Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F _______
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No___X____
INVITATION |
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CALL NOTICE |
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MANAGEMENT PROPOSAL |
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1. Procedures inherent to the Extraordinary General Meeting hereby called |
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Voting Right of shareholders who hold preferred shares |
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Opening of the Extraordinary General Meeting |
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Qualification and Participation in the Extraordinary General Meeting |
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2. Business to be deliberated at the Extraordinary General Meeting hereby called |
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2.1 History |
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2.2. Debt with Eletronorte |
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2.3. Valuation of AmGT |
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2.4. Donation in Payment |
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2.5. Cash amount to be paid by Eletronorte: |
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2.6. Non-application of article 253, I, of Law 6,404/76 |
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2.7 Benefits, risks and costs |
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2.8 Opinion of Eletrobras’ Legal Superintendence |
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2.9 Manifestation by the Statutory Audit and Risk Committee |
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3. Management Conclusion |
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LIST OF ANNEXES |
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS summons all its shareholders to attend its 176th Extraordinary General Meeting, as follows:
Date: January 31, 2020
Time (Brasília): 2:00 p.m.
Venue: Corporate Headquarters, Setor Comercial Norte, Quadra 06, Conjunto A, Bloco A, 6º andar, Ed. Venâncio 3000, Asa Norte, CEP 70716-900, Brasília-DF.
Business to be deliberated:
1. To approve the transfer of all shares representing the share capital of Amazonas Geração e Transmissão de Energia S.A. (hereinafter referred to as AmGT), equivalent to 489,068,809 common shares, by Eletrobras to Centrais Elétricas do Norte do Brasil S.A. (“Eletronorte”), for R$ 3,130,227,000.00 (three billion, one hundred and thirty million, two hundred and twenty-seven thousand reais), as of December 31, 2018, to be adjusted and paid, in accordance with the terms and conditions set forth in the Datio in Solutum and Other Agreements Contract Draft (Annex 09).
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MINISTRY OF MINES AND ENERGY
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS
(Publicly-held company)
CNPJ No. 00.001.180/0001-26
176th Extraordinary General Meeting
The company hereby convenes the Shareholders of Centrais Elétricas Brasileiras S.A - Eletrobras (“Company”) to meet at the Company’s registered office, in Brasília, Distrito Federal, Setor Comercial Norte, Quadra 06, Conjunto A, Bloco A, 6th floor, parte, Ed. Venâncio 3000, Asa Norte, ZIP CODE 70716-900, on January 31, 2020, at 2:00 p.m., at the Extraordinary General Meeting to deliberate on the following Agenda:
1. To approve the transfer of all shares representing the share capital of Amazonas Geração e Transmissão de Energia S.A. (hereinafter referred to as AmGT), equivalent to 489,068,809 common shares, by Eletrobras to Centrais Elétricas do Norte do Brasil S.A. (“Eletronorte”), for R$ 3,130,227,000.00 (three billion, one hundred and thirty million, two hundred and twenty-seven thousand reais), as of December 31, 2018, to be adjusted and paid, in accordance with the terms and conditions set forth in the Datio in Solutum and Other Agreements Contract Draft (Annex 09).
Pursuant to paragraph one of article 126 of the Corporations Act and the decision no. 1 of the CVM Board in CVM case RJ-2014/3578, on November 4, 2014, a shareholder may be represented at the shareholders’ meeting: (i) if by an individual, by an attorney-in-fact appointed less than 1 (one) year ago (which is a shareholder, manager of the Company or attorney duly registered under the Brazilian Bar Association); (ii) if by a legal entity, by its legal representatives or by an attorney-in-fact appointed in accordance with its Corporate Articles and in accordance with the Brazilian Civil Code; and (iii) if by an investment fund, by its trustee and/or manager, or by an attorney-in-fact appointed in accordance with its corporate documents and in accordance with the Brazilian Civil Code rules.
Subject to the procedures set forth in CVM Instruction 481, of December 17, 2009, as amended ("CVM Instruction 481"), in the Company's Reference Form and the instructions contained in the Management Proposal for the Shareholders’ Meeting hereby called, the shareholder ("Voting Ballot") made available by the Company at the Company's websites (www.eletrobras.com/ri) and that of the Brazilian Securities and Exchange Commission - CVM (www.cvm.gov.br).
For participation in person, the Shareholder or its legal representative, in order to ensure admission to the Shareholder’s Meeting, pursuant to Article 5 of CVM Instruction 481, shall submit the following documents:
· Official ID card with photo;
· Authenticated copy of the updated Articles (Articles of Incorporation or Consolidation), in the case of a legal entity;
· Original with certified signature or authenticated copy of power of attorney granted by shareholder;
· Original copy of the extract of equity position provided by the depositary institution or custodian, identifying its status as a shareholder, at the most dated two (02) days before the date of holding the Extraordinary General Meeting. In the case of investment funds, in addition to the documents above, accordingly, the representative shall prove that it is a trustee of the fund or an attorney-in-fact duly appointed by such party, pursuant to the provisions of the applicable laws.
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In case of foreign legal entities, the documentation proving the powers of representation shall be translated into Portuguese by a sworn translator, and registered with the competent notary public, in addition to undergoing notarization and consularization. However, under the terms of the Convention Abolishing the Requirement of Legalization for Foreign Public Documents, of October 5, 1961, enacted by Decree No. 8660, dated January 29, 2016, the Company shall dispense with consularization of foreign documents issued in countries that are signatories to that convention, provided that its apostille is evidenced.
Pursuant to the first paragraph of article 19 of the Company’s Articles of Incorporation, it is requested that the delivery of the documents evidencing the condition of shareholder and its representation occurs up to 72 (seventy-two) hours before the Extraordinary General Meeting hereby called, in the Investor Relations Superintendence – DFR, Market Relations Department – DFRM, at Rua da Quitanda, nº. 196 – 9th floor, ZIP CODE 20.091-005, in the city of Rio de Janeiro, State of Rio de Janeiro, from 8 a.m. to 12 p.m., and from 2 p.m. to 5 p.m. The shareholders who attend it, presenting the required documentation, shall participate in the Extraordinary General Meeting summoned hereunder.
Resolutions at the Extraordinary General Meeting now convened shall be passed by a majority of votes, and each shareholder’s vote shall be proportional to its equity interest in the Company’s capital.
The shareholders shall have access, at the Investor Relations Superintendence - DFR, Market Relations Department – DFRM, at Rua da Quitanda, nº. 196 – 9th floor, ZIP CODE 20.091-005, in the city of Rio de Janeiro, State of Rio de Janeiro, and at the websites of the Company (www.eletrobras.com/ri), of the Securities Commission - CVM (www.cvm.gov.br) and B3 S.A. Brasil, Bolsa, Balcão (www.b3.com.br), to the entire documentation connected to the business which shall be deliberated at the Extraordinary General Meeting, under the terms of the Corporations Act and CVM Instruction 481.
Brasília, December 17, 2019
José Guimarães Monforte
Chairman of the Board of Directors
4
1. Procedures inherent to the Extraordinary General Meeting hereby called
To facilitate the understanding and attendance of the Shareholders to the Extraordinary General Meeting summoned hereunder, the Company lists below some relevant information regarding the procedures for the opening, participation, and holding of the meeting. (“Management Proposal”)
The Company informs that the holders of preferred shares are temporarily entitled to vote, pursuant to article 111 of the Brazilian Corporation Law, however, the referred right will automatically cease with the payment of dividends declared at the 59th Annual Shareholders' Meeting (April/2019), expected to occur by December 30, 2019, therefore, prior to the date of the 176th EGM. Once the payment is made, any votes of preferred shareholders for the 176th EGM, even if previously sent by voting ballot, will be disregarded, since on the date of the 176th EGM there will no longer be the right to vote by the preferred shareholders.
Pursuant to article 125 of the Corporations Act, in order to call the Extraordinary General Meeting to open on first call, it is necessary that shareholders and/or their legal representatives holding at least 25% (twenty-five percent) of the Company's voting capital duly attend.
If said percentage is not attained, a new convocation will be made with at least 08 (eight) days of notice, after which the Extraordinary General Meeting shall be installed by the presence of any number of shareholders.
In order to participate in the Extraordinary General Meeting, the Shareholders shall prove the condition of holders of shares issued by the Company, by submitting the following documents:
(a) statement issued by the financial institution depositary of the book-entry shares issued by Eletrobras held by the respective shareholder, containing the indication of the respective shareholding, dated at most 02 (two) days before the date of the Extraordinary General Meeting; and
(b) original or certified copy of an identification document legally recognized as such, with recent photograph and national validity, within the validity period, if applicable, in case of a natural person; or
(c) power of attorney, duly granted under the terms of the law and/or corporate documents of the shareholder, with signature notarization, and in case of document drawn up abroad, its sworn translation into Portuguese, duly registered at the competent notary office, as well as the proof of its notarization and consularization, or alternatively, of its apostille in compliance with the applicable legislation, in original version or authenticated copy; or
(d) an authenticated copy of the updated corporate documents of the shareholder and of the document that invests the representative with sufficient powers for representation within the Extraordinary General Meeting, duly registered at the competent bodies, accompanied by their respective publications, in the case of a legal entity.
5
For the purposes of the documents described in item (d), the Company will accept (i) articles of incorporation and corporate charters, in a certificate issued by the respective registration agency: simple copy of the original, provided that it is accompanied by the original certificate issued by the registration agency or its authenticated copy, attesting the registration of the document or authenticated copy of the registered instrument; and (ii) specifically in relation to the instrument that invests the representative with powers to vote on behalf of the legal entity shareholder, in case of a private power of attorney, it shall contain the notarized signature of the grantor of his representatives (except for foreign shareholders, under the terms of Company's Articles of Incorporation), and be accompanied by its sworn translation duly registered with the competent notary public, as well as the evidence of notarization and consularization or apostille, as the case may be. In case such instrument corresponds to a meeting of the board of directors, the shareholder shall provide the proof of filing and publication of the instrument in the competent registration agency.
In case of legal entities with representatives that are not appointed in the articles of incorporation/corporate charter or with some appointing procedure by a separate instrument, it is necessary for the shareholder to prove the validity of the appointment providing proof of filing of the instrument in the competent registration agency.
In case of investment funds, the representative shall prove that he is a trustee of the fund or an attorney-in-fact duly appointed thereby, pursuant to the provisions of the applicable legislation.
In the case of foreign legal entities, the documentation proving the powers of representation shall be translated into Portuguese by a sworn translator, and registered with the competent notary public, in addition to undergoing notarization and consularization. However, under the terms of the Convention Abolishing the Requirement of Legalization for Foreign Public Documents, of October 5, 1961, enacted by Decree No. 8660, dated January 29, 2016, the Company shall dispense with consularization of foreign documents issued in countries that are signatories to that convention, provided that its apostille is evidenced.
