Lobo de Rizzo lights up Cemig’s US$900 million debt tap

16 . August . 2019 |

Lobo de Rizzo Advogados has helped Minas Gerais state-owned electricity company Cemig raise 3.6 billion reais (US$900) through a debentures issuance on São Paulo’s capital markets.

Underwriters BB Investimentos and Banco Bradesco BBI also relied on Lobo de Rizzo. The deal closed on 22 July.

The issuance was divided into two series. The first, a 2.1 billion reais (US$525 million) issuance, is due in five years while the other, worth 1.5 billion reais (US$375 million), expires in seven.

The proceeds will refinance debts owed by Cemig’s distribution arm, listed as Cemig D. Following the deal, the company’s average debt payment term was increased from 2.9 to 5.1 years.

Cemig is also using a divestment programme to tackle debt. In July, the company reducedits stake in Rio de Janeiro’s utility company from 49% to 21%. Other assets will also be sold off.

In the longer-term, the state of Minas Gerais plans to privatise the company, which has a quasi-monopoly over the local electricity market (Brazil’s third biggest behind the states of São Paulo and Rio de Janeiro). Its privatisation needs approval from the state’s legislature.

Brazil’s electricity private sector has recently been diversified by privatisations from Eletrobras. In October 2018, it sold wind farm and transmission lines projects. It also divested stakes in five distribution companies, including its interest in the state of Piauí’s power distributor, Cepisa.

The federal government has already announced plans to sell its controlling stake in Eletrobras through a yet to be scheduled equity offer on Brazil’s stock exchange.

Counsel to Cemig, BB Investimentos and Banco Bradesco BBI

In-house counsel to BB Investimentos – Cassia Regina Truppel

In-house counsel to Bradesco BBI – Andreia Leite Rhormens Natel

Lobo de Rizzo Advogados

Partners Milton Pinatti and Caio Cossermelli, and associates Amanda Fajnzylber Ammar and Isabela Magalhães

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