22 de junio de 2016 / 16:41 / hace un año

Brazil probe likely to hamper Eletrobras asset sales

4 MIN. DE LECTURA

SAO PAULO, June 22 (Reuters) - Several graft and bribes probes into Centrais Elétricas Brasileiras SA could delay asset sale plans at Brazil's state-controlled power holding company, analysts and lawyers said on Wednesday, underscoring mounting caution among potential buyers.

The course of federal and internal probes into accusations that government and company officials received bribes or help facilitate contracts and funnel part of the proceeds into ruling coalition parties could deter potential bidders from targeting assets involved in the investigations, lawyers said.

In addition, poor corporate governance standards at the company, known as Eletrobras, and some of the subsidiaries that have been put up for sale remain a concern among interested parties, they said.

The asset sale plan is seen as key to help rebalance the finances of Eletrobras after the ruling Workers Party, which governed Brazil over the past 13 years, forced the company to enter money-losing segments and overspend in others.

"A potential investor evaluating these assets has no way to know if the probes are nearing an end," said Pedro Seraphim, a lawyer at TozziniFreire Advogados. "The question is 'have we found rock bottom?'"

Following the suspension of President Dilma Rousseff last month, the interim government of Vice President Michel Temer is trying to downsize Eletrobras.

Mines and Energy Minister Fernando Coelho Filho wants Eletrobras to sell seven power distribution companies and minority stakes in generation and transmission units. Eletrobras has stakes in 49 electricity generation projects and in 87 power transmission companies, besides the ownership of seven regional power distributors.

Some of the most coveted assets are indeed the ones under investigation, such as stakes in the Belo Monte, Jirau, Santo Antonio and Teles Pires dams.

Eletrobras' delay in unveiling findings of its internal investigation and publishing financial data led the New York Stock Exchange to began a delisting of its American depositary receipts.

'Ruled Out'

Temer's administration is already trying to clean up the company.

Newspaper O Estado de S.Paulo reported that Chief Executive Officer José da Costa Neto could be replaced by Wilson Ferreira Jr., the outgoing CEO of private-sector power utility CPFL Energia SA.

Still, more needs to be done to reinstill investor confidence in Eletrobras, industry executives said.

A top executive at a large, foreign-owned power company operating in Brazil told Reuters under condition of anonymity that the pursuit or acquisition of any Eletrobras asset under investigation has already been ruled out.

Cássio Cavalli, a lawyer at São Paulo-based law firm Veirano Advogados, said the investigations are taking too long. Since Brazil's anti-corruption legislation is relatively new, it still remains difficult for investors to access corruption-related risks.

"No one wants to buy a Trojan Horse," Cavalli said. "Investors want to pay a fair value for an asset, and avoid exposure to potential problems."

An additional hurdle refers to rates of return on some projects.

Luiz Pinguelli Rosa, a former Eletrobras CEO, said the company accepted to participate in projects where those rates were inadequate, only to enable them to go ahead.

"In many cases, it has a rate of return smaller than that of partners in the same project," Rosa said. (Additional reporting and writing by Marcelo Teixeira; Editing by Guillermo Parra-Bernal and Richard Chang)

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