Documents drawn up in other languages, pursuant to the Law, will only be accepted upon presentation of a sworn translation duly registered at the competent registry office.
Pursuant to the first paragraph of article 19 of the Company’s Articles of Incorporation, it is requested that the delivery of the documents evidencing the condition of shareholder and its representation occurs up to 72 (seventy-two) hours before the Extraordinary General Meeting hereby called, in the Investor Relations Superintendence – DFR, Market Relations Department – DFRM, at Rua da Quitanda, nº. 196 – 9th floor, in the city of Rio de Janeiro, State of Rio de Janeiro – ZIP CODE: 20.091-005, from 8 a.m. to 12 p.m. and from 2 p.m. to 5 p.m.
Remote Voting
As established under CVM Instruction 481, Eletrobras will make available to the Extraordinary General Meeting hereby convened the possibility of remote participation through the Distance Voting Ballot, which has template available at the websites of the Company (www.eletrobras.com/ir) and CVM (www.cvm.gov.br).
In order to participate in the Extraordinary General Meeting in this mode, the shareholders of the Company shall fill in the proper fields, sign the Voting Ballot and submit it, alternatively, to: (i) the Bookkeeping Agent (as defined below) of the shares issued by the Company; (ii) the Custody Agent responsible for the custody of the shares issued by the Company held by them (“Custody Agent”), provided that he is apt to receive the Voting Bulletin pursuant to CVM Instruction 481; or, also, (iii) directly to the Company.
6
In this sense, Eletrobras informs that the broker-dealer of its shares, namely, Banco Bradesco S.A. ("Bookkeeping Agent"), under the terms of an agreement entered into with the Company, will receive the voting ballot in its network of bank branches spread throughout the national territory, observing the procedures established by the Written Agent. The shareholders or their representatives shall go to any bank branch of the Bookkeeping Agent, with a valid original identification document containing photograph and, in case of shareholders considered legal entities and/or represented by an attorney-in-fact, the competent representation documents shall be presented, in addition to the Voting Ballot.
In addition to this, it is noteworthy that in accordance with CVM Instruction 481, custody agents may, but are not required to receive the Voting Ballots of the Company's shareholders. For this reason, the shareholders should check with the respective Custody Agent if it will provide such service, as well as its costs and procedures. In case the Custody Agent opts to receive the Voting Bulletins, the shareholders of the Company may also, at their exclusive discretion, send the Voting Bulletin directly to such agents.
Also, pursuant to CVM Instruction 481, shareholders who so wish may also forward the Voting Bulletin directly to the Company and, in this case, should abide by the following rules:
(i) The Voting Ballot will only be received when it is sent physically, by post, addressed to the Investor Relations Department of the Company, located in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Presidente Vargas, 196, Centro, 9th floor, ZIP CODE: 20.091- 005 or when sent by e-mail to the following e-mail address: ombudsman- [email protected], and the originals, in the latter case, should be forwarded to the Company before the scheduled date for the Extraordinary General Meeting called hereunder;
(ii) The Voting Ballot shall have the place, date and signature of the requesting shareholder. In case the shareholder is considered a legal entity in accordance with the Brazilian legislation, the signature shall be of its legal representative, or attorney-in-fact with powers for this type of act;
(iii) The Voting Ballot sent directly to the Company should be accompanied by documentation attesting to the capacity of the shareholder or legal representative of the shareholder acting as the signatory, thus in compliance with the requirements and formalities referred to in item 1.i above.
The Voting Ballot that is sent directly to the Company and is unaccompanied by the documentation necessary to prove the condition of shareholder, or to prove its representation will not be considered valid, and, as a consequence, will not be processed by the Company. However it may be, corrected and resubmitted by the shareholder to the Company, in compliance with the terms and procedures established in CVM Instruction No. 481.
The Voting Ballot received by the Custodian Agent, the Custody Agent (as the case may be) and/or by the Company up to 7 (seven) days prior to the date of the Shareholder’s Meeting pursuant to Article 21-B of CVM Instruction 481. The Voting Bulletin that is delivered after this deadline will be considered invalid and will not be processed by the Company.
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After the expiration of the period above, if there remain unfilled items of the Voting Bulletins presented, the Company informs that it will consider them as an instruction equivalent to abstaining from voting related to such business.
2. Business to be deliberated at the Extraordinary General Meeting hereby called
This Management Proposal seeks to provide the Shareholders with the necessary information to enable them to resolve on the transfer of all shares representing the share capital of Amazonas Geração e Transmissão de Energia S.A (hereinafter referred to as AmGT) to Eletronorte.
Eletrobras’2018-2022 Business and Management Steering Plan (“PDNG”) established in its financial discipline item the corporate restructuring of Amazonas Distribuidora de Energia S.A (“Amazonas Energia”), through the divestiture of distribution activities, thus transferring AmGT shares belonging to Amazonas Energia to Eletrobras. In addition, the PDNG established that an assessment should be performed concerning the corporate alternatives for Amazonas GT.
A first stage, namely, the divesture of Amazonas Energia was completed and Amazonas Energia privatized. In this sense, on March 1, 2018, the Private Instrument of Donation in Payment and Other Agreements was executed between Eletrobras and Amazonas Energia, aiming at concluding the divesture. Based on Deloitte’s valuation report, the donation in payment amount was BRL 2.86 Billion, but with termination conditions connected to the full assignment of the Natural Gas Sales Agreement executed by and between CIGÁS – Companhia de Gás do Amazonas and Amazonas Energia, to AmGT. The execution of the Assignment Instrument happened on April 30, 2018.
On August 21, 2018, the National Electric Energy Agency - ANEEL, through Order No. 1.885, deemed that Amazonas Energia and AmGT met the requirements of submission of documentation referred to under Paragraph § 2 of Article 3 of Authorization Resolution No. 4.244, dated July 16, 2013, which consented with the divesture of Amazonas Energia.
As part of its Strategic Operational Excellence effort, the 2019-2023 PDNG established a corporate restructuring of regional subsidiaries as a strategy aiming at more operational, economic and financial and corporate synergy among Eletrobras Companies, expressly naming the companies Eletronorte and AmGT.
In order to continue the corporate restructuring process, Eletronorte and AmGT executed a letter of intent for access and sharing of information necessary for AmGT’s assessments, due diligence and valuation, as well as shared use of said valuation between Eletrobras and Eletronorte.
In this sense, Deloitte was hired to perform the above assessments as an independent consultant and there was an agreement between Eletrobras and Eletronorte that both would validate the results presented by Deloitte and use them for the asset transaction (Amazonas GT’s shares).
The due diligence report produced by Deloitte as well as the valuation report are part of this proposal as Annexes 01 and 02 respectively.
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Within the scope of the process of privatization of distribution companies then controlled by Eletrobras, the shareholders of Eletrobras, by means of the 170th EGM, approved the modeling for sale, as well as the assumption of the distribution company debts, by means of their capitalization, as defined by CPPI Resolution No. 20/2017, and amendments.
Thus, part of the of the debts of Ceron and Boa Vista Energia, assumed by Eletrobras, were debts that such distribution companies had with Eletronorte as a result of purchase of electric energy. As a result, Eletrobras now owes Eletronorte.
On October 30, 2018, Eletrobras assumed R$ 2,609,490,507.00 (Two Billion, Six Hundred Nine Million, Four Hundred Ninety Thousand, Five Hundred and Seven Reais) of Ceron's debt with Eletronorte and, on December 10, 2018, assumed R$ 283,761,153.00 (Two Hundred and Eighty-three Million, seven hundred sixty one Thousand, one Hundred and fifty three Reais) of the debt of Boa Vista Energia with Eletronorte, totaling R$ 2,893,251,660.00 (Two Billion, Eight Hundred Ninety-three Million, two hundred fifty One Thousand, six hundred sixty Reais) in debts due to Eletronorte assumed by Eletrobras.
Such debt with Eletronorte is adjusted based on Selic, thus the table below shows the evolution of the outstanding balance:
BRL thousand | |||
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Assumption Date |
31/12/2018 |
9/30/20191 |
CERON - (Assure on 10/30/2018) |
2,609,490.5 |
2,648,971.2 |
2,771,274.9 |
BOA VISTA (Assumption on 12/10/2018) |
283,761.2 |
287,078,2 |
300,340.7 |
TOTAL |
2,893,251.7 |
2,936,049.5 |
3,071,615.6 |
Thus, the datio in solutum reviewed hereunder is important to settle the debt of Eletrobras with Eletronorte, thus ending the financial cost with the carryover of the said debt.
All assumptions and explanations regarding AmGT's Valuation, prepared by consulting firm Deloitte, are detailed in technical note IT DFPI-023/2019 (Annex 03), as well as Deloitte's own valuation (Annex 02). The result obtained is presented in the following table:
BRL thousand | |
Result of Valuation | |
Cash Flow at Present Value |
5,023,468 |
Economic Adjustments |
-2,540,248 |
Working Capital Settlement |
92,483 |
Residual Amount / Sale of Assets |
554,524 |
Economic Value |
3,130,227 |
If the matter of this management proposal is approved, the transfer of AmGT’s shares from Eletrobras to Eletronorte will be made through Donation in Payment, where Eletrobras will pay off its debt to Eletronorte, transferring all AmGT shares to Eletronorte.
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All other conditions of this operation are detailed in the Contract of Donation in Payment and Other Agreements (Annex 09).
The table below shows the composition of amounts involved in the transaction on the base date of December 31, 2018:
|
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AmGT Amount: |
3,130,227,000.0 |
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Debt Balance on 12/31/2018 |
2,936,049,450.3 |
Cash amount to be paid by ELN |
194,177,549.7 |
The amounts shown in the table above will be adjusted until the actual transfer date of the shares as follows:
- Balance of Eletrobras’ Debt with Eletronorte: Adjusted based on SELIC;
- AmGT Amount: The following adjustments will be made (i) between the valuation base date (namely 12/31/2018) and the last audited financial statement (quarterly or annual) by AmGT’s variation in Net Equity; and (ii) between the last audited financial statement and the actual transfer of shares. The amount will by adjusted by the SELIC rate.
- Cash amount to be paid by Eletronorte: Difference between AmGT’s value and Debt amount with Eletronorte, adjusted on the transfer date, as mentioned above.
Considering that there is a difference between the balance of AmGT amounts and the debt due to Eletronorte, and AmGT’s amount exceeds the debt due by Eletrobras to Eletronorte, Eletronorte shall pay the residual amount, observing all the provisions of item 2.4 above, under the following conditions:
Conditions: Payment in currency:
Payment Deadline: On the share transfer date.
