TCU Rapporteur proposes Eletrobras’ renationalization mechanism in ‘poison pill’

The rapporteur of the process that deals with the privatization of Eletrobras in the TCU (Union Court of Auditors), Minister Aroldo Cedraz, proposes a change in the original proposal that makes room for the renationalization of the company, if the federal government deems it strategic.

Cedraz’s vote was made available to the other ministers a few hours before the trial, scheduled for this Wednesday (20).

The change is in the passage that deals with the so-called “poison pill” (poison pill, in the original English term).

“Poison pills” are common defensive measures in the financial market, taken by publicly traded companies to prevent a shareholder from suddenly becoming a majority, with a hostile offer. In this case, an attempt is made to prevent a new controller from making decisions that harm the other shareholders.

In the modeling presented by BNDES (National Bank for Economic and Social Development), the new Eletrobras, after capitalization in stock exchanges, would have its “poison pill”. According to the proposed rule, a shareholder that exceeds certain limits of shareholding participation would be penalized with the obligation to carry out a public offer for the acquisition of the quotas of the other shareholders. The value of this offer would be up to three times higher than the highest historical share price on the market.

Those who had access to the documents call the “poison pill” an anti-Lula clause, alluding to the fact that former president Luiz Inácio Lula da Silva, who leads the polls for the presidential election, has already declared that the party does not support the operation. in an interview with Sheetdeputy Gleisi Hoffmann, president of the PT, stated that if the party wins the elections and the privatization of Eletrobras has been completed, the process would be reviewed.

In his vote, Justice Aroldo Cedraz agrees that the “poison pill”, as originally worded, is important to avoid a hostile takeover of Eletrobras by a private investor, but considers that it would have a setback that cannot be ignored: the mechanism, as proposed, would also be applied to public authorities, which he does not consider appropriate.

The rapporteur’s assessment is that the State has guaranteed by the Constitution the prerogative of retaking control of Eletrobras, if there is a strategic need that justifies this decision.

Therefore, he proposes the revision of the “poison pill” clause in order to preserve the prerogative of the federal government to, at any time, reverse the process of privatization of Eletrobras, upon payment of fair, but not exorbitant, amounts – to the other shareholders.

This afternoon’s trial tends to promote intense debate in the courtroom.

Minister Vital do Rêgo Filho announced that he intends to ask for a view, as he understands that he needs time to evaluate the rapporteur’s vote, which in his assessment was presented at the last minute.

In the previous judgment, Minister Rêgo questioned the formula for calculating the value of the state-owned company, assessing which company would be worth R$ 130 billion and not the R$ 67 billion defined.

According to market analysts, who follow the procedures, the process needs to be concluded in the first half of the year, before the electoral campaign enters the decisive phase and alienates investors.

With a two-month stoppage, the trial could be delayed until the end of June, delaying the entire process. After the judgment at the TCU, it will still be necessary to follow the rite of preparation for the operation in the capital market. If the procedures are prolonged until August, privatization risks being delayed until 2023.

The largest energy company in Latin America, Eletrobras is the owner or partner of the most important hydroelectric plants in Brazil, such as Belo Monte and Furnas, and is still responsible for almost 44% of the country’s transmission system.

The sale on stock exchanges seeks to dilute the Union’s participation, which needs to fall from 72% to 45%, raise funds to pay the grant to the State and transform the company into a corporation. No shareholder may hold more than 10% of the total shares.