Business Context and Reporting Period
This Form 6-K filing by Energy Company of Minas Gerais (Cemig) covers corporate events and Board of Directors decisions occurring between October 9, 2015, and December 16, 2015. The filing summarizes minutes from four Board meetings, material announcements regarding asset acquisitions and divestitures, regulatory responses, and shareholder notifications.
Key Financial Metrics
The filing provides specific financial data related to the company's 2015 performance and capital structure as of the reporting period:
- EBITDA: R$ 5,310 million
- Net Debt: R$ 13,986 million (Gross Debt of R$ 15,304 million less Cash of R$ 1,318 million)
- Stockholders' Equity: R$ 13,331 million
- Capital Expenditures (Capex): R$ 3,314 million
- Debt Ratios (2015):
- Net Debt / EBITDA: 2.63x
- Net Debt / (Net Debt + Equity): 51%
- Capex / EBITDA: 62%
- Dividends and Interest on Equity (2014): Total payments of R$ 682.3 million (R$ 567.3 million in dividends and R$ 115.0 million in interest on equity) scheduled for December 28, 2015.
Material Changes and Corporate Actions
Significant developments during the period include:
- Asset Acquisition: On November 25, 2015, subsidiary Cemig GT won concessions for 18 hydroelectric plants (Lot D) with 699.57 MW capacity. The Concession Grant Fee is R$ 2.22 billion, with annual remuneration of R$ 498.7 million.
- Debt Restructuring: The Board authorized the postponement of R$ 540 million in debt maturities due in October 2015 and secured a new R$ 120 million credit line to manage liquidity.
- Divestiture Cancellations: On December 1, 2015, the agreement to sell Light's shares in Renova to SunEdison was rescinded. Consequently, Phase II of the agreement between Renova and TerraForm Global (involving R$ 13.4 billion in assets) was canceled. Phase I remains in effect.
- Executive Changes: The Board approved the appointment of Mr. César Vaz de Melo Fernandes as Chief Business Development Officer.
Guidance, Outlook, and Risks
Capital Market Access: To fund the first tranche of the hydro plant concession fee, Cemig GT intends to issue promissory notes of up to R$ 1.5 billion in the Brazilian capital market.
Regulatory and Legal Risks:
- Shareholder Structure: The company responded to a CVM inquiry regarding media reports that BNDESPar might acquire a 12.91% voting stake via debenture conversion. Cemig stated it has not been informed if this right will be exercised and no change in the share registry has occurred.
- Legal Proceedings: A conciliation hearing was scheduled for December 15, 2015, regarding the Jaguara Hydroelectric Plant concession. Management views this as routine and not a material change to the status quo.
- By-Law Ratios: The Board requested shareholder approval to exceed by-law limits on debt ratios (Net Debt/EBITDA up to 2.6x and Net Debt/Equity up to 51%) due to the new concession investment.
Sustainability: Cemig was included in the BM&F Bovespa ISE Corporate Sustainability Index for the 11th consecutive year and recognized in the Euronext Vigeo Emerging 70 index.
Investor Verification Checklist
- Verify the execution of the R$ 1.5 billion promissory note issuance by Cemig GT to fund the hydro plant concession fee.
- Monitor the outcome of the Extraordinary General Meeting (scheduled for December 29, 2015) regarding the approval of exceeded debt ratios.
- Confirm whether BNDESPar exercises its option to convert debentures into a 12.91% voting stake in Cemig.
- Track the status of the Jaguara Hydroelectric Plant legal proceedings following the December 15 conciliation hearing.
- Review the revised business plan for Renova Energia following the cancellation of the TerraForm Global Phase II transaction.