If, after restatement the resulting amount is lower than the debt, the difference will remain as a balance due by Eletrobras to Eletronorte, under the same conditions as the current agreement.
We inform that the provisions of article 253, I, of Law 6,404/76 will not apply, since AmGT was not converted into a wholly-owned subsidiary by means of a merger of shares, which, according to the most recent decisions of the CVM Board, would dismiss the requirement to grant right of first refusal to Eletrobras' shareholders as set forth in said Law.
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Benefits
· The datio in solutum will equate Eletrobras’ debt with Eletronorte, thus ending the financial cost with the carryover of the said debt, by Selic;
· Synergy between AmGT and Eletronorte and operational and administrative efficiency (as per Annex 04); and
· Consolidated Tax Efficiency, as Eletronorte currently collects PIS and Cofins on financial expenses arising from Eletrobras’ debt, even without actual receipt.
Costs
· Eletrobras will be responsible for payment of withholding income tax, levied on the portion of interest incorporated to the outstanding debt balance, as per item 7.1 of NT technical note IT DFPI-023/2019 (Annex 03);
· Eletrobras shall reimburse 50% of the Deloitte’s valuation work costs, i.e., R$ 180,000.00 (one hundred and eighty thousand reais), to Eletronorte;
Risks
· In item 5.1.2 of the Datio in Solutum and Other Agreements Contract Draft (Annex 09), if within 6 (six) months from the actual transfer of controlling interest, losses or gains actually incurred by Amazonas GT are recognized and no longer recorded in the balance sheet of Amazonas GT and that exceed 10% (ten percent) of the final value of the transaction, the Parties undertake, in respect of such amount, in the proportion of 50% (fifty percent) for each, except for the amounts of corrections already included in the due diligence and reflected in the valuation and those set forth in the Clause 3.3.1. The losses or gains dealt with in this clause shall be due to a triggering event prior to the transfer of the controlling interest of Amazonas GT to Eletronorte;
· The matter was approved by the National Electric Energy Agency - Aneel, via order 3189, of November 14, 2019 (Annex 05). A period of 120 days from the publication of said order for implementation was granted. If the operation is not completed within this period, further approval will be required.
In addition to the information indicated above and in the other annexes to this Management Proposal, the Company provides in Annex 07 to this Management Proposal the complete opinion issued by its Legal Superintendence about the operation for proposal.
Management Proposal in reference was reviewed by the Statutory Audit and Risk Committee in a meeting held on December 12, 2019. An opinion on this matter was made available in full in the form of Annex 06 of this Management Proposal.
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In view of the foregoing, the Company's Management, by unanimous vote of those present, approved the convening of the 176th Extraordinary General Meeting, pursuant to this Management Proposal, and recommends that the Shareholders carefully read all the documentation made available to them in relation to the transfer of all Shares representing the share capital of Amazonas Geração e Transmissão de Energia S.A – AmGT, from Eletrobras to Eletronorte and then approve the agenda.
Brasília, December 17, 2019
José Guimarães Monforte
Chairman of the Board of Directors
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LIST OF ANNEXES
All documents related to the business to be deliberated at the 176th Extraordinary General Meeting are available to shareholders on the Company’s website (www.eletrobras.com/ri/assembleiasacionista), as listed below:
ANNEX 01 – Deloitte’s Due Diligence Report;
ANNEX 02 – Deloitte’s Valuation Report;
ANNEX 03 – IT DFPI-023-2019;
ANNEX 04 – NT DGEG-001/2019;
ANNEX 05 – Aneel’s Consent
ANNEX 06 – Manifestation by Statutory Audit and Risk Committee
ANNEX 07 - Opinion of Eletrobras’ Legal Superintendence;
ANNEX 08 – Article 8 – ICVM 481 Instruction
ANNEX 09 – Donation in Payment and Other Agreements Contract Draft
The Company, through its Investor Relations Department, at the phone numbers (55)(21)2514-6333 or (55)(21)2514-6331 and [email protected] is at your disposal for further clarifications on the 176th Extraordinary General Meeting.
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Date: 11/05/2019
IT DFPI-023/2019 |
Technical Information
Title Transfer of the shares owned by Eletrobras to Eletronorte by means of Datio in Solutum.
Subject Amount of AmGT; Dation in solutum; corporate restructuring. Authors Marcos Barreto de Faria Pinho – DFPI;
Leonardo Pereira Alves – DFPI.
Eletrobras Company.
Category Technical Information.
Keywords Eletrobras, AmGT, Eletronorte, valuation, sale.
Classification: Confidential
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Date: 11/05/2019
IT DFPI-023/2019 |
Contents
1. Purpose |
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3. History |
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5.8 Fuel |
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5.9 PMSO |
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5.10 Investments |
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5.11 Discount Rate |
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Classification: Confidential
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Date: 11/05/2019
IT DFPI-023/2019 |
The purpose of this report is to present the results of AmGT’s Valuation performed by Deloitte, which will be used as the basis for the transfer of the shares owned by Eletrobras in AmGT to Eletronorte, by Datio in Solutum, as established under RES-876/2018 dated December 10, 2018.
It should be noted that the economic and financial forecasts in this IT have estimates. Such estimates do not stand as statements that they shall become true or be accomplished in the future, rather, they mean they reflect beliefs and expectations based on the best information available for Eletrobras at the time of valuation.
Lastly, it should be noted that all valuation efforts carried out may stand as uncertain estimates and projections on future events, according to the Securities Commission and Securities and Exchange Commission, Section 27A of the Securities Act of 1933, as amended, and Section 21E of Securities and Exchange Act of 1934, as amended.
Eletrobras 2018-2022 PDNG estimated, in its financial discipline item, under 4b effort, the corporate restructuring of Amazonas Energia, through the divestiture of Amazonas D - AmD, thus transferring AmGT shares belonging to AmD to Eletrobras. In addition, the Plan established that an assessment should be performed concerning the corporate alternatives for Amazonas GT.
In turn, 2019-2023 PDNG, within its Strategic Operational Excellence effort, pointed out to the Corporate Synergy of Regional Subsidiaries as a strategy for operational improvement, and referred to the corporate restructuring of Eletrosul and CGTEE, as well as that of AmGT and Eletronorte.
On March 01, 2018, the Private Instrument of Datio in Solutum and Other Agreements was executed between Eletrobras and AmD, aiming at concluding the divesture. The amount of the datio in solutum, based on the valuation report of Deloitte, was BRL 2.86 Billion, although with the termination conditions connected to the full assignment of the gas agreement
Classification: Confidential
Page 3
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Date: 11/05/2019
IT DFPI-023/2019 |
The Datio instrument had a termination condition under its Clause Six, which was the execution of the Full Assignment Agreement of the Natural Gas Sale Agreement entered into by and between CIGÁS and AmD, on June 1, 2006, for Amazonas GT. The execution of the Assignment Instrument happened on April 30, 2018.
On August 21, 2018, the National Electric Energy Agency - ANEEL, through Order No. 1885, deemed that AmD and AmGT net the requirements of submission of documentation referred to under Paragraph § 2 of Article 3 of Authorization Resolution No. 4244, dated July 16, 2013, which consented with the divesture of AmD.
Subsequent to the conclusion of the divesture process, RES No. 632/2018, dated March 9, 2018, created a Working Group (GT) to evaluate the joint activities of the companies Amazonas Geração e Transmissão (AmGT) and Eletronorte (ELN), aiming to introduce the modeling alternatives and their advantages and disadvantages.
As a result of this work, the said GT identified that the operation of transfer of all AmGT shares, owned by Eletrobras, to Eletronorte, with takeover after the tax benefit, would be the most recommended owing to the potential for reducing of management costs beyond gains from operational synergy between the companies.
Based on the conclusions of GT, the Executive Board of Eletrobras, by means of RES-876/2018 dated December 10, 2018, resolved:
1. to approve the GT Report created by RES.DEE 632/2018 that evaluated the technical and economic/financial feasibility of the joining of the activities of AmE GT and Eletronorte, and extinguish GT;
2. to approve the joining of the activities of AmE GT and Eletronorte in two phases: (1) operation transfer of the shares representing the Capital of Amazonas Geração e Transmissão de Energia SA – AmE GT, from Eletrobras to Eletronorte, through Datio in Solutum of the shares representing the Capital of AmE GT, using as consideration the debts assumed by Eletrobras with Eletronorte arising from the adjustments required by Resolution CPPI 20, and subsequent amendments, within the scope of the privatization process of CERON and Boa Vista Energia, and (2) the takeover of AmE GT by Eletronorte;
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3. To approve, as a reference value for the datio in solutum transaction, the amount of BRL 2,866,831,000.00 resulting from the valuation DTT used as the basis of the decision-making process of the AmE GT Divestiture, approved on March 1, 2018, which should be updated;
4. To authorize the contracting of the valuation update, by an independent consultant, in order to price the final amount of the datio in solutum transaction, to be approved by the Eletrobras and Eletronorte governance bodies, which shall be carried out prior to the convening of the Eletrobras AGE, which shall deliberate on the matter;
5. To order that the takeover of AmE GT by Eletronorte happens by the second half of 2020;
In order to continue the process and operationalize the decision of the Board of Eletrobras, Eletrobras, Eletronorte and AmGT executed a letter of intent for access and sharing of information necessary for AmGT’s assessments, due diligence and valuation, as well as shared use of said valuation between Eletrobras and Eletronorte.
Deloitte was hired to perform the above assessments as an independent consultant and there was an agreement between Eletrobras and Eletronorte that both would validate the results presented by Deloitte and use them for the asset transaction.
On October 2, Deloitte delivered the final valuation report, as well as the due diligence reports. The results presented by Deloitte shall be stated by the end of this Technical Note.
This matter shall be addressed only in the first stage of the corporate structuring approved by DEE, which is the transfer of the shares representing the Capital of AmGT, pf Eletrobras to Eletronorte, by means of Datio in Solutum using as consideration the debts assumed by Eletrobras with Eletronorte arising from the adjustments required by Resolution CPPI 20, and subsequent amendments, within the scope of the privatization process of CERON and Boa Vista Energia. The takeover of AmGT by Eletronorte shall be subsequently addressed when the tax credits of AmGT finish.
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Within the scope of the process of privatization of Distribution Companies, the shareholders of Eletrobras, by means of the 170th AGE, approved the modeling for sale, as well as the assumption of the distribution company debts, by means of their capitalization, as defined by CPPI Resolution No. 20/2017, and amendments.
Thus, part of the assumption of the debts of CERON and Boa Vista were the debts that such distribution companies had with Eletronorte. On October 30, 2018, Eletrobras assumed BRL 2,609,490,507.00 with Ceron and, on December 10, 2018, it assumed BRL 283,761,153 with Boa Vista, amounting to BRL 2,893,251,660 of assumption.
