SAO PAULO (Reuters) - Renova Energia SA’s (RNEW11.SA) imminent sale of a wind farm project will likely prompt the Brazilian renewable power company to put on hold the search for a new partner for an undetermined period, a person with direct knowledge of the plan said on Wednesday.
According to the person, the board of Cia Energética de Minas Gerais SA (CMIG4.SA), Renova’s largest shareholder, has convened a meeting for later in the day to approve the sale of Renova’s Alto Sertao II project to AES Corp’s (AES.N) Brazilian unit for 700 million reais (179.78 million pounds).
The project’s sale could be announced on Thursday, said the person, who requested anonymity since the plan is confidential. Proceeds from the Alto Sertao II sale could be used to finish construction of 400-megawatt wind farm Alto Sertao III and repay maturing debt, the person said.
The deal also removes a great deal of pressure on Renova (RNEW11.SA) and controlling shareholder Cemig to find a new partner for the renewable power generation firm. Since a plan to team up with SunEdison Inc (SUNEQ.PK) for several projects late in 2015, Renova has struggled to preserve cash and maintain long-term investments.
AES Brasil did not have an immediate comment. Renova declined to comment. A press official for Cemig did not immediately respond to calls or messages seeking comment.
According to the person, the sale of Alto Sertão II gives Renova “enough oxygen to make it without a new partner for now, since it resolves any cash woes for the short and medium run.”
Reuters reported in June that Renova was looking for a new partner to join the bloc of controlling shareholders. In December, people told Reuters that the search for a new partner for Renova was under way and might be concluded within three months.
The units (RNEW11.SA), a blend of Renova’s common and preferred shares, rose from intraday lows on the news. The stock was up 1.7 percent to 6.50 reais in early afternoon trading on Wednesday.
Additional reporting by Luciano Costa in São Paulo; Editing by Phil Berlowitz