Eletrobras defends privatization in the shortest possible time

The president of Eletrobras, Rodrigo Limp, defended this Tuesday (17) that the privatization of the company be carried out “as soon as possible”, to avoid the risk of loss of value with the holidays in the Northern Hemisphere and the proximity to the presidential elections. in Brazil.

The process will be analyzed again by the TCU (Union Court of Auditors) this Wednesday (18) and court sources say that there is already consensus for approval. The timing of the share offering, however, will depend on the complexity of the recommendations made at the trial.

“There is the vacation period in the Northern Hemisphere that ends up alienating investors and the proximity to the electoral period. That is why we think it is positive for the Union that the operation takes place in the shortest possible time”, said Limp.

“It is a market window that results in more benefits not only for the company but also for the Union, which is the company’s majority shareholder”, he added, in an interview to detail the profit of R$ 2.7 billion recorded by the company in the first quarter.

The company expected to offer the shares even before the release of the balance sheet, using the consolidated data for 2021 as a reference, but a request for a view from TCU Minister Vital do Rego forced the postponement of the operation.

This Wednesday, the ministers will evaluate the model of the offer and the minimum price of the shares. In the interview, Limp said the company is still working to complete the transaction in the second quarter, but that the timeline depends on the outcome of the trial.

“It is difficult to estimate a timeframe because we do not know which recommendations and determinations will come to Eletrobras, which will go to BNDES [Banco Nacional de Desenvolvimento Econômico e Social]which for MME [Ministério de Minas e Energia] and which ones for the CNPE [Conselho Nacional de Política Energética]”.

In privatization, the Union wants to reduce its participation from the current 72% to around 45%. It is expected to generate BRL 25 billion in grants paid in cash to the Union and a five-year deposit of BRL 32 billion to reduce the pressure of subsidies on the electricity bill.

The process faces resistance from the opposition and workers at the state-owned company, who went to the SEC (the US stock market regulator) to denounce the company for allegedly omitting a billion-dollar risk to shareholders.

They allege that the company has been postponing the disclosure of details about the assistance to the Santo Antônio plant, one of the largest in the country, which lost arbitration over a dispute of R$ 1.5 billion with construction companies responsible for the work.

The imbroglio will cost Furnas, a subsidiary of Eletrobras that is a partner in the plant, at least R$ 700 million, already provisioned in the balance sheet for the fourth quarter of 2021. The expectation is that other partners will not participate in the rescue, which could lead the state-owned company to take control of the project.

In Tuesday’s interview, Limp said that the company has not yet been officially notified of the process at the SEC and defended that it had acted transparently in the case, complying with the requirements for disclosure of notices to the market. “We have a lot of security in the procedures,” he said.

According to him, the risks are also already identified in an annual form delivered to the Stock Exchanges and will be detailed in the prospectus for the stock offering.

Limp said he assesses that the crisis at the Santo Antônio plant does not affect capitalization, even under the risk that Eletrobras assumes all the plant’s debt on its balance sheet, if it becomes the majority in the project.

Furnas currently holds 43% of the shares. Cemig, which has 8%, has already announced that it will not participate in the capital increase to help the company. “We understand that today our indebtedness is comfortable”, said the Executive.

At the end of the first quarter, the company’s leverage indicator, which measures how much cash generation it needs to pay off debt, was at 1x, below the 2.5x considered as a limit by its strategic plan.

The government is counting on the capitalization of Eletrobras to demonstrate that an important part of the privatization program has been carried out, especially among voters linked to the financial market, whose spirits have cooled in recent months.