Such debt with Eletronorte is adjusted based on Selic, thus the table below shows the evolution of the outstanding balance:
|
BRL thousand | ||
|
Assumption Date |
12/31/2018 |
09/30/2019 |
CERON - (Assumption on 10/30/2018) |
2,609,490.5 |
2,648,971.2 |
2,771,274.9 |
BOA VISTA (Assumption on 12/10/2018) |
283,761.2 |
287,078.2 |
300,340.7 |
|
|
|
|
TOTAL Source: DFF |
2,893,251.7 |
2,936,049.5 |
3,071,615.6 |
According to the table below, it can be seen that from the date of assumption of debt (October 30, 2018) to the last position (September 30, 2019) there was a debt carryover cost of BRL 176 million to Eletrobras.
BRL thousand
Position: 09/30/2019 | ||
Eletrobras - Eletronorte | Eletrobras - | |
Eletronorte (Ceron) | (Boavista) | |
Principal | 2,609,491 | 286,091 |
Interest | 161,784 | 14,250 |
Outstanding Balance | 2,771,275 | 300,341 |
Source: DFF |
Thus, the datio in solutum reviewed hereunder is important to settle the debt of Eletrobras with Eletronorte, thus ending the financial cost with the carryover of the said debt.
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In November 2018, the Federal Government issued Provisional Measure No. 855 (“MP 855”), which directly impacted AmGT’s thermal power plants. MP 855 allowed the advance of AmGT’s energy delivery obligation, using to supply the contract, the power plants available for generation, and that had contracts terminated, by allowing the operation of the units after the termination of the contracts.
Also over the term of MP, AmGT took the necessary measures to implement with ANEEL the contracts and authorizations of the Agency that were provided for under MP. Thus, even with the expiry of MP, which was not converted into Law, because the acts were performed over the effectiveness of MP, they are valid and are not impacted by such expiry. The following acts were performed, and used as a premise in modeling:
· Extension of UTE Aparecida authorization until 2030;
· Use of Aparecida and the 5 PIE’s (Ponta Negra, Manauara, Cristiano Rocha, Tambaqui and Jaraqui) to advance the CCEAR energy sale agreement of Mauá 3, given that PIE’s only perform energy sale under such agreement as of 2025, year in which they are transferred to AmGT;
· Advance of the termination of CCEAR from Mauá 3 to 2030, concurrently with the termination of the gas contract;
· AmGT has waived the rights corresponding to the excess energy portion, which is not traded by the advance of the agreement with Aparecida and PIE’s.
· Base Date: December 2018;
· AmGT was evaluated by the Income Approach methodology, based on discounted cash flow to present value, and the cash flow projections generated by its operations include the period from January 1, 2019 to November 30, 2030 (year in which the gas contract expires);
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· The projections were made based on information from AmGT’s current contracts, historical management results and the Company’s Business Plan, provided by Eletronorte and AmGT Managements;
· The projected sums are presented in nominal terms, i.e., include the inflation expectation for the projection period;
· Amounts are expressed in thousands of Brazilian Reais (BRL Thousand), unless otherwise stated;
· This assessment considers only the projection of operating results “Debt-Free” model);
· To calculate the present value, the half-rate convention was adopted, under the premise that AmGT cash flow is evenly generated throughout the year;
· For the estimate the economic value of AmGT, the following cash-generating units (CGU’s) were considered: UTE Mauá 3, Balbina HPP, UTE Aparecida, PIE’s Complex, Complexo Interior, Transmission and Corporate. The Corporate CGU covers the operation of UTE Coari and PIE’s until May 2025;
· Except for UTE Mauá 3 and the Complexo PIE’s, all AmGT units are contractually entitled to receive the residual value connected to the total non-depreciation of assets at the end of their concession period. However, owing to the difficulty estimating decommissioning, demobilization and environmental liabilities costs at the end of operations, except for UTE Mauá 3, residual values were not considered under the premise that they would be offset by such costs, as discussed with the Company’s Management;
· Considering the recent construction of UTE Mauá 3, at the end of the operation in November 2030, its assets will still be in operational condition. Thus, the sale of the asset at its book value in the period was considered as premise, as discussed with the Company’s Management;
· For the Transmission, the sale of the assets in March 2020 was considered through the auction scheduled for December 2019, as reported by the Company’s Management. As the amount received for the sale, the amount reported in the Transmission Asset Valuation Report provided by AmGT on the base date of May 2018 and adjusted for inflation until March 2020 was applied. In addition, the depreciated accounting balance of investments made after May 2018 and assets classified as “LT Balbina/Manaus CD 230 KV” was considered, given moreover that they were not considered in the Valuation Report, as informed by the Company’s Management;
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· At the end of the concession, the present value of the reversal of the remaining working capital was considered (see adjustment in chapter “Valuation Results”);
The main characteristics of the power plants and their contracts are as follows:
Type |
Power Plant |
Installed Power (MW) |
Contracted Power |
Contract Method |
|
|
|
(MW) |
|
UTE Própria |
Aparecida |
166.0 |
145.0 |
CCEAR |
UTE Própria |
Mauá 3 |
590.8 |
484.4 |
CCEAR¹ |
UTE Própria |
Balbina |
249.8 |
130.3 |
CCVEE |
Usina Interior |
Anamã |
2.2 |
2.1 |
CCVEE |
Usina Interior |
Anori |
4.6 |
4.5 |
CCVEE |
Usina Interior |
Caapiranga |
2.2 |
2.1 |
CCVEE |
Usina Interior |
Codajás |
5.5 |
5.4 |
CCVEE |
PIE Capital |
Cristiano Rocha |
85.4 |
65.0 |
CCVEE² |
PIE Capital |
Tambaqui |
89.5 |
60.0 |
CCVEE² |
PIE Capital |
Jaraqui |
72.8 |
60.0 |
CCVEE² |
PIE Capital |
Manauara |
68.3 |
60.0 |
CCVEE² |
PIE Capital |
Ponta Negra |
166.0 |
60.0 |
CCVEE² |
Source: Company’s Management
¹ 38 contracts of UTE Mauá 3.
² Effective until May 2025, when operations of CCEAR modality start.
As established by the Management of AmGT, the following premises were considered:
· The projections cover the current conditions of the Natural Gas Supply Agreement, executed between Companhia de Gás do Amazonas (Cigás) and AmGT, as well as the reimbursement by the Fuel Consumption Account (CCC) according to the current calculation parameters and utilization of the balance of Amount Paid and Not Withdrawn (QPNR) of gas accrued over the period in which the contract belonged to AmD;
· PIE Coari: According to the best interpretation of the contract with PIE Coari by the Company’s Management, the only impact expected by the assignment of the contract of AmD to AmGT is on the management of the supply of natural gas to the independent producer;
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· Heat Rates: The heat rate (efficiency) of each UTE was considered, as provided by the Management of AmGT and shown below.
|
(In m³/MWh) |
Heat Rate |
|
UTE Mauá 3 |
182.0 |
UTE Aparecida |
280.0 |
Complexo Interior |
301.0 |
Complexo PIEs |
250.0 |
UTE Coari |
231.0 |
Source: Company’s Management |
|
Balbina HPP trades energy in the Free Contracting Environment (ACL) through its respective Electricity Sale Agreement (CCVEE).
The price of energy dispatched to Balbina HPP was projected based on the values currently charged by the Company, made available by AmGT through invoices for the months of January to April 2019.
For the period from May 2019 to the end of the projection period (February 28, 2027), the average values of the invoices from January to April 2019 were adopted, which were adjusted annually in October by the IPCA projection on the base date, according to contractual parameters.
The volume of energy dispatched in MWh was projected considering the average contracted power in MW stated in the 1st amendment to the CCVEE of the 130.32 MW unit.
UTE Aparecida trades energy in the Regulated Contracting Environment (ACR) through its respective Regulated Environment Electricity Trading Agreement (CCEAR).
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In BRL Thousand | |
Price Contractual | |
Components | |
Unit Variable Cost per MWh (O&M)¹ | 0.0178 |
Fixed Revenue (Fuel) ² | 27,730 |
Fixed Revenue (Other Items) ² | 199,890 |
Source: CCEAR Contract of UTE Aparecida | |
¹ referred to March 2014 | |
² referred to November 2014 |
The volume of energy dispatched in MWh was projected considering the contracted power in average MW reported under CCEAR of the 145 MW unit.
UTE Mauá 3 trades energy in the Regulated Contracting Environment (ACR) through its respective Regulated Environment Electricity Trading Agreements (CCEAR)
In BRL Thousand | |
Price Contractual | |
Components | |
Unit Variable Cost per MWh (O&M)¹ | 0.0178 |
Fixed Revenue (Fuel) ² | 100,970 |
Fixed Revenue (Other Items) ² | 659,437 |
Source: CCEAR Contract of | |
UTE Mauá 3. | |
¹ referred to March 2014 | |
² referred to November 2014 |
The volume of energy dispatched in MWh was projected considering the premises of the Company’s Management for the period from 2019 to 2023. As of 2024, the average of the dispatch estimated by AmGT for 2023 was applied.
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Complexo Interior, comprising power plants UTE Codajás, UTE Anori, UTE Caapiranga and UTE Anamã, trades energy in the Free Contracting Environment (ACL) through its respective Electricity Sale Agreement (CCVEE).
The price of energy dispatched to Complexo Interior was projected based on the following components:
· O&M: The O&M portion was projected based on the amount of BRL 456.13 per MWh, according to CCVEEs, which is referenced in May 2018. The adjustment of this amount was applied annually in November through the IPCA projection on the base date;
· Fuel: The fuel portion was projected based on the fuel cost related to the operation of Complexo Interior.
The volume of energy dispatched in MWh was projected considering the contracted powers reported in the unit’s CCVEEs, with 14.23 MW being the total contracted for the four plants of Complexo Interior.
PIEs are composed of the UTE Cristiano Rocha, UTE Jaraqui, UTE Manauara, UTE Ponta Negra and UTE Tambaqui Power Plants, and, as of May 31, 2025, will trade energy in the Regulated Contracting Environment (ACR) through their respective Electric Energy Trading Agreements in the Regulatory Environment (CCEAR), as reported by AmGT.
|
In BRL Thousand |
Price Contractual Components |
|
Unit Variable Cost per MWh (O&M)¹ Fixed Revenue (Fuel) ² |
0.0178 |
2025 |
36,463 |
2026 to 2029 |
57,348 |
2030 |
52,477 |
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Fixed Revenue (Other Items) ² 2025 |
268,194 |
2026 to 2029 |
421,439 |
2030 |
385,645 |
Source: CCEARs Contract of Complexo PIEs. ¹ referred to March 2014 ² referred to November 2014 |
|
The volume of energy dispatched in MWh was projected considering the contracted powers reported in the units’ CCEARs, with 331.59 MW being the total contracted for the five power plants belonging to Complexo PIEs.
