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UPDATE 1-Brazil's Cemig will sell stocks to retain dam -congressman
September 25, 2017 / 11:11 PM / 3 months ago

UPDATE 1-Brazil's Cemig will sell stocks to retain dam -congressman

(Adds information on stock offering, comments from congressman, context on auction this week)

By Luciano Costa

SAO PAULO, Sept 25 (Reuters) - Brazil’s second largest utility launched a last-ditch attempt on Monday to try to retain control of at least one of the four hydroelectric dams the federal government wants to privatize in an auction on Wednesday.

Cemig, or Companhia Energética de Minas Gerais, said it plans to sell as many as 200 million new shares to raise up to 1 billion reais ($316.57 million) to financially strengthen the company controlled by the state of Minas Gerais.

Later on Monday, congressman Fabio Ramalho, a representative from Minas Gerais state and a member of President Michel Temer‘S PMDB party, said Cemig was in talks with the federal government to exclude Miranda dam from this week’s auction.

Ramalho said Cemig would use proceeds from the share offering to pay a 1.1 billion-real signing bonus to retain Miranda, a 408-megawatt plant.

Cemig has been trying for months to avoid the auction of the expired operating licenses for the four dams it operates. The Temer administration, which has embarked on a privatization offensive to raise money and cut Brazil’s budget deficit, announced it would offer new licenses for investors.

The Minas Gerais company would like to keep the dams, but it lacks cash as it tries to cut a large debt load.

In addition to the proposal to keep Miranda dam out of the auction, Ramalho said Cemig would take part in the auction and bid through its joint venture with mining company Vale SA , called Aliança Energia SA.

There was no immediate comment from Cemig on the congressman’s remarks.

Vale said it was evaluating taking part in the auction using the Aliança joint venture, as an alternative to secure power supplies at reasonable cost.

Ramalho also said Cemig has secured a credit line with Citibank to obtain 1.9 billion reais more and pay a signing bonus to retain a second dam, the 424-megawatt Jaguara plant. ($1 = 3.1589 reais) (Reporting by Luciano Costa; Additional reporting and writing by Marcelo Teixeira; Editing by Jonathan Oatis)

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