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SAO PAULO (Reuters) - Brazil's renewable power generation company Renova Energia SA (RNEW11.SA) is in talks to sell its wind farm Alto Sertao II to the Brazilian unit of AES Corp (AES.N), known as AES Brasil, for 600 million reais to 700 million reais ($214 million), a source with direct knowledge of the matter told Reuters on Monday.
AES Brasil submitted a formal proposal last week, the person said. Due diligence work has also been concluded, the person added. Renova plans to use the proceeds to repay debts.
Units in Renova accelerated their rise after Reuters reported the deal. The unit, a blend of common and preferred shares, rose 22.5 percent to 7.35 reais in early Monday afternoon trading.
The Alto Sertao II wind farm has been in operation since 2014. Renova could also use part of the proceeds to finish construction of 400-megawatt wind farm Alto Sertao III, which is 90 percent built, said the person.
Renova did not immediately respond to requests for comment. AES Brasil said power generation company AES Tiete Energia SA is looking into investment opportunities, but it did not comment directly on Alto Sertao II.
Controlling shareholder Companhia Energetica de Minas Gerais SA (CMIG4.SA) has been trying to find ways to boost Renova's capital since a failed deal late in 2015 with SunEdison Inc (SUNEQ.PK) sharply reduced Renova's expected cash position and compromised long-term investments.
Cemig, as the company is known, is looking to bring in a partner for Renova. The person expects that process to be concluded within the next three months.
Last year, Renova cut its investments and renegotiated terms of power sales to alleviate the cash shortage.
($1 = 3.2752 reais)
Additional reporting by Luciano Costa; Writing by Tatiana Bautzer; Editing by Andrea Ricci and Alan Crosby