Gross Revenue classified as “Corporate” includes the operation of UTE Coari and Complexo PIEs from January 2019 to May 2025. Both units operate with pass through CCVEE contracts with AmD. Therefore, their operation has no impact on the Company’s operating income.
The Annual Allowed Revenue (RAP) calculated by (ANEEL) and reported by AmGT of BRL 52.3 million per year for the period from July 2019 to the end of the projection period (March 2020). The sale of the transmission assets will happen in December 2019. The value considered as residual was informed in the valuation report of the transmission assets made available by AmGT.
Forecasted revenues per generating unit are shown in the table below:
Projected Income Statement |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
Gross Revenue |
3,384,246 |
3,588,650 |
3,714,767 |
3,837,808 |
4,005,486 |
4,182,387 |
% Growth |
n.a. |
6.04% |
3.51% |
3.31% |
4.37% |
4.42% |
Generation |
1,919,783 |
1,997,972 |
2,079,829 |
2,141,570 |
2,245,774 |
2,350,927 |
% Gross Revenue |
56.73% |
55.67% |
55.99% |
55.80% |
56.07% |
56.21% |
Transmission |
50,403 |
13,076 |
- |
- |
- |
- |
% Gross Revenue |
1.49% |
0.36% |
0.00% |
0.00% |
0.00% |
0.00% |
Corporate |
1,414,060 |
1,577,602 |
1,634,938 |
1,696,238 |
1,759,712 |
1,831,459 |
% Gross Revenue |
41.78% |
43.96% |
44.01% |
44.20% |
43.93% |
43.79% |
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Projected Income Statement |
|
2025 |
|
2026 |
|
2027 |
|
2028 |
|
2029 |
|
2030 |
Gross Revenue |
|
3,983,829 |
|
3,755,137 |
|
3,514,558 |
|
3,579,412 |
|
3,723,703 |
|
3,532,194 |
% Growth |
|
-4.75% |
|
-5.74% |
|
-6.41% |
|
1.85% |
|
4.03% |
|
-5.14% |
Generation |
|
3,027,772 |
|
3,518,840 |
|
3,269,230 |
|
3,324,211 |
|
3,459,265 |
|
3,280,996 |
% Gross Revenue |
|
76.00% |
|
93.71% |
|
93.02% |
|
92.87% |
|
92.90% |
|
92.89% |
Transmission |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
% Gross Revenue |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
Corporate |
|
956,057 |
|
236,297 |
|
245,328 |
|
255,201 |
|
264,437 |
|
251,198 |
% Gross Revenue |
|
24.00% |
|
6.29% |
|
6.98% |
|
7.13% |
|
7.10% |
|
7.11% |
Taxes and Charges Balbina Aparecida Mauá 3 Transmission PIEs
ICMS (Balbina, Aparecida and Block III) |
25.0% |
25.0% |
- |
25.0% |
25.0% |
PIS |
1.65% |
1.65% |
1.65% |
1.65% |
1.65% |
COFINS |
7.60% |
7.60% |
7.60% |
7.60% |
7.60% |
ONS / CCEE |
0.10% |
0.10% |
0.10% |
0.10% |
0.10% |
TFSEE (%) / (BRL Thousand / year) |
0.40% |
0.40% |
0.40% |
0.40% |
0.40% |
ESS |
0.50% |
0.50% |
- |
- |
1.00% |
RGR |
2.60% |
2.60% |
- |
2.60% |
0.00% |
CDE |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
R&D |
1.00% |
1.00% |
1.00% |
1.00% |
1.00% |
TUST 2017-2018 (BRL/kW) / TUSD / TUSTg |
3.704 |
6.71 |
3.26 |
- |
6.71 |
MUST (MW) |
245.00 |
151.40 |
- |
|
305.00 |
CFURH - 2018 (BRL / MWh) |
5.05 |
- |
- |
- |
- |
AmGT has a natural gas purchase agreement, which contracts a total volume of
5,420 thousand m³ per day for its operation.
The contract has a Take or Pay character at 70% of daily volume (3.8 million m³/day) and an annual volume of 80% of daily volume (4.3 million m³/day).
The price of cubic m³ is segregated into five portions, namely molecule, distribution margin, transport, taxes and outlet cable, the last one being applied only to the volume directed to Complexo PIEs due to the compensation, by means of the natural gas tariff, of investments in thermoelectric outlet cables required for the delivery of gas to the PIEs Complex.
The price projection of m³ of gas was made according to the prices on the base date reported by AmGT’s Management, which were adjusted annually based on the IPCA projection on the base date.
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The projected consumption in m³ of gas was calculated based on the volume dispatched in MWh, multiplied by the specific Heat Rate of each thermal power plant.
For the total amount considered as fuel cost, the discount derived from the Amount Paid and Not Withdrawn (QPNR) was applied, which was accumulated in moments of gas consumption below 50% of the contracted volume. AmGT’s QPNR balance at the base date is 588,205 million m³.
The discount derived from QPNR was calculated by deducting from the monthly volume consumed by the total AmGT in m³ that exceeded the minimum of 70% established under the contract.
Reimbursement by Fuel Consumption Account (CCC)
As reported by AmGT Management, the Company receives coverage from the Fuel Consumption Account (CCC) through the Electric Energy Trading Chamber (CCEE) of part of the fuel cost, and is reimbursed with the amounts paid relating to the transport installments and margin distribution.
The reimbursement received by AmGT from the transport and gas distribution margin portions also provides that any portion of PIS/Cofins and ICMS credit that is not used in the AmGT operation will also be reimbursed, according to premises discussed with the Company’s Management.
PMSO projections were handled separately between AmGT’s generating units.
Regarding the projection of costs and expenses with personnel and social charges, materials and products, outsourced services and other operating expenses (PMSO), for the period from 2019 to 2023, the amounts were considered as expected by the Company’s Management, which include forecasting the impact of the Voluntary Dismissal Program (POS) between 2019 and 2020. Additionally, PMSO projections include maintenance and overhaul cycles of the power plants.
From 2024 until the end of the AmGT concession (November 30, 2030), personnel costs and social charges were calculated based on the 2023 projection adjusted annually using the IPCA projection on the base date.
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With regard to Balbina HPP, despite its operations ending on February 28, 2027, the maintenance of personnel and social charges until the end of AmGT operations was considered.
For costs with Materials and Products, Third Party Services and Other Operating Expenses from 2024 to the end of the respective operations of the units, we adopted the average margins on the net revenue from 2019 to 2023, in order to capture the cycles of maintenance and overhaul stated under such entries and designed by the Company.
Additionally, as reported by AmGT Management, the operations of the PIEs and Aparecida generating units are similar to each other. Thus, for PMSO projections of PIEs after May 31, 2025, the same ratio of expenses by power was used, except for personnel costs and social charges, which considered the inflation adjustment based on the IPCA index.
For the period from 2019 to 2023, the amounts ?were adopted according to expectations presented in the Company’s PDG.
For PMSO costs connected to Corporate, the expectations of AmGT Management presented in the Company’s PDG, which covers the period from 2019 to 2023, were considered.
From 2024 until the end of the AmGT concession (November 30, 2030), the 2023 amounts ?annually adjusted based on the IPCA projection on the base date were considered.
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PMSO |
|
2019 |
2020 |
2021 |
2022 |
2023 |
Personnel and Social Charges |
|
141,368,982,17 |
106,799,951,74 |
111,026,440,03 |
116,622,172,61 |
122,639,876,72 |
Central Administration |
|
31,101,176 |
23,495,989 |
24,425,817 |
25,656,878 |
26,980,773 |
UHE Balbina |
|
15,550,588 |
11,747,995 |
12,212,908 |
12,828,439 |
13,490,386 |
UTE Aparecida 7,8,9 and 10 |
|
22,619,037 |
17,087,992 |
17,764,230 |
18,659,548 |
19,622,380 |
UTE Mauá Block III and IV |
|
21,205,347 |
16,019,993 |
16,653,966 |
17,493,326 |
18,395,982 |
UTE Mauá 3 - Usina Nova ( Complex+ ADM + Other) |
|
38,169,625 |
28,835,987 |
29,977,139 |
31,487,987 |
33,112,767 |
UTE Mauá - ADM |
|
4,241,069 |
3,203,999 |
3,330,793 |
3,498,665 |
3,679,196 |
Other Generation |
|
11,309,519 |
8,543,996 |
8,882,115 |
9,329,774 |
9,811,190 |
Transmission |
|
29,687,486 |
22,427,990 |
23,315,552 |
24,490,656 |
25,754,374 |
UTE Other Interior Power Plants |
|
4,241,069,47 |
3,203,998,55 |
3,330,793,20 |
3,498,665,18 |
3,679,196,30 |
Materials and Products |
|
114,359,228,69 |
82,965,602,73 |
128,654,038,17 |
41,712,771,50 |
53,773,397,53 |
Central Administration |
|
1,444,741 |
1,506,454 |
1,570,872 |
1,638,117 |
1,682,064 |
UHE Balbina |
|
3,960,363 |
2,882,674 |
2,913,181 |
3,049,868 |
3,191,951 |
UTE Aparecida |
|
24,024,000 |
23,564,000 |
29,828,000 |
10,828,000 |
17,838,000 |
UTE Mauá Block III and IV |
|
|
|
|
|
|
UTE Mauá 3 - Usina Nova ( Complex+ ADM + Other) |
|
76,917,873 |
48,466,837 |
85,899,985 |
20,051,543 |
20,627,562 |
UTE Mauá - ADM |
|
|
|
|
|
|
Other Generation |
|
844,211 |
477,085 |
494,289 |
505,748 |
515,767 |
Transmission |
|
551,000 |
30,000 |
20,000 |
10,000 |
10,000 |
UTE Other Interior Power Plants |
|
7,461,252 |
6,515,638 |
8,422,001 |
6,135,243 |
10,423,820 |
Third Party Service |
|
130,205,307,26 |
104,811,950,91 |
100,212,077,39 |
69,916,720,89 |
73,362,498,52 |
Central Administration |
|
28,147,047 |
24,567,558 |
24,833,427 |
26,244,985 |
27,619,625 |
UHE Balbina |
|
23,935,163 |
9,984,953 |
10,497,501 |
9,734,796 |
8,517,804 |
UTE Aparecida |
|
21,161,555 |
15,679,430 |
22,626,789 |
10,794,575 |
12,973,527 |
UTE Mauá Block III and IV |
|
230,000 |
|
20,000 |
|
20,000 |
UTE Mauá 3 - Usina Nova ( Complex+ ADM + Other) |
|
47,139,165 |
47,642,951 |
35,444,687 |
16,046,771 |
17,473,769 |
UTE Mauá - ADM |
|
1,638,743 |
1,737,414 |
1,842,645 |
1,954,905 |
2,074,700 |
Other Generation |
|
353,223 |
233,064 |
242,740 |
252,682 |
263,206 |
Transmission |
|
3,954,967 |
1,036,669 |
744,848 |
757,657 |
355,500 |
UTE Other Interior Power Plants |
|
5,867,410 |
5,900,390 |
6,064,826 |
6,337,937 |
6,422,275 |
Other Operating Expenses |
|
31,842,971,18 |
31,408,266,08 |
38,847,099,80 |
29,132,408,68 |
30,135,844,49 |
Central Administration |
|
18,309,482 |
15,155,714 |
14,455,624 |
13,960,026 |
14,438,613 |
UHE Balbina |
|
781,990 |
783,546 |
793,876 |
799,086 |
708,487 |
UTE Aparecida |
|
3,649,979 |
2,149,369 |
5,507,073 |
2,106,198 |
2,678,645 |
UTE Mauá Block III and IV |
|
58,000 |
36,000 |
|
|
|
UTE Mauá 3 - Usina Nova ( Complex+ ADM + Other) |
|
8,564,076 |
13,145,441 |
17,910,508 |
12,080,971 |
12,117,560 |
UTE Mauá - ADM |
|
8,413,885 |
8,794,881 |
8,844,107 |
8,884,134 |
8,919,753 |
Other Generation |
|
20,191 |
21,029 |
29,920 |
30,837 |
31,807 |
Transmission |
|
487,499 |
101,791 |
104,661 |
107,661 |
110,796 |
UTE Other Interior Power Plants |
|
49,946 |
72,405 |
75,358 |
78,467 |
81,744 |
Other Risk Payment (GSF UHE Balbina)¹ |
|
|
|
|
|
|
PLR |
|
|
|
|
|
|
TOTAL |
|
417,776,489 |
325,985,771 |
378,739,655 |
257,384,074 |
279,911,617 |
The investment curve foreseen in PDNG was considered, with increases pointed out by the Due Diligence performed by Deloitte. The table below shows the investment curve for the assessment period.
