10/22/2019

Petrobras Global Finance B.V.

Date of Action: September 18, 2019

Attachment to Internal Revenue Service Form 8937

The information contained herein is being provided pursuant to the requirements of Section 6045B of the Internal Revenue Code of 1986, as amended, and includes a general summary regarding the application of certain U.S. federal income tax laws and regulations relating to the effects of the Exchange (as defined below) on the tax basis of the new note issued by Petrobras Global Finance B.V. ("PGF") to holders of five series of existing notes of PGF in exchange therefor. The information contained herein does not constitute tax advice and does not purport to be complete or to describe the consequences that may apply to particular categories of holders. PGF does not provide tax advice to holders of its debt obligations and the examples provided below are based on certain assumptions and are merely illustrative. Holders should consult their own tax advisers regarding the particular tax consequences of the Exchange to them, including the applicability and effect of all U.S. federal, state and local and foreign tax laws.

Line 10 - CUSIP Numbers:

Old Notes

New Note

71647NAF6, the "4.375% Global Notes due May 2023"

71647NBF5

71647NAM1, the "6.250% Global Notes due March 2024"

71647N AV1, the "5.299% Global Notes due January 2025"

71647NAQ2, the "8.750% Global Notes due May 2026"

71647NAS8, the "7.375% Global Notes due January 2027"

71647N AW9, the "5.999% Global Notes due January 2028"

71647NAZ2, the "5.750% Global Notes due February 2029"

14. Describe the organizational action and, if applicable, the date of the action or the date against which shareholders' ownership is measured for the action.

On September 18, 2019, certain holders of seven outstanding series of PGF notes listed below (collectively, the "Old Notes") exchanged their Old Notes for a combination of PGF's newly issued 5.093% Global Note due 2030 (the "New Note") and cash (the "Exchange"). Each $1000 principal amount of Old Note was exchanged for fifty percent (50%) in principal amount of the New Note plus fifty percent (50%) in cash in the amount shown below.

Exchange of the following series of notes for the New Note:

Old Note

Consideration per $1000 of Old Note Principal

Cash

New Note Principal

4.375%

Global Notes due May 2023

$526.98

$526.98

6.250%

Global Notes due March 2024

$564.62

$564.62

5.299%

Global Notes due January 2025

$551.34

$551.34

8.750%

Global Notes due May 2026

$638.86

$638.86

7.375%

Global Notes due January 2027

$604.79

$604.79

[AM_ACTIVE 401643255_6]

5.999%

Global Notes due January 2028

$336.89

$336.89

5.750%

Global Notes due February 2029

$331.84

$331.84

For more information, see the press release for the final results of the Exchange, available on the PGF's website: https://www.agenciapetrobras.com.br/Materia/ExibirMateria?p_materia=981231&p_editoria=8

15. Describe the quantitative effect of the organizational action on the basis of the security in the hands of a U.S. taxpayer as an adjustment per share or as a percentage of old basis.

PGF will treat all of the exchanges of Old Notes for the New Note as "exchanges" pursuant to the Treasury Regulations that will qualify as recapitalizations.

Recapitalizations generally do not result in the recognition of gain or loss, subject to certain exceptions. However, a holder recognizes gain in a recapitalization equal to the lesser of

  1. the cash amount received (not including any amounts received in respect of accrued and unpaid interest on the Old Notes, which will be taxed as such) plus the fair market value of the "excess principal" amount received (collectively, "boot"), and (ii) the gain realized by the holder. The gain realized by a holder is equal to the excess of (i) the issue price of the New Note received in exchange for Old Notes, plus any cash received (not including any amounts received in respect of accrued and unpaid interest on the Old Notes) over (ii) the holder's tax basis in the Old Notes surrendered in the exchange.

See the response to Question 16 regarding the calculation of initial tax basis in the New

Note.

16. Describe the calculation of the change in basis and the data that supports the calculation, such as the market values of securities and the valuation dates.

Under the rules applicable to recapitalizations, a holder's initial tax basis in the New Note is the same as the holder's tax basis in the Old Notes allocated thereto, increased by the amount of gain recognized by the holder in the exchange, if any, and decreased by the amount of boot received by the holder. As an example, assume that an investor held a $1000 principal amount of an Old Note with a $1,000 tax basis, and exchanged the Old Note for total consideration of $1050 consisting of a New Note with a principal amount of $525 and cash of $525. The holder's initial tax basis in the New Note would be $1,000 (holder's tax basis in the Old Note), increased by $50 (gain recognized), and decreased by $525 (cash received), resulting in a $525 basis in the New Note.

17. List the applicable Internal Revenue Code section(s) and subsection(s) upon which the tax treatment is based.

Section 1001; Section 368(a)(1)(E); Section 354; Section 356; Section 358; Treasury Regulation section 1.1273-2.

2

[AM_ACTIVE 401643255_6]

18. Can any resulting loss be recognized?

A holder that exchanges Old Notes for the New Note in an exchange treated as a recapitalization generally will not be permitted to recognize any loss on the exchange.

19. Provide any other information necessary to implement the adjustment, such as the reportable tax year.

The Exchange was consummated on September 18, 2019. For a holder whose taxable year is the calendar year, the reportable tax year is 2019.

Pursuant to U.S. Treasury Regulation section 1.1273-2(f)(9), PGF has determined that, within the meaning of U.S. Treasury Regulation section 1.1273-2:

  • The New Note is "traded on an established market."
  • The issue price of the New Note is $104.43 per $100 face amount of such New Note, or 104.426%.

3

[AM_ACTIVE 401643255_6]

This is an excerpt of the original content. To continue reading it, access the original document here.

Attachments

Disclaimer

PETROBRAS - Petróleo Brasileiro SA published this content on 22 October 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 October 2019 17:59:07 UTC