Electrobras suspended on NYSE as graft cost hazy

Bloomberg

The New York Stock Exchange suspended U.S. trading of Brazil’s state-owned utility Eletrobras on Wednesday and began delisting procedures after the company said it would miss a deadline to submit its 2014 financial results.
Centrais Eletricas Brasileiras SA, as the utility is formally known, has already delayed the filing to the U.S. Securities and Exchange Commission three times as it conducts internal investigations to put a price tag on corruption. The Rio de Janeiro-based company still doesn’t have enough information to assess the impact on its financial statements.
The move by the NYSE will make it harder for Latin America’s biggest electric utility to tap U.S. debt markets. It follows the Brazilian meatpacking giant JBS SA’s announcement last week of plans to create a New York-listed unit to access cheaper capital. Eletrobras’s effort to estimate the cost of corruption comes amid the country’s massive probe into graft, Operation Carwash, that led to an overhaul last year at the state-owned oil company Petrobras and the suspension this month of President Dilma Rousseff.
Carwash Scandal
Eletrobras has had years of losses “and now investors realize it’s just the tip of the iceberg,” said Alexandre Montes, an equity analyst at Lopes Filho & Associados Consultores de Investimentos in Rio de Janeiro.
“Now there’s the Carwash corruption scandal and it sticks in investors’ minds. They will never be willing to put money in the company again.”
The company said in a statement late Tuesday that it was expecting the NYSE to suspend trading of its U.S.-traded American depositary receipts, and that it plans to appeal the decision while continuing to work on finishing the delayed reports. The ADRs, each worth one ordinary share, may start trading in the exchange’s less prestigious over-the-counter market, the company said May 11.
The shares plunged as much as 6.7 percent in Sao Paulo on Wednesday.