Nominal CapEx |
|
2019 |
2020 |
2021 |
2022 |
2023 |
UHE Balbina |
0 |
5,765 |
38,565 |
13.332 |
8,799 |
580 |
UTE Aparecida |
0 |
17,095 |
1,402 |
129 |
357 |
58 |
Mauá 3 |
0 |
0 |
0 |
0 |
0 |
0 |
Environmental: Construction |
0 |
703 |
730 |
0 |
0 |
0 |
Environmental: Improvement |
0 |
23 |
0 |
0 |
0 |
0 |
Environmental: Systems |
0 |
146 |
0 |
0 |
0 |
0 |
Environmental: Implementation |
0 |
10,811 |
11,073 |
9,739 |
10,101 |
10,487 |
Transmission |
36,771 |
7,940 |
0 |
0 |
0 |
0 |
Classification: Confidential
Page 17
|
Date: 11/05/2019
IT DFPI-023/2019 |
On September 16, 2019, Eletrobras’ Executive Board approved the new discount rate for the Eletrobras System through Resolution No. 644/2019. As the transaction is between the same group, Deloitte used the Eletrobras System discount rate.
The assessment of the outsourced consulting firm, Deloitte, presented the following results:
|
BRL Thousand |
Result of Valuation |
|
Cash Flow at Present Value |
5,023,468 |
Economic Adjustments |
-2,540,248 |
Working Capital Settlement |
92,483 |
Residual Amount / Sale of Assets |
554,524 |
Economic Value |
3,130,227 |
The assumptions used by Deloitte for AmGT valuation were reviewed and validated by Eletrobras technical areas. In addition, DFPI has analyzed Deloitte’s economic and financial model and is in accordance with the modeling and methodology used. Accordingly, DFPI approves the use of the Deloitte assessment for AmGT’s datio in solutum transaction to Eletronorte.
As approved by resolution RES-876/2018 dated December 10, 2018, the transfer of AmGT’s shares from Eletrobras to Eletronorte will be made through Datio in Solutum, where Eletrobras will pay off its debt to Eletronorte, as explained under Item 4 of this IT, transferring all AmGT shares to Eletronorte.
Classification: Confidential
Page 18
|
Date: 11/05/2019
IT DFPI-023/2019 |
As the value of the shares, as a result of Deloitte’s valuation, is higher than the debt balance, Eletronorte will pay the difference in currency. The table below shows the composition of the amounts involved in the transaction on the base date of December 31, 2018:
BRL thousand | |
Amount of AmGT | 3,130,227,000.0 |
Debt Balance on 12/31/2018 | 2,936,049,450.3 |
Cash amount to be paid by ELN | 194,177,549.7 |
Adjustments:
The amounts shown in the table above will be adjusted until the actual transfer date of the shares as follows:
- Debt Balance: Adjusted based on SELIC;
- AmGT Amount: Adjustment will be made between the valuation base date and the last audited financial statement (quarterly or annually) by AmGT’s variation in Net Equity. Between the date of the last audited financial statement and the actual transfer, the amount will be adjusted by SELIC.
- Cash amount to be paid by Eletronorte: Difference between AmGT and Debt amount, adjusted on the transfer date.
The operation of transfer of shares by Datio in Solutum involves fiscal and tax aspects. In this sense, it was found that according to current tax laws, the payment of financial charges on loan operations, the person responsible for the payment of withholding income tax (IRRF) is the legal entity that makes the payment of yield.
It should be noted that IRRF accounts for an advance of the tax, from the point of view of the legal entity which is beneficiary of the yield. Thus, the amount of IRRF will be used by the beneficiary company as a credit to be deducted in the calculation of income tax levied on earnings (IRPJ). The Withholding Income Tax (IRRF) rate is defined based on the term of the transaction, as below (Article 45, IN RFB 1585/2015):
Classification: Confidential
Page 19
|
Date: 11/05/2019
IT DFPI-023/2019 |
· 22.5%, in applications with term up to 180 days;
· 20%, in applications with term from 181 days to 360 days;
· 17.5%, in applications with term from 361 days to 720 days;
· 15%, in applications with term above 720 days.
Article 47, Paragraph 4 (RFB Normative Instruction No. 1585/2015), defines that in the operations of loan of financial resources between legal entities or between legal entities and individuals in which the payment term is indefinite, the rate of income tax at source is 22.5%.
Considering the debt balance at September 30, 2019, as informed by DFF, of the total debt amount of BRL 3,071,616 thousand, BRL 176,034 thousand account for interest that was incorporated, as shown in the table already shown in Item 4.1. Accordingly, Eletrobras will pay the amount of BRL 36,607 thousand as income tax withheld at source. The settlement of the debt with Eletronorte is net of the applicable income tax, and Eletronorte is credited with this amount.
|
BRL thousand | |
|
Position: 09/30/2019 |
|
|
Eletrobras - Eletronorte |
Eletrobras - Eletronorte |
|
(Ceron) |
(Boavista) |
Principal |
2,609,491 |
286,091 |
Interest |
161,784 |
14,250 |
Outstanding Balance |
2,771,275 |
300,341 |
Eletronorte currently collects PIS and COFINS on financial expenses arising from Eletrobras’ debt to the latter, even without actual payment given that interest is being capitalized. Thus, Eletronorte does not receive payment of the principal and interest portion of the debt, and has to pay the federal income tax on the incorporated interest. With the operation in question, this tax inefficiency will cease.
Given that there is a difference in the amount ascertained by the valuation and the book value of AmGT, there was need for analysis of the possibility of formation of goodwill and the way of accounting for the transaction.
Classification: Confidential
Page 20
|
Date: 11/05/2019
IT DFPI-023/2019 |
Accordingly, the Accounting Standards Department (DFCN) concluded that the appropriate accounting treatment is that any differences between the carrying amount and the transaction price should be allocated directly to the net equity of Eletrobras Holding and Eletronorte, specifically under the retained earnings and loss account, and there should be no effect on the income, nor goodwill formation in this intragroup transaction. Additionally, it should be noted that any effects on transactions between parent and subsidiary would naturally be offset in the business group by the equity method.
For instance, considering that the sale price of Amazonas GT to Eletronorte amounted to BRL 3,130,227 thousand and the net equity value of Amazonas GT amounted to BRL -50,136, we would have the following simulated impact that would ultimately generate a negative effect on Eletronorte’s net equity without impact on profit or loss.
Eletrobras | |
Sale | |
Deficiency - Amazonas GT |
-50,136 |
Amount of the Sale |
3,130,227 |
| |
Positive entry in PL for the sale - retained earnings |
3,180,363 |
| |
Negative entry in PL - retained earnings - equity method Eletronorte |
-3,180,363 |
| |
Eletronorte | |
Purchase | |
| |
Entry of deficiency - Amazonas GT |
-50,136 |
Amount Paid |
3,130,227 |
| |
Negative entry in PL - retained earnings |
-3,180,363 |
Pursuant to the premises established, DFPI agrees with the amount of AmGT set by Deloitte to carry out the Datio in Solutum transaction with Eletronorte, thus carrying out the efforts necessary for the transfer of AmGT shares to Eletronorte, pursuant to decision of the Executive Board of Eletrobras based on RES-876/2018, and as set forth in the Company’s Strategic Planning.
Classification: Confidential
Page 21
|
Date: 11/05/2019
IT DFPI-023/2019 |
The proposed operation will settle a debt that Eletrobras has with Eletronorte, resulting from the privatization process of the distribution companies Ceron and Boa Vista Energia, in addition to optimizing Eletrobras’ structure, taking advantage of the existing synergy in the company’s operations in Brazil’s Northern region.
