June 20, 2016 / 10:12 PM / in 2 years

UPDATE 1-Brazil's Santo Antonio power plant partners looking to sell stakes

(Adds comments from partners, project information, context)

SAO PAULO, June 20 (Reuters) - Brazil’s Santo Antônio Energia SA, one of the five largest hydroelectric projects in the country, said on Monday it has been informed by some of its shareholders of plans to sell their stakes in the dam, according to a securities filing.

Santo Antônio is among the power plants being built in the Amazon region, along with Jirau and Belo Monte, in a drive by Brazil to secure future energy supply.

It will have a total generation capacity of 3,568 megawatts (MW) when fully operational next year. Total investment is projected at 17.5 billion reais ($5.14 billion).

“The management was informed by some shareholders of their intention to sell their stakes,” said Luiz Pereira de Araújo Filho, Santo Antonio’s investor relations director.

“This issue is being handled directly by shareholders and not by the company’s management,” he said.

The announcement comes after a report last week by local paper Valor Economico that stakeholders such as engineering groups Odebrecht SA and Andrade Gutierrez were in talks to sell their stakes.

The paper cited Chinese energy companies State Grid Corp and Three Gorges as possible buyers and said the deal could fetch as much as 9 billion reais for a controlling stake.

Santo Antonio said in the securities filing that it has no knowledge of the possible sale price if a deal is reached.

Odebrecht, Andrade Gutierrez and Companhia Energética de Minas Gerais, or Cemig, have 51 percent of Madeira Energia SA (MESA), the controlling group.

Furnas Centrais Eletricas SA, a subsidiary of state-controlled power holding Centrais Eletricas Brasileiras SA , and an investment fund from state bank Caixa Economica Federal are also stakeholders.

Odebrecht’s energy arm confirmed the talks.

“Odebrecht Energia do Brasil confirms the existence of negotiations with some companies in the competitive tender to sell a 28.6 percent stake in Santo Antonio Energia,” the company said after a request for comment.

“We are currently in the process of signing non-disclosure agreements with interested companies,” Odebrecht said.

Andrade Gutierrez declined to comment. Cemig denied it is willing to sell its stake.

Furnas said it will wait for any result of the talks and then evaluate the convenience of exercising a ‘tag along’ right.

According to the shareholders agreement, the company would have the right to sell its stake at the same conditions reached by the controlling group.

State Grid did not immediate respond to a request for comment.

“We are always looking at opportunities in the Brazilian power sector, but will not comment on market rumors,” Three Gorges said. (Reporting by Marcelo Teixeira; Editing by Phil Berlowitz and Bernard Orr)

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