CSN (CSNA3) buys power generator CEEE-G with an offer of BRL 928 million

SAO PAULO (Reuters) – Steelmaker CSN (CSNA3) won the privatization auction of the Rio Grande do Sul power generator CEEE-G on Friday, after disputing the asset in open voice mode with Auren Energia (AURE3).

Through Companhia Florestal do Brasil, CSN offered R$928 million for the hydroelectric generator, a premium of 10.93% over the minimum price of R$836.9 million defined in the public notice.

The offer beat the last offer offered by Auren Energia, from the Votorantim group and CPPIB, which had offered BRL 927.2 million.

Historic

In 2021, aiming at privatization, the government of Rio Grande do Sul split its integrated concessionaire Companhia Estadual de Energia Elétrica (CEEE) into 3 different companies: distributor CEEE-D, transmitter CEEE-T and generator CEEE-G. After selling the distributor (to Equatorial EQTL3 in March 2021) and the transmitter (to CPFL CPFE3 in July 2021), the state government today made its 2nd attempt to auction the generator, this time successful.

The first attempt was made earlier this year, when Rio Grande do Sul set the minimum price at R$1.25 billion for its approximately 66% stake in CEEE-G, but this was seen as too high, ending up without bidders. For the 2nd attempt on the 29th, the minimum price has been reduced by around 30%.

The auction winner must pay a minimum concession fee of R$1.66 billion for new 30-year concession contracts and changes to the quota regime for independent producers.

The CEEE-G unit is composed of 15 consolidated hydroelectric units, all located in Rio Grande do Sul (3 selling energy in the free market and 12 under quota regime – to be changed to independent producer with new contracts) totaling 921 MW of installed capacity (407 average MW of assured capacity).

The company also holds stakes in 8 hydroelectric units and 5 wind farms, totaling 350 MW of installed capacity (160 MW average assured capacity) in CEEE-G’s share.

The auction winner must complete the construction of the Povo Novo wind farm (52.5 MW of installed capacity, R$250 million of expected remaining capex), which has faced problems with suppliers, and has the option to add 82 MW of installed capacity ( 34.4 MWavg assured) through the expansion and repowering of existing HPPs.

In BBI’s assessment, in the base case, the total equity value of CEEE-G is approximately R$ 1.7 billion.

(with Reuters)

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