Marcos Barreto de Faria Pinho |
Leonardo Pereira Alves |
Agreed: |
Felipe Baptista da Silva |
Classification: Confidential
Page 22
|
ANEXO 1 – DRE AND CASH FLOW |
Date: 10/17/2019
IT DFPI-023/2019 |
Projected Income Statement |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
2029 |
2030 | ||
Gross Revenue |
3,384,246 |
3,588,650 |
3,714,767 |
3,837,808 |
4,005,486 |
4,182,387 |
3,983,829 |
3,755,137 |
3,514,558 |
3,579,412 |
3,723,703 |
3,532,194 | ||
% Growth |
n.a. |
6.04% |
3.51% |
3.31% |
4.37% |
4.42% |
-4.75% |
-5.74% |
-6.41% |
1.85% |
4.03% |
-5.14% | ||
Generation |
1,919,783 |
1,997,972 |
2,079,829 |
2,141,570 |
2,245,774 |
2,350,927 |
3,027,772 |
3,518,840 |
3,269,230 |
3,324,211 |
3,459,265 |
3,280,996 | ||
% Gross Revenue |
56.73% |
55.67% |
55.99% |
55.80% |
56.07% |
56.21% |
76.00% |
93.71% |
93.02% |
92.87% |
92.90% |
92.89% | ||
Transmission |
50,403 |
13,076 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- | ||
% Gross Revenue |
1.49% |
0.36% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% | ||
Corporate |
1,414,060 |
1,577,602 |
1,634,938 |
1,696,238 |
1,759,712 |
1,831,459 |
956,057 |
236,297 |
245,328 |
255,201 |
264,437 |
251,198 | ||
% Gross Revenue |
41.78% |
43.96% |
44.01% |
44.20% |
43.93% |
43.79% |
24.00% |
6.29% |
6.98% |
7.13% |
7.10% |
7.11% | ||
Deductions |
(918,155) |
(981,734) |
(1,014,713) |
(1,049,551) |
(1,090,806) |
(1,136,480) |
(1,057,804) |
(967,308) |
(859,509) |
(862,372) |
(896,592) |
(849,961) | ||
% Growth |
27.13% |
27.36% |
27.32% |
27.35% |
27.23% |
27.17% |
26.55% |
25.76% |
24.46% |
24.09% |
24.08% |
24.06% | ||
Generation |
(427,628) |
(439,875) |
(454,747) |
(468,589) |
(488,105) |
(509,205) |
(730,354) |
(886,376) |
(775,484) |
(774,965) |
(806,022) |
(763,925) | ||
% Gross Revenue |
46.57% |
44.81% |
44.82% |
44.65% |
44.75% |
44.81% |
69.04% |
91.63% |
90.22% |
89.86% |
89.90% |
89.88% | ||
Transmission |
(6,212) |
(1,531) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- | ||
% Gross Revenue |
0.68% |
0.16% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% | ||
Corporate |
(484,315) |
(540,329) |
(559,966) |
(580,962) |
(602,701) |
(627,275) |
(327,450) |
(80,932) |
(84,025) |
(87,406) |
(90,570) |
(86,035) | ||
% Gross Revenue |
52.75% |
55.04% |
55.18% |
55.35% |
55.25% |
55.19% |
30.96% |
8.37% |
9.78% |
10.14% |
10.10% |
10.12% | ||
Net Revenue |
2,466,090 |
2,606,916 |
2,700,054 |
2,788,257 |
2,914,680 |
3,045,906 |
2,926,025 |
2,787,830 |
2,655,049 |
2,717,041 |
2,827,110 |
2,682,233 | ||
% Growth |
n.a. |
5.71% |
3.57% |
3.27% |
4.53% |
4.50% |
-3.94% |
-4.72% |
-4.76% |
2.33% |
4.05% |
-5.12% | ||
Generation |
1,492,155 |
1,558,097 |
1,625,082 |
1,672,981 |
1,757,669 |
1,841,722 |
2,297,418 |
2,632,464 |
2,493,746 |
2,549,246 |
2,653,243 |
2,517,070 | ||
% Gross Revenue |
60.51% |
59.77% |
60.19% |
60.00% |
60.30% |
60.47% |
78.&% |
94.43% |
93.92% |
93.82% |
93.85% |
93.84% | ||
Transmission |
44,191 |
11,545 |
- |
- |
-- |
- |
- |
- |
- |
- |
- |
- | ||
% Gross Revenue |
1.79% |
0.44% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% | ||
Corporate |
929,744 |
1,037,273 |
1,074,972 |
1,115,277 |
1,157,011 |
1,204,184 |
628,608 |
155,365 |
161,303 |
167,795 |
173,867 |
165,163 | ||
% Gross Revenue |
37.70% |
39.79% |
39.81% |
40.00% |
39.70% |
39.53% |
21.48% |
5.57% |
6.08% |
6.18% |
6.15% |
6.16% | ||
PMSO |
(425,814) |
(329,814) |
(382,350) |
(260,988) |
(283,852) |
(366,944) |
(461,664) |
(540,157) |
(543,332) |
(562,797) |
(585,247) |
(556,177) | ||
% Growth |
17.27% |
12.65% |
14.16% |
9.36% |
9.74% |
12.05% |
15.78% |
19.38% |
20.46% |
20.71% |
20.70% |
20.7-4% | ||
Generation |
(304,093) |
(237,664) |
(289,269) |
(164,518) |
(182,960) |
(266,782) |
(357,674) |
(432,192) |
(431,242) |
(446,423) |
(464,425) |
(441,191) | ||
% Gross Revenue |
71.41% |
72.06% |
75.66% |
63.04% |
64.46% |
72.70% |
77.47% |
80.01% |
79.37% |
79.32% |
79.36% |
79.33% | ||
Transmission |
(34,681) |
(22,720) |
(23,316) |
(24,491) |
(25,754) |
(26,739) |
(27,760) |
(28,821) |
(29,923) |
(31,066) |
(32,254) |
(30,696) | ||
% Gross Revenue |
8.14% |
6.89% |
6.10% |
9.38% |
9.07% |
7.29% |
6.01% |
5.34% |
5.51% |
5.52% |
5.51% |
5.52% | ||
Corporate |
(87,040) |
(69,430) |
(69,765) |
(71,979) |
(75,138) |
(73,424) |
(76,230) |
(79,143) |
(82,168) |
(85,308) |
(88,568) |
(84,290) | ||
% Gross Revenue |
20.44% |
21.05% |
18.25% |
27.58% |
26.47% |
20.01% |
16.51% |
14.65% |
15.12% |
15.16% |
15.13% |
15.16% | ||
Non-Manageable |
(1,205,746) |
(1,323,773) |
(1,391,204) |
(1,462,667) |
(1,526,502) |
(1,587,340) |
(1,270,746) |
(1,003,852) |
(1,053,351) |
(1,099,168) |
(1,137,352) |
(1,076,185) | ||
% Growth |
48.89% |
50.78% |
51.53% |
52.46% |
52.37% |
52.11% |
43.43% |
36.01% |
39.67% |
40.45% |
40.23% |
40.12% | ||
Generation |
(280,643) |
(287,709) |
(316,232) |
(347,390) |
(369,491) |
(383,155) |
(642,138) |
(848,487) |
(892,048) |
(931,374) |
(963,484) |
(911,022) | ||
% Gross Revenue |
23.28% |
21.73% |
22.73% |
23.75% |
24.21% |
24.14% |
50.53% |
84.52% |
84.69% |
84.73% |
84.71% |
84.65% | ||
Transmission |
4,641 |
1,210 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- | ||
% Gross Revenue |
-0.38% |
-0.09% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% | ||
Corporate |
(929,744) |
(1,037,273) |
(1,074,972) |
(1,115,277) |
(1,157,011) |
(1,204,184) |
(628,608) |
(155,365) |
(161,303) |
(167,795) |
(173,867) |
(165,163) | ||
% Gross Revenue |
77% |
78% |
77% |
76% |
76% |
76% |
49% |
15% |
15% |
15% |
15% |
15% | ||
EBITDA |
834,531 |
953,329 |
926,501 |
1,064,602 |
1,104,326 |
1,091,622 |
1,193,615 |
1,243,820 |
1,058,366 |
1,055,075 |
1,104,512 |
1,049,872 | ||
EBITDA Margin |
33.84% |
36.57% |
34.31% |
38.18% |
37.89% |
35.84% |
410.79% |
44.62% |
39.86% |
38.83% |
39.07% |
39.14% | ||
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- | ||
Generation |
907,419 |
1,032,725 |
1,019,581 |
1,161,072 |
1,205,219 |
1,191,785 |
1,297,606 |
1,351,785 |
1,170,456 |
1,171,450 |
1,225,334 |
1,164,857 | ||
% EBITDA |
108.73% |
108.33% |
110.05% |
109.06% |
109.14% |
109.18% |
108.71% |
108.68% |
110.59% |
111.03% |
110.94% |
110.95% | ||
Transmission |
14,151 |
(9,965) |
(23,316) |
(24,491) |
(25,754) |
(26,739) |
(27,760) |
(28,821) |
(29,923) |
(31,066) |
(32,254) |
(30,696) | ||
% EBITDA |
1.70% |
-1.05% |
-2.52% |
-2.30% |
-2.33% |
-2.45% |
-2.33% |
-2.32% |
-2.83% |
-2.94% |
-2.92% |
-2.92% | ||
Corporate |
(87,040) |
(69,430) |
(69,765) |
(71,979) |
(75,138) |
(73,424) |
(76,230) |
(79,143) |
(82,168) |
(85,308) |
(88,568) |
(84,290) | ||
% EBITDA |
-10.43% |
-7.28% |
-7.53% |
-6.76% |
-6.80% |
-6.73% |
-6.39% |
-6.36% |
-7.76% |
-809% |
-8.02% |
-8.03% | ||
|
-7719.624207 |
|
|
|
|
|
|
|
|
|
|
| ||
Depreciation and Amortization |
(287,601) |
(282,903) |
(272,509) |
(263,575) |
(248,562) |
(248,573) |
(158,287) |
(93,825) |
(73,777) |
(69,768) |
(69,768) |
(63,954) | ||
% Receita Liquida |
11.66% |
10.85% |
10.09% |
9.45% |
8.53% |
8.16% |
5.41% |
3.37% |
2.78% |
2.57% |
2.47% |
2.38% | ||
EBIT/LAIR |
546,929 |
670,427 |
653,991 |
801,027 |
855,764 |
843,049 |
1,035,328 |
1,149,996 |
984,589 |
985,308 |
1,034,744 |
985,918 | ||
% Receita Liquida |
22.18% |
25.72% |
24.22% |
28.73% |
29.36% |
27.68% |
35.38% |
41.25% |
37.08% |
36.26% |
36.60% |
36.76% | ||
IR &CSLL |
(130,145) |
(196,066) |
(222,333) |
(272,325) |
(290,936) |
(286,613) |
(351,988) |
(390,975) |
(334,736) |
(334,981) |
(351,789) |
(335,188) | ||
% IR/CSLL |
23.80% |
29.24% |
34.00% |
34.00% |
34.00% |
34.00% |
34.00% |
34.00% |
34.00% |
34.00% |
34.00% |
34.00% | ||
Accrued Tax Loss |
257,770 |
93,691 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- | ||
Negative Base of IRCSLL |
|
30% |
(164,079) |
(93,691) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Taxable Earnings |
|
|
382,850 |
576,735 |
653,991 |
801,027 |
855,764 |
843,049 |
1,035,328 |
1,149,996 |
984,589 |
985,308 |
1,034,744 |
985,918 |
Income Tax – Base |
|
15% |
(57,428) |
(86,510) |
(98,099) |
(120,154) |
(128,365) |
(126,457) |
(155,299) |
(172,499) |
(147,688) |
(147,796) |
(155,212) |
(147,888) |
Income Tax - Additional < |
240 |
10% |
(38,261) |
(57,650) |
(65,375) |
(80,079) |
(85,552) |
(84,281) |
(103,509) |
(114,976) |
(98,435) |
(98,507) |
(103,450) |
(98,568) |
SUDAM |
|
0% |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
CSLL |
|
9% |
(34,457) |
(51,906) |
(58,859) |
(72,092) |
(77,019) |
(75,874) |
(93,180) |
(103,500) |
(88,613) |
(88,678) |
(93,127) |
(88,733) |
Net Profit/(Loss) for the Year |
|
416,784 |
474,361 |
431,658 |
528,702 |
564,828 |
556,437 |
683,341 |
759,021 |
649,853 |
650,327 |
682,955 |
650,730 | |
% Growth |
|
|
16.90% |
18.20% |
15.99% |
18.96% |
19.38% |
18.27% |
23.35% |
27.23% |
24.48% |
23.94% |
24.16% |
