It hurts to be a minority shareholder in “certain companies”.

In what an analyst called a “monstrous reversal,” Petrobras shares have reversed a positive gain of 3% by mid-afternoon to finish the section down 3.6% after the market slowly digested the latest maneuver that the Brazilian government has architected with the company’s cash.

The Government announced today that Petrobras will make a payment to the Union of R$2 billion this year, followed by another R$13 billion between 2015 and 2018 as an advance of the excess oil in the pre-salt reserves.

“The size of the payment is not a huge one, but it signals to the market that the government is, once again, cashing out from a company that is already under financial constraints,” says one manager. “Petrobras has not yet extracted the 5 billion barrels from the pre-salt, and it is already paying the government with future cash flows.”

“It means more pressure on the company’s cash, which is already very leveraged and carries no cash flow in the short term,” says another analyst.

“It is terrible for the stock.”

Source: Veja Mercados

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