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March 27, 2008 |
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COMPANHIA ENERGETICA: Brazil Cancels Stake Sale The Sao Paulo government has canceled the March 26 auction to privatize Companhia Energetica de Sao Paulo aka Cesp due to lack of interest from potential buyers, various reports say. According to Brazilian clearing house CBLC, pre-qualified bidders failed to deposit financial guarantees for the auction. The five bidders were identified as: -- Suez Tractebel, part of France's Suez Energy International; -- Energias do Brasil, a subsidiary of Portugal's EDP; -- Neoenergia that has Spain's Iberdrola as a key partner; -- U.S. aluminum producer Alcoa Inc; and -- Brazil's energy holding CPFL Energia Business News Americas relates that each pre-qualified bidder had to deposit BRL1.74 billion to participate in the auction. The initial purchase price was BRL6.6 billion. The Financial Times relates that the deal, which would have raised a minimum of BRL6.6 billion, has turned to uncertainty at the last minute following several companies' talks of forming a consortium to bid for the company. Sao Paulo's Governor Jose Serra told reporters that the auction failed because firms had trouble securing loans to bid for Cesp. Power firms had been worried that there was no guarantee Cesp's Jupia and Ilha Solteira plants would secure concession renewals, BNamericas states. The state was unprepared to lower the asset price and possible bidders might have been unable to support the necessary fund because of tightness in credit markets, FT reports, citing Governor Serra. Reuters states that the potential buyers objected to spending nearly BRL20 billion (US$11.5 billion) for the company as concerns grew about the renewal of licenses in two dams, Jupia and Ilha Solteira, that account for nearly two-thirds of Cesp's generation capacity. According to the report, the licenses of the two plants have already been renewed once and cannot be repeated unless the government approved the deal. The plants accounted for about 5,000 megawatts, or two-thirds of the energy Cesp generates at its six dams. Headquartered in Sao Paulo, Brazil, Companhia Energetica de Sao Paulo (BOVESPA: CESP3, CESP5 and CESP6) is the country's third largest power generator, majority owned by the State of Sao Paulo. CESP operates 6 hydroelectric plants with total installed capacity of 7,456 MW and reported net revenues of BRL1,983 million in the last twelve months through Sept. 30, 2006. * * * As reported in the Troubled Company Reporter-Latin America on Oct. 10, 2007, Standard & Poor's Ratings Services raised its ratings on electricity generator Companhia Energetica de Sao Paulo, including its corporate credit rating to 'B' from 'B-'. At the same time, S&P raised its Brazil national scale ratings on CESP to 'brBBB-' from 'brBB'. S&P said the outlook remains positive on both scales. |
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