Brazil’s Equatorial shares soar after announcing purchase of Celg-D, owned by Enel

By Gabriel Araújo

ODSPAULSep 23 – Brazilian power company Equatorial Energia SA has agreed to acquire local electricity distributor Celg-D, a securities filing showed on Friday, ending Italy’s Enel SpA’s control of a company it has long owned. quality problems.

Equatorial will pay 1.58 billion reais ($309 million) for Celg-D in a deal that also includes a 5.71 billion reais debt restructuring, while Enel said it will record a $990 million loss related to the transaction. .

Analysts liked the price and Equatorial shares rose 7%, becoming the biggest gainer on Brazil’s Bovespa stock index, which was down 2%.

Analysts at Credit Suisse said the deal was positive, however they noted that information regarding the financing was lacking.

JPMorgan also praised the deal, saying the price was better than expected.

“We believe the transaction will not only be cumulative for Equatorial, but will also rebuild the company’s equity allocation prestige with the investment community following last year’s costly acquisition of Echoenergia,” its economists said.

Enel paid 2.1 billion reais to buy Celg-D in a privatization in 2016, however, the company has ranked among the worst Brazilian power distributors in terms of service quality, not reaching some minimum regulatory levels, according to the energy regulator. Anel energy.

Enel Americas SA said in a document filed with the SEQ which expects to record a loss of about 990 million dollars in its consolidated net result as a result of the transaction.

Milan-listed shares of Enel were down 3.4% in afternoon trading and shares of the Chile-listed Americas subsidiary were flat at the start of the session.

Enel said that the parties have also agreed on some possible compensation payments depending on the outcome of certain contingencies not yet quantifiable that are ongoing.

The operation still requires approval from Brazilian regulators.

(1 dollar = 5.1171 reais)

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