Bloomberg News

Brazil Funds Vinci, GP Said to Be in Talks to Buy Celpa

May 29, 2012

Brazilian private-equity funds Vinci Partners Investimentos Ltda. and GP Investments Ltd. (GPIX) are in talks to purchase bankrupt utility Centrais Eletricas do Para SA, according to two people familiar with the negotiations.

The funds plan to merge Belem-based Celpa, as the company is known, with Cia. Energetica do Maranhao, a Brazilian utility based in Sao Luis, said the people, who asked not to be identified because the discussions are private. Vinci Partners, founded by Gilberto Sayao and other former Banco BTG Pactual SA executives, owns 65.2 percent of Cemar through its Equatorial Energia SA energy fund, according to data compiled by Bloomberg.

Celpa, which distributes electricity to 7.4 million people in 143 municipalities in northern Brazil, filed for bankruptcy on Feb. 28 amid growing debt and more than four years without a rate increase. The government isn’t planning to take control of Celpa to help investors and would only step in to ensure power distribution if that became necessary, Energy Minister Edison Lobao said March 13.

About 66 percent of Celpa is owned by Rede Energia SA (REDE4), while the state-controlled Centrais Eletricas Brasileiras SA (ELET6), known as Eletrobras, holds about 35 percent, data compiled by Bloomberg show. Eletrobras also owns a stake of about 33.5 percent in Cemar.

Bonds Gain

Defaulted bonds sold by Celpa climbed 7.5 cents to 38.5 cents on the dollar in New York, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority.

Officials at Vinci Partners, GP Investments (GPIV11), Celpa and Cemar declined to comment, asking not to be named in keeping with company policies.

Celpa will seek to raise 850 million reais ($429 million) through a bond sale and loans as part of a plan to recover from bankruptcy, the company said earlier this month. The plan includes selling 650 million reais of 2027 local bonds convertible into shares to yield 15 percent and loans of 200 million reais.

The main creditors of Celpa’s 2.3 billion reais of debt include Societe Generale SA (GLE), Banco do Brasil SA, Bank of America Corp. (BAC:US), Banco Bradesco SA (BBDC4) and Itau Unibanco Holding SA (ITUB4), according to Celpa regulatory filings.

To contact the reporter on this story: Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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