Brazil’s Eletrobras privatization may occur by mid-August

RIO DE JANEIRO, BRAZIL – On May 17, Eletrobras CEO Rodrigo Limp said that the completion of the company’s privatization operation could occur by mid-August in a favorable scenario.

“This is the most favorable scenario,” Limp said in an online press conference about the first-quarter results, stating that this is the best market window, coinciding with the vacations in the Northern Hemisphere and before the election period in Brazil, which represents, in his view, more benefits for the company and the Union.

He said he is waiting for the decision of the Federal Audit Court (TCU) in a meeting scheduled for May 18 to proceed with the company’s capitalization process. After the court’s approval, it will still be necessary to conclude the preparation of all the prospectus documentation and conduct an independent audit assessment.

The Financial and Investor Relations Director, Elvira Presta, said it is hasty to talk about dates for the roadshow (presentation of a company and its products to investors). “We will only be able to set up the schedule [of the road show] after TCU’s approval,” added Elvira.

SANTO ANTÔNIO

Limp admitted that the legal dispute lost to creditors for the Santo Antônio plant, where Eletrobras participates through its subsidiary Furnas, could have repercussions on the privatization. He acknowledged that, in this case, Eletrobras would have to evaluate a possible negotiation with Santo Antônio’s creditors.

“There are no conclusions yet on the impact on the leverage of the company [value of debt in the capital structure of the business],” he indicated.

Located on the Madeira River in Porto Velho (Rondônia), the Santo Antônio plant has 3,568.3 megawatts (MW) installed capacity. According to Limp, the plant’s debt reaches R$18 billion (US$3.6 billion).

If Eletrobras takes control of the company, the debt will be added to that of the holding company in the electric sector.

For Limp, however, the level of debt of Eletrobras today “is comfortable”.

The company’s recurrent net debt was R$20.6 billion at the end of March 2022, showing stability compared to the same quarter of 2021. Limp pointed out that this results from a financial discipline that started in 2016.

With information from Agência Brasil