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Montevideo, September 22nd 2017 - 06:13 UTC

Temer prepared to privatize one of Brazil's jewels of the crown

Wednesday, August 23rd 2017 - 09:55 UTC
Full article 11 comments
The transaction should be concluded by mid-2018 and could involve the sale of new stock to help replenish Eletrobras capital, Minister Fernando Coelho Filho said. The transaction should be concluded by mid-2018 and could involve the sale of new stock to help replenish Eletrobras capital, Minister Fernando Coelho Filho said.
President Michel Temer has rushed to sell state assets and shrink the size of Brazil's government before leaving office in December 2018. President Michel Temer has rushed to sell state assets and shrink the size of Brazil's government before leaving office in December 2018.

Brazil's surprise move to privatize Centrais Eletricas Brasileiras SA sent the utility's shares soaring nearly 50% on Tuesday as investors bet the plan augured further moves to loosen the government's grip on the economy.

 The transaction should be concluded by mid-2018 and could involve the sale of new stock to help replenish the capital of Eletrobras, as the holding company is known, Mines and Energy Minister Fernando Coelho Filho revealed.

While the plan involves the end of federal government voting control at Eletrobras, it remains to be decided how much of its 51% voting stake will be sold and how, deputy Finance Minister Eduardo Guardia said. Proceeds should help cut the deficit, he said, noting the plan could also bring recurring revenue under certain conditions.

President Michel Temer has rushed to sell state assets and shrink the size of Brazil's government before leaving office in December 2018. Investors cheered his efforts to reduce state meddling in an economy hobbled by a three-year recession, lifting the benchmark Bovespa stock index on Tuesday past 70,000 points for the first time in almost seven years.

The plan comes as Chief Executive Officer Wilson Ferreira Jr's turnaround has taken longer than expected because of years of mismanagement at Eletrobras and massive operational losses between 2012 and 2015.

Investors said the Eletrobras plan stoked optimism that Temer remains committed to shrinking the role of the state in the economy, regardless of political resistance to his administration.

“This could be extended to other state firms, which is good for fiscal and market reasons,” said Victor Carvalho, a partner at fund manager LAIC-HFM in São Paulo.

According to Coelho Filho, Eletrobras's privatization could raise up to 20 billion reais. The federal government will remain a shareholder and reserve the right to veto some strategic decisions.

Top Comments

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  • :o))

    Anything & ANYBODY is for SALE:
    http://www.chargeonline.com.br/php/DODIA//jbosco.jpg

    Aug 23rd, 2017 - 11:22 am 0
  • Enrique Massot

    Poor Brazil. Carlos Menem would be envious of Temer, but what a carnival for the purchasers! Imagine--a customer base captive, no competition, no advertising costs. All they need is an accomplice state to charge as they want. No doubt a sample of things to come after Temer was exonerated by lawmakers of those pesky “corruption” (hey, who worries about it anymore?) charges.

    Aug 23rd, 2017 - 08:29 pm 0
  • :o))

    Q: “who worries about it anymore?”
    A: Not even the population!

    Aug 24th, 2017 - 03:08 am 0
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