SAO PAULO (Reuters) - The No. 1 shareholder in Cia Energética de Minas Gerais SA has decided to oust Chief Executive Bernardo Alvarenga and three senior executives after the debt-laden Brazilian power utility lost dam contracts and took too long to shed assets, two people directly involved in the matter said on Friday.
The Brazilian state of Minas state, which has 51 percent voting control of the utility known as Cemig, will announce the ouster of Alvarenga and three senior vice presidents after their replacements have been found, one of the people said. The move should speed up Cemig’s pending asset sales, the person said.
Alvarenga’s performance as head of Brazil’s No. 3 utility has been “disappointing” in the opinion of Minas state officials including Governor Fernando Pimentel, the person said. Pimentel hired Alvarenga in December to undertake an ambitious debt-reduction and asset-sale program that has not taken off.
“Those were goals Bernardo failed to meet,” said the person, who did not say when the decision to oust Alvarenga was made.
Spokespeople for Cemig and Minas state said the information was not true, but declined further comment. Efforts to speak to Alvarenga and senior vice presidents Dimas Costa, Cesar Vaz and Maura Galuppo Martins were unsuccessful.
Common shares (CMIG3.SA) in the Belo Horizonte, Brazil-based utility seesawed on the news, and closed unchanged at 8 reais on Friday. A list of candidates for Cemig’s top post has been drafted, with the frontrunner being Mauro Meinberg, a former CEO of builder Rodobens Negócios Imobiliários SA (RDNI3.SA), one of the people said.
Meinberg did not immediately respond to requests for comment.
The Pimentel administration and AGC have diverged on how to turn around Cemig, which has been struggling with the burden of low-return acquisitions in the past 15 years and erratic energy industry policies at the start of the decade.
Dissatisfaction with Alvarenga and the other executives mounted in recent weeks after Minas state’s partner in Cemig’s controlling bloc, AGC Energia SA, decided to exit the company, the person said. The team also failed at a government auction this week to retain the Miranda, São Simão, Jaguara and Volta Grande dams.
Linked to shareholder AGC, Vaz serves as Cemig’s senior vice president for a division in charge of mergers and acquisitions strategy. Costa is Cemig’s senior vice president for sales, and Galuppo is a vice president in charge of human resources.
Cemig planned to use proceeds from asset sales to repay 5 billion reais ($1.6 billion) of debt maturing this year as creditors press for a quick downsizing. Cemig is fully disposing of majority stakes in utility Light SA (LIGT3.SA) and renewable power firm Renova Energia SA to focus on in-house generation, transmission and distribution of electricity.
Earlier in the day, Reuters reported that both Cemig and Light were leaning towards exiting their controlling stake in Renova as Brookfield Asset Management Inc considers raising a takeover bid more than initially expected.
According to the people, Alvarenga’s exit would not derail or delay discussions to sell Cemig’s Renova stake. Units of Renova (RNEW11.SA) rallied the most in almost five months on the report.
Brookfield would offer Cemig and Light the equivalent of 11.75 reais per unit of Renova, which consists of one common and two preferred shares.
($1 = 3.1674 reais)
Reporting by Guillermo Parra-Bernal and Luciano Costa; Editing by Andrew Hay