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Electrobras leads Brazilian privatizations

Electrobras, considered the largest energy company in Latin America, is leading Brazil‘s extensive privatization package.

By 2022, the Brazilian government expects the Programa de Parcerias de Investimentos (PPI) to encompass 153 active projects, totaling 389.3 billion reais in investments, including 26 airports, 10 highways and 4 railway concessions.

In addition, the federal government will assist states and municipalities in carrying out other water supply and waste disposal concession projects.

On July 12, 2021, the law authorizing the privatization of the state-owned electricity holding company Eletrobras (the “Eletrobras Privatization Law”) entered into force.

The privatization is intended to enable the company to improve its investment capacity in electricity generation and transmission and to contribute to the development of the Brazilian energy sector.

On February 15, 2022, the privatization was approved by the Federal Court of Accounts (Tribunal de Contas da Uniao or “TCU“) and on February 22, 2022, Eletrobras’ shareholders approved the privatization model proposed by the company’s management, which involved a public offering of the company’s shares in Brazil and abroad to reduce the federal government’s voting equity interest to a percentage equal to or less than 45 percent.

Also, on May 18, 2022, the Federal Court of Auditors approved, by 7 votes to 1, the Eletrobras privatization model.

Thus, on June 9, 2022, Eletrobras fixed the price of its public offering of 697,476,856 ordinary shares, including 9,783,100 American Depositary Shares (“ADSs”), without taking into account the over-allotment option.

Electrobras

The price per share to the public was set at R$42.00, resulting in a total price of R$29,294,027,952.00.

The ADSs were offered and sold to the public at a price of US$ 8.63 per ADS (including an issue commission of US$ 0.05 per ADS).

In addition, BNDES Participações S.A. – BNDESPAR, as a shareholder of Eletrobras, made a secondary offering of 69,801,516 shares owned by BNDESPAR at the same price as the primary offering.

Settlement of the offerings occurred on June 14, 2022 (except for the common shares subject to the over-allotment option, which if exercised is expected to be settled on July 14, 2022).

As a result of these offerings, the federal government’s interest in Eletrobras’ voting capital decreased from 72% to 45%, prior to the potential exercise of the over-allotment option.

 

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