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Why Golar LNG Dropped 10% Today

By Howard Smith – Sep 28, 2020 at 3:26PM

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Allegations against the CEO of a joint-venture subsidiary is impacting money-raising plans.

What happened

Shares of liquid natural gas transportation company Golar LNG (GLNG -0.76%) dropped as much as 12% today before settling down at 10% as of 3:10 p.m. EDT.

So what

This follows a 32% plunge last Thursday after the company commented on news regarding bribery allegations involving previous work of the chief executive officer of Hygo Energy Transitions, a joint-venture between Golar and private equity firm Stonepeak Infrastructure Partners. Hygo, which was scheduled to have its initial public offering (IPO) on Friday, postponed the offering. 

Liquified natural gas tanker with smaller boats and buoy in foreground.

Image source: Getty Images.

The bribery allegations against current Hygo CEO Eduardo Antonello stem from a Brazilian enforcement operation called "Operation Car Wash." At the time of the alleged conduct, Mr. Antonello represented Seadrill Group (SDRL), a leader in offshore drilling, when a Brazilian shipping company allegedly paid $40 million in bribes to win a $2.7 billion contract from Brazilian oil company Petrobras (PBR -2.81%)

According to the Federal Public Ministry, the shipping company allegedly hired a lobbyist to get inside information from Petrobras to help create a winning bid and passed that information to Mr. Antonello, who represented Seadrill at the time. 

Golar said it would still initiate a review to determine whether there have been any "deviations from its culture of compliance" related to Mr. Antonello's work with Hygo.

Hygo had priced its planned IPO on Thursday when the news of the alleged conduct was reported. The company, which provides integrated downstream liquefied natural gas solutions in Brazil, was seeking to raise $450 million in the deal. No update has been provided on when, or if, the offering will take place. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Golar LNG Stock Quote
Golar LNG
GLNG
$24.77 (-0.76%) $0.19
Petroleo Brasileiro Stock Quote
Petroleo Brasileiro
PBR
$11.08 (-2.81%) $0.32
SeaDrill Limited Stock Quote
SeaDrill Limited
SDRL

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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