Paraná wants to privatize Copel in the ‘corporation’ model; stocks skyrocket

The electricity company from Paraná, Copel, informed this Monday (21) that it received from the government of Paraná, its controller, a statement about the intention of the State to transform the electric company into a company with dispersed capital, without a controlling shareholder, which led to stocks soaring 24% this afternoon.

In practice, the corporate change to a “corporation” model, like the operation of Eletrobras, means privatizing the electricity company, since the government would no longer be controlling, which requires approval by the local legislature.

The announcement comes three weeks after the State announced plans to study a potential operation to “optimize investments” in electricity, which was interpreted by market agents as a sign that, for the first time, the government was looking at the possibility of privatizing to Copel.

According to this Monday’s communiqué, according to studies carried out by the CCEE (Conselho de Controle das Empresas Estadual), the government of Paraná would remain with a participation of at least 15% of the total share capital of the electric company, and 10% of the total number of votes conferred by the shares entitled to vote.

Currently, the State holds 69.7% of the ON shares of the electric company, equivalent to 31.1% of the total share capital.

The transformation of Copel into a “corporation” would take place through a secondary public offering of shares and/or units, as per the plan of the government of Paraná.

Around 4 pm, Copel’s shares soared 22.35% and led the highs on the Brazilian Stock Exchange. State companies advanced amid the optimism generated by Paraná. Cemig, an energy company from Minas Gerais, advanced 8.59%. Sabesp, state sanitation company in São Paulo, jumped 6.52%.

In a report, the UBS bank said that an eventual transformation of Copel into a “corporation” would have the potential to increase the value of the shares, since the “cost of equity” of the company should decrease.

One analyst, who asked not to be identified, said that the government of Ratinho Júnior (PSD), re-elected in October for a second term, has a local parliamentary majority, which tends to facilitate privatization plans.

According to this Monday’s communiqué, the State will present “in due time” a bill to be deliberated by the Paraná legislature.

Copel is one of the few state-owned electricity companies in the country, along with Celesc (SC) and Cemig (MG) —in the case of Cemig, the privatization plans announced by the government of Romeu Zema have not made concrete progress in recent years , although the now re-elected governor has indicated that he maintains the proposal.

During his first term in the government of Paraná, Ratinho Júnior had already promoted important transformations at Copel, reforming the company’s bylaws, approving a new dividend policy and proceeding with the divestments of non-strategic assets.

In order to become a “corporation”, Copel’s bylaws must be amended in order to reflect certain assumptions, such as providing that no shareholder or group of shareholders may cast votes in excess of 10% of the total number of votes conferred by common shares in assembly deliberations.

A special class preferred share, exclusively owned by the State of Paraná, should also be created, which will grant veto power in resolutions of the general meeting regarding some matters.

This special action also authorizes managers to approve and execute Copel Distribuição’s Annual Investment Plan if investments, as of this tariff cycle, do not reach a minimum value of the tariff revision cycle.

“The Operation aims to raise financial resources to meet the investment needs of the State of Paraná, as well as to increase the value of its remaining shares held in Copel”, says the statement received from the controlling shareholder.

With Clayton Castelani