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Financial News: ELETROBRAS: Privatization Proposition Will Be Presented To

ELETROBRAS: Privatization Proposition Will Be Presented To Board

08/22/2017 - 17:34:00 (RTTNews)

(RTTNews) - The Brazilian Ministry of Mines and Energy proposition to privatize the power generator and distributor Eletrobras will be sent to the company's board of directors for analysis.

"We are going to send the proposition to the council today. They will analyze and see what's best," said Fernando Coelho Filho, Brazil's minister of Mines and Energy.

Eletrobras' privatization proposition does not yet have a defined model, but will be within the framework of Brazil's privatization act, said the minister.

In a press conference, Coelho Filho stated that despite the lack of modeling definition the announcement was aimed to show that for everything is being done with transparency and clarity, since the company is listed on the Brazilian Stock Exchange and that the decision on the subject will be taken based on the market.

It is estimated that the sale of the control by the federal government under the so-called Partnership and Investment Program (PPI) would raise up to R$ 20 billion.

Paulo Pedrosa, the Executive Secretary of the Ministry of Mines and Energy, stressed that the proposition is in line with what he called as a favorable environment for investments in Brazil.

Although the proposition, Eletrobras' asset sales process will move ahead, Coelho Filho noted. "The sale process continues normally and this proposition does not change anything," said the minister.

Eletrobras' business and management master plan for the 2017-2021 period, released in November 2016, provides for the sale of interests in distributors and in generation and transmission projects, its subsidiaries, as well as its interests in specific purpose companies (SPEs).

Meanwhile, Eletrobras' net debt is expected to fall sharply if the company succeeds in its asset sales plan, said Wilson Ferreira, the company's chief executive officer. At the end of the second quarter, Eletrobras' debt was at R$23.423 billion (US$ 7.427 billion).

"If we succeed in the program, that debt will fall a lot, and the expectation is that the leverage will be below four times," the executive said.

Eletrobras's privatization proposition is contested by José Luiz Alquéres, the former chairman of the board of the company.

"It is reprehensible to privatize Eletrobras just to benefit the fiscal budget. The ideal model should be the sale in lots, by subsidiaries," he said.

Alquéres believes that the best format would be to dispose of Eletrosul, Furnas and Eletronorte separately, but not including Chesf and Eletronuclear, which are considered strategic assets in the Brazilian electricity system.

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