Stressed Out: Petrobras Shares Rise on Management Restructuring Plans

 | Jan 28, 2016 | 11:35 AM EST
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This article is part of a Real Money series on 20 companies investors should consider adding to their distressed watch list.

Petrobras (PBR), the stressed-out Brazilian oil giant which is included in our Stressed Out index, just announced some measures to help it deal with its massive debt. This, coupled with a recovery in some oil stocks following a rise in the price of oil, has sent its U.S.-traded shares as much as 10% higher Thursday.

In a statement on its website, the company, one of the 20 in the Real Money Stressed Out index, announced restructuring measures that could save around 1.8 billion Brazilian reals ($440 million) per year and cut at least 30% of managerial posts in non-operational areas. Of the company's 7,500 management positions, 5,300 are in non-operational areas.

Among the measures: centralizing activities, merging various areas, setting new criteria for appointing executive managers and making managers formally responsible for decisions and results.

The Deal: Petrobras in advanced talks to sell slice of gas distribution unit to Mitsui

Petrobras is rated below investment grade by Moody's and Standard & Poor's, with a negative outlook. Its total debt stands at $127.5 billion, some 6.3x trailing 12-months earnings before interest, tax, amortization and depreciation (EBITDA).

The state-owned company has already cut its investment plans for 2015-2019 by 24% in an attempt to rein in its debt; its share price has collapsed more than 50% over one year as it has been engulfed into a corruption scandal that has hit the country's highest-ranked politicians.

For more on Real Money's 20 distressed companies to watch:

Stressed Out: Introducing Real Money's Distressed Index

Stressed Out: Petrobras and 2 Other Fallen Angels From Abroad

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