Business Context and Reporting Period
This Form 6-K filing by Energy Company of Minas Gerais (CEMIG) covers the month of October 2009. The document primarily summarizes Board of Directors' decisions from September 24, 2009, and provides updates on significant corporate transactions, regulatory approvals, and responses to market inquiries regarding potential acquisitions.
Key Financial Metrics and Capital Activities
The filing does not contain standard quarterly financial statements (revenue, profit, or cash flow). However, it details significant capital market activities and transaction values:
- Debt Issuance: Cemig Geração e Transmissão S.A. (Cemig GT) commenced the public distribution of 270 commercial promissory notes (Third Issue) with a total value of R$ 2.7 billion (approx. $1.35 billion USD at 2009 rates). The notes carry a 180-day maturity and interest at 113% of the DI rate.
- Investment Fund: The public distribution of units for the "Fundo de Investimento em Participações Coliseu" (FIP Coliseu) was completed, raising R$ 1.33 billion.
- Acquisition Pricing: The agreed purchase price for the acquisition of Terna Participações S.A. (Terna) from Terna S.p.A. is R$ 2.33 billion (approx. $1.16 billion USD), subject to dividend adjustments.
- Use of Proceeds: Funds from the promissory notes are designated for capital injection into Transmissora do Atlântico de Energia Elétrica S.A. (Taesa) to facilitate the Terna acquisition and other investments totaling R$ 576.1 million in wind power, hydro projects, and capital expenditures.
Material Changes and Corporate Actions
The filing highlights several material developments compared to prior periods:
- Terna Acquisition Structure: CEMIG's Board approved an alternative structure for the Terna acquisition. Instead of Cemig GT acquiring 100% of Terna directly, the company may reduce its final holding to 50% less one common share, partnering with FIP Coliseu to acquire the remaining 51% of common shares. This structure was ratified by the General Meeting of Shareholders on August 26, 2009.
- Regulatory Approval: The Brazilian electricity regulator, ANEEL, approved the transfer of control of Terna from Terna S.p.A. to Taesa (a special-purpose company of Cemig GT) via Resolution No. 2107 on September 25, 2009.
- Transaction Timeline: The financial settlement for the Terna Share Purchase Agreement is planned for November 3, 2009.
- Leadership Changes: Mr. Márcio Augusto Vasconcelos Nunes was elected Chief Officer of the Gas Division and appointed CEO of Gasmig.
Outlook, Risks, and Management Commentary
Management Commentary and Outlook: Management is actively executing the Terna acquisition to consolidate CEMIG's presence in the Brazilian electricity transmission market. The company is also engaged in dialogues regarding a potential increase in its stake in Light S.A., though no concrete commitments or timelines have been established.
Risks and Contingencies:
- Acquisition Uncertainty (Light S.A.): In response to CVM and BM&FBovespa inquiries regarding press reports of a "conclusive phase" in negotiations to acquire control of Light S.A., CEMIG clarified that while dialogues exist with partners (Equatorial Energia and Andrade Gutierrez), there is no concrete result, commitment, or envisaged conclusion date.
- Regulatory and Antitrust: The Terna acquisition remains subject to final approval by antitrust authorities (CADE) and the Brazilian Development Bank (BNDES).
- Debt Covenants: The promissory notes include early maturity events triggered by insolvency, default on obligations exceeding R$ 50 million, or changes in stockholding control without holder consent.
Investor Verification Checklist
- Verify the final closing date and conditions for the Terna acquisition, specifically the BNDES position and CADE antitrust approval.
- Confirm the final capital structure of the Terna deal (Cemig GT vs. FIP Coliseu ownership split) following the planned Board meeting in late October 2009.
- Monitor official announcements regarding the status of negotiations for Light S.A., as press reports have outpaced official disclosures.
- Review the allocation of the R$ 2.7 billion promissory note proceeds to ensure alignment with the Terna acquisition and the R$ 576.1 million investment plan.
- Check for any updates on the mandatory tender offer for floating Terna shares to be conducted by Cemig GT upon closing.