Ministers will discuss modeling of primary and secondary offers of Union shares in Eletrobras
THE TCU (Union Court of Auditors) set for May 18 the resumption of the trial of the modeling of primary and secondary offers of Union shares in Eletrobras. Both aim to reduce the Union’s share in the company’s share capital, from around 60%, to less than 45%.
This is the 2nd phase of judgment of Eletrobras privatization by the court and also the 2nd attempt by the court to appreciate this process.
On April 20, Minister Vital do Rêgo asked for a 60-day review of the process — more time for analysis —, but agreed to reduce the deadline to 20 days. He alleged the following inconsistencies in the process:
- methodological flaws that resulted in a potential underestimation of the value added to the contracts in the order of R$ 63 billion;
- that Brazilian citizens will have to pay more in their electricity bills, monthly and for years on end;
there is not enough maturity in the numbers and studies presented to minimally support the privatization of Eletrobras; is that - the cash flows presented by BNDES, in the last ten years of the period used, which goes until 2051, register a reduction of investments until reaching the null value.
The minister said that he would use the extra time to talk to government agents and investigate the flaws identified in the process.
With the postponement of the judgment, the sale of shares will no longer take place in the 1st half of 2022. Power 360 found that the next “window of opportunity” for the offer will be between July and August. This is because the results of Eletrobras for the first quarter of this year will have to be considered, which should only be released on May 16th.
by the rules of US Securities and Exchange Commission (US Securities and Exchange Commission), from that date, the company has up to 135 days to make the public offering. Eletrobras will be capitalized both on the B3, in São Paulo, and on the New York Stock Exchange.
The rapporteur of the process, Aroldo Cedraz, determined that the government review the minimum price of the company’s share, used as a reference for the operation. He also established that:
- the Ministry of Mines and Energy publishes studies of the economic and financial impacts of the sale of Eletrobras;
- the BNDES (National Bank for Economic and Social Development), until the share pricing stage, in the Eletrobras privatization process, promotes long-term reference price adjustments used for projecting Eletrobras’ generation revenues and also makes the other corrections pointed out in the TCU ruling;
- the government informs the Securities and Exchange Commission to approve the adoption of the measures it deems appropriate.
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