Brazil’s Equatorial shares soar after announcing purchase of Enel-owned Celg-D By Reuters


©Reuters. File image of the logo of the Italian energy multinational Enel at the Milan headquarters

By Gabriel Araújo

SAO PAULO, Sept 23 (Reuters) – Brazilian power company Equatorial Energia SA has agreed to acquire local power distributor Celg-D, a securities filing showed on Friday, ending control of the Italian company. In the (BIT:) SpA about a company that has had quality problems for a long time.

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 in the Brazilian stock index, which was down 2%.

The analysts of Credit Suisse (SIX:) said that the operation was positive, however, they pointed out that information regarding the financing was lacking.

JPMorgan (NYSE:) 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 filing with the SEC that it expects to record a loss of about $990 million in its consolidated net income 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)

(Reporting by Gabriel Araujo; edited in Spanish by Aida Peláez-Fernández)

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