Bloomberg News

Cemig Falls to Lowest in Two Months on Belo Monte Concern

October 03, 2011

(Adds closing prices in second and last paragraphs.)

Oct. 3 (Bloomberg) -- Cia. Energetica de Minas Gerais, a Brazilian state-controlled electricity utility, fell to the lowest in almost two months on concern it plans to buy a stake in the Belo Monte dam being constructed in Brazil’s Para state.

Cemig, as the company is known, fell 2.6 percent to 27 reais, the lowest since Aug. 8 at the 4:15 p.m. New York time close.

Cemig is in talks to buy a 10 percent stake in Belo Monte from the companies building the facility, Folha de S.Paulo reported Oct. 1, citing an unidentified person familiar with the matter. Cemig would buy 5 percent directly and 5 percent indirectly, through Light SA, in which it has a controlling stake, the newspaper reported.

“We see this investment as negative,” said Fabio Frischer, analyst at Credit Suisse Group AG in an e-mailed report to clients today. “We think it’ll have a bigger negative impact on Light than on Cemig, given the difference in size between them.”

An official at Cemig who asked not to be identified in accordance with company policy declined to comment on the Folha report.

Light dropped 2.7 percent to 24.07 reais, the lowest since December.

--Editors: Glenn J. Kalinoski, Richard Richtmyer

To contact the reporter on this story: Jose Sergio Osse in Sao Paulo at josse1@bloomberg.net

To contact the editor responsible for this story: Helder Marinho at hmarinho@bloomberg.net


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