S&P's Petrobras Energia ratings unaffected

Standard & Poor's said its rating on Petrobras Energia SA (B/negative watch) would not be affected by the company's recently announced accounting adjustment that will reduce its $2.5 billion reported net worth by $350 million as of Dec. 31. The adjustment will be reflected during fiscal 2006 and follows recent changes in the Argentine accounting rules on some asset valuation differences between accounting and tax rules, mainly inflation adjustment in fixed assets.

Reflecting this change, the company's board of directors recently decided that a deferred tax liability would be created, reducing Petrobras Energia's current net worth by the above-mentioned amount. S&P said the ratings are unaffected by this change because the adjustment represents an accounting issue that does not affect current or future cash generation or projected income tax payments.

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