Business Context and Reporting Period
This Form 6-K filing covers the month of March 2012 for Energy Company of Minas Gerais (CEMIG), a Brazilian foreign private issuer. The report summarizes principal decisions from Board of Directors meetings held on January 31, 2012, and February 15, 2012, alongside material announcements regarding strategic investments and debt issuance.
Key Financial Metrics and Capital Structure
The filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period. Financial data is limited to capital market activities:
- Debt Issuance: CEMIG Geração e Transmissão S.A. (CEMIG GT), a wholly-owned subsidiary, is proceeding with a public distribution of up to R$ 1,000,000,000.00 (one billion Reais) in unsecured, non-convertible debentures (Third Issue).
- Investment: CEMIG signed an agreement to subscribe to 40% of the total share capital of Gás Brasiliano Distribuidora S.A. (GBD).
- Credit Rating: The debenture issue carries a risk rating of Aa1.br from Moody's América Latina.
Material Changes and Strategic Actions
Significant corporate actions reported include:
- Strategic Investment: On February 8, 2012, CEMIG, Petrobras, and GBD signed an Investment Agreement for CEMIG to acquire a 40% stake in GBD, subject to prior conditions.
- Debt Offering Terms: Changes were made to the CEMIG GT Third Debenture Issue to comply with CVM requirements and Anbima regulations. Key changes include:
- Registration of Second and Third Series debentures in the Anbima Fixed Income Novo Mercado.
- Partial exemption for the Third Series regarding investor concentration limits (minimum 5 investors, max 20% individual participation).
- Exclusion of a waiver regarding the right of debenture holders to decide on capital reduction for the transfer of CEMIG's holding in Taesa.
- Board Decisions: The Board approved the 2012 Budget Proposal, guarantee insurance contracting, and a conduct adjustment undertaking with the Minas Gerais State Public Attorneys' Office.
Outlook, Risks, and Contingencies
Management commentary is limited to the execution of the debenture offering and the GBD investment. Key risks and contingencies identified include:
- Liquidity Risk: The debenture offering utilizes a "communicating vessels" system for allocation between series, which could affect the liquidity of series with lower demand.
- Regulatory Contingency: The GBD investment is subject to the fulfillment of prior conditions.
- Early Redemption: Obligatory early redemption events for the Third Series debentures were adjusted based on the partial exemption granted by Anbima.
- Legal Settlements: The company signed a conduct adjustment undertaking with the State Public Attorneys' Office and a free lease agreement with the State Forests Institute.
Investor Verification Checklist
- Verify the final closing status and subscription levels of the R$ 1 billion CEMIG GT debenture issue.
- Confirm the fulfillment of conditions precedent for the 40% acquisition of Gás Brasiliano Distribuidora S.A. (GBD).
- Review the full Preliminary Prospectus for the CEMIG GT Third Issue to understand the specific terms of the "communicating vessels" allocation system.
- Monitor the impact of the conduct adjustment undertaking with the Minas Gerais State Public Attorneys' Office on future operations.
- Check for updates on the transfer of CEMIG's holding in Transmissora Aliança de Energia Elétrica (Taesa) to the Guarantor, as this was a subject of the excluded waiver.