Privatization Novel Novelties

Brazilian Electricity Regulatory Agency - Eletrobras - announced yesterday (21) to the market that the National Electric Energy Agency (ANEEL), through an order, decided to certify compliance by companies Amazonas Generation and Transmission of Energy SA - Amazonas GT and Amazonas Energy Distribution SA - AmD of the requirement to send documentation, concurring with the unbundling process of Amazonas Distribuição de Energia SA - AmE. "Eletrobras will keep the market informed about the subject matter of this announcement to the market," the company said. In other words, the notice referred to above by Eletrobras relays the information that Aneel approved the process of unbundling, that is, separation of operations, at Amazonas Energia, a subsidiary of the Eletrobras Group. With this in practice, the company will be divided into two parts: Amazonas GT, which will act in the generation and transmission of energy, and Amazonas D (or AmD) that will act offering the service of energy distribution. In this way, the process enables the sale of the distribution part to the private initiative in an auction scheduled for September 26. It is also worth noting that, yesterday, Eletrobras, by means of another notice to the market, pointed out that its Executive Board approved a notice for the sale of 71 equity interests in Special Purpose Companies (SPE), assembled in 18 lots, held on September 27 of that year, at B3. According to Eletrobras, in its report, the initiative to sell the stakes in SPEs is part of the "Financial Discipline" pillar, one of the five pillars established in the Company's Business and Management Plan for the 2018-2022 five-year period approved by its Board of Directors in December 2017. "This operation aims to enable Eletrobras and its subsidiaries to reduce their financial leverage, reducing their Net Debt / EBITDA indicators to the levels usually practiced by the market," said the state-owned company. Currently, as you can see below, its Net Debt / EBITDA indicator is at 6x, in fact well above the level which we consider to be healthy for any company. In addition, still in the scope of the communiqué made by the state, the holdings will be grouped into 18 lots, which include wind power assets and transmission lines. A minimum amount of R $ 3.1 billion was stipulated for all lots. Credit Suisse was hired by Eletrobras to provide advisory services for the sale of the equity interests. In our view, this fact can be interpreted positively by investors who appreciate the strategy of Value Investing, given that, according to the historical data and facts of the capital market, companies that undergo a process of privatization tend to present results better over time. However, while there is nothing yet consolidated, we prefer to wait outside the unfolding of the facts about the company and its subsidiaries.