has agreed to settle the securities class action lawsuit filed in the United States District Court for the Southern District of New York (SDNY).

Petrobras said on Wednesday that it signed an agreement in principle aimed at resolving all pending and prospective claims by buyers of Petrobras securities in the United States and by buyers of Petrobras securities that are listed for trading in the United States.

As a reminder, the investors sued the company after authorities in Brazil accused former executives of accepting more than $2 billion in bribes. The bribery scandal was uncovered following an investigation named Operation Lava Jato (Car Wash).

Petrobras agreed to pay $2.95 billion to resolve claims in two installments of $983 million and the last installment of $984 million.

The first installment will be paid within ten days of preliminary approval of the settlement by the court. The second installment will be paid within ten days of final approval of the settlement while the final installment will be paid either six months after final approval or on January 15, 2019, whichever comes later. The total settlement amount will be recognized in the fourth quarter of 2017.

Petrobras admitted no wrongdoing or misconduct and denied any liability claiming that the company was a victim of the acts uncovered by Operation Lava Jato.

“As a victim of the scheme, Petrobras has already recovered R$1.475 billion in restitution in Brazil and will continue to pursue all available legal remedies from culpable companies and individuals,” the company said.

The agreement will now be submitted to the district court in the SDNY for review. If preliminary approval is granted, the court will consider any objections and hold a hearing on the fairness of the proposed settlement before deciding whether to grant final approval.

According to Reuters, the settlement came only days after the Brazilian securities regulator CVM accused eight former Petrobras executives, including former CEOs Maria das Graças Foster and José Sérgio Gabrielli, of corruption.

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