24.26% |
Classification: Confidential
Page 23
|
ANEXO 1 – DRE AND CASH FLOW |
Date: 10/17/2019
IT DFPI-023/2019 |
Discounted Cash Flow |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
2029 |
2030 |
EBITDA |
834,531 |
953,329 |
926,501 |
1,064,602 |
1,104,326 |
1,091,622 |
1,193,615 |
1,243,820 |
1,058,366 |
1,055,075 |
1,104,512 |
1,049,872 |
Working Capital Variation |
(760,477) |
(115,979) |
(22,434) |
(338) |
(23,435) |
(31,341) |
46,576 |
325,560 |
(16,824) |
(3,851) |
(6,913) |
(8,349) |
EBITDA (Líquido da Variação do Capital de Giro) |
74,053 |
837,350 |
904,067 |
1,064,264 |
1,080,891 |
1,060,281 |
1,240,191 |
1,569,381 |
1,041,542 |
1,051,224 |
1,097,599 |
1,041,522 |
CAPEX |
(42,484) |
(51,770) |
(23,200) |
(19,258) |
(11,125) |
|
|
|
|
|
|
|
Income Tax and Social Contribution |
(130,145) |
(196,066) |
(222,333) |
(272,325) |
(290,936) |
(286,613) |
(351,988) |
(390,975) |
(334,736) |
(334,981) |
(351,789) |
(335,188) |
Cash Flow |
(98,576) |
589,514 |
658,534 |
772,681 |
778,831 |
773,668 |
888,204 |
1,178,406 |
706,806 |
716,243 |
745,810 |
706,334 |
Discount Factor |
0.951 |
0.862 |
0.784 |
0.714 |
0.649 |
0.590 |
0.537 |
0.488 |
0.444 |
0.404 |
0.367 |
0.335 |
Discounted Cash Flow |
(93,707) |
508,014 |
516,271 |
551,342 |
505,602 |
456,725 |
476,811 |
575,258 |
313,763 |
289,132 |
273,778 |
236,719 |
| ||||||||||||
|
Projetado | |||||||||||
Residual Amount |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
2029 |
2030 |
Residual Amount |
- |
339,144 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
702,174 |
Generation |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
702,174 |
Transmission |
- |
339,144 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
Complexo Mauá |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
Discount Factor |
0.904 |
0.822 |
0.748 |
0.681 |
0.619 |
0.563 |
0.512 |
0.466 |
0.423 |
0.385 |
0.350 |
0.321 |
Residual Value at Present Value |
- |
278,703 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
225,296 |
Classification: Confidential
Page 24
Classification: Public Technical Note DGEG-001/2019
The process of transfer of the controlling interest from Eletrobras Amazonas GT to Eletronorte, for later merger into Eletronorte is in line with the Operational Excellence operating guideline established by the senior management in Eletrobras' strategic planning. In this regard, the Business and Management Master Plan (PDNG) 2019-2023 establishes the search for the corporate synergy of regional subsidiaries, with regard to operational, economic and financial and corporate aspects, and lists the corporate restructuring of Eletrosul and CGTEE, in addition to restructuring of Amazonas GT and Eletronorte among its goals.
The works for the merger of the two companies were started at Eletrobras upon RES 632/2018, dated 09/03/2018 with the creation of a WG to evaluate the merger of the activities of the companies AmGT and Eletronorte.
The final report of the aforementioned WG was approved by the Resolution of the Executive Board of Eletrobras under No. RES-876/2018 and, in addition, this resolution approved the merger of the activities of AmGT and Eletronorte.
One of the activities required to complete this merger was the valuation of AmGT's assets. For such purpose, the consulting firm Deloitte, which was responsible for conducting the Due Diligence and valuation of AmGT, was engaged.
The Generation Asset Expansion and Management Superintendence (DGE) was called, by the Advisory Board of the Generation Board on 05/07/2019, to monitor Deloitte's Due Diligence process in loco. This follow-up was carried out by the technicians assigned to the Generation Asset Management (DGEG) and Environment (DGEA), reporting to this superintendency, from May 13 to May 28, 2019. In addition to representatives of Eletrobras, technicians from Eletronorte attended this process.
The concluding Due Diligence results prepared by Deloitte were used in this document to support relevant information from the transfer of shareholding control from Amazonas GT to Eletronorte.
At last, on 11/19/2019, DGE received a request to prepare this Technical Note, entitled “Identification of Technical Benefits and Operating Synergies with the Transfer of Controlling Interest from Amazonas GT to Eletronorte”, to compose the necessary documentation for the Preparation of the Management Proposal of EGM 176 that will address the above topic.
4
Classification: Public Technical Note DGEG-001/2019
The purpose of this Technical Note is to present the characteristics of the assets of the companies Amazonas GT and Eletronorte, opportunities for operational adjustments/improvements, as well as gains in scale and scope due to the diversification of the company's portfolio resulting from the process of merger of these two companies by transferring the shares owned by Eletrobras in Amazonas GT to Eletronorte, by Giving in Payment, as determined by the Resolution of Eletrobras Executive Board RES-876/2018 dated 12/10/2018.
Amazonas Geração e Transmissão de Energia S.A. – AmGT is one of the Eletrobras Group companies, created in April 2013, as a result of the unbundling of the company Amazonas Energia, due to the interconnection of Manaus to the National Interconnected System - SIN. The company is headquartered in Manaus-AM, focusing on the business of Generation, Transmission and Sale of Electricity.
In September 2014, ANEEL, under Resolution No. 4.836/2014, approved the segregation of Amazonas Energia's activities and, as a result, AmGT absorbed that company's Electricity Generation, Transmission and Sale activities.
The composition of AmGT's generation portfolio includes corporate assets in water, fuel oil and gas thermal sources. In the thermal source, we highlight the Mauá 3 plant, combined cycle, whose first commercial operation order was issued by ANEEL in September 2017.
The following table provides a summary of generation assets, containing the most relevant technical information.
Power plant |
Primary Energy Source |
State |
Type |
System |
Generation Facility Configuration |
Type of Turbine /UG |
Cycle Type |
Eletrobras Installed Power Capacity (MW) |
HPP Balbina |
Water |
AM |
Corporate |
SIN |
5 x 51.50 MW |
Kaplan |
|
249.75 |
TPP Aparecida |
Natural Gas |
AM |
Corporate |
SIN |
Block I (2x40 MW) Block II (2x43 MW) |
GE (LM 6000) GE (LM 6000) |
Simple |
166 |
TPP Mauá 1 |
Natural Gas/OPGE Oil |
AM |
Corporate |
SIN |
Block III (2x55 MW) Block IV (10x15 MW) |
GE (MS 7000B) Wärtsila (18V46B) |
Simple |
260 |
TPP Mauá 3 |
Natural Gas |
AM |
Corporate |
SIN |
2 TG x 189.55 MW 1 1 TV x 211.65 MW |
Siemens (TG: CGT6 5000F4) Siemens (TV: SST6- PAC5000) |
Combined |
590.75 |
TPP Anamã |
Natural Gas |
AM |
Corporate |
Isolated |
5 x 433 kW |
Guascor (SFGLD-360) |
Simple |
2.17 |
TPP Anori |
Natural Gas |
AM |
Corporate |
Isolated |
5 x 914 kW |
Guascor (SFGM-560) |
Simple |
4.57 |
TPP Caapiranga |
Natural gas |
AM |
Corporate |
Isolated |
5 x 433 kW |
GudSCOr (SFGLD 360) |
Simple |
2.17 |
TPP Codajás |
Natural gas |
AM |
Corporate |
Isolated |
6 x 914 kW |
Guascor (SFGM 560) |
Simple |
5.48 |
|
|
|
TOTAL (MW) |
|
|
|
1,280.89 | |
Explanatory note 1 - Decommissioned and not able to return. Procedures for formal decommissioning are ongoing. Installed power capacity refers to Blocks III (natural gas) and IV (PGE oil) Source: Investor Information 3Q19 |
5
Classification: Public Technical Note DGEG-001/2019
Table 1: AmGT Generation Assets
In addition, by 2025, the assets of Manaus Independent Energy Producers (PIE) will be reversed to AmGT.
Power plant |
Primary Energy Source |
State |
System |
Generation Facility Configuration |
Type of Turbine /UG |
Cycle Type |
Eletrobrás Installed Power Capacity (MW) |
TPP Cristiano Rocha 1 |
OC1A Oil / Natural Gas |
AM |
SIN |
5 x 17.07 kW |
Wärtsilä (18V46-GD) |
Simple |
85 |
TPP Manauara 1 |
OC1A Oil / Natural Gas |
AM |
SIN |
5 x 17.07 kW |
Wärtsilä (18V46-GD) |
Simple |
67 |
TPP Ponta Negra 1 |
OC1A Oil / Natural Gas |
AM |
SIN |
5 x 17.07 kW |
Wärtsilä (18V46) |
Simple |
66 |
TPP Tambaqui 1 |
OC1A Oil / Natural Gas |
AM |
SIN |
5 x 16.06 kW |
MAN |
Simple |
75 |
TPP Jaraqui 1 |
OC1A Oil / Natural Gas |
AM |
SIN |
5 x 16.23 kW |
MAN |
Simple |
75 |
|
|
|
TOTAL (MW) |
|
|
368.00 | |
Explanatory note: 1- Independent Energy Producers (PIE), which in 2025 (end of contract) will be reverted to AmGT. Source: Investor Information 3Q19 |
Table 2: PIEs to be absorbed by AmGT in 2025
The current Business and Management Master Plan (PDNG) currently in force encompasses the investments planned for the 2019-2023 cycle. The figures presented by AmGT in PDNG 19-23 consider expenses required to invest in its generation assets, investments in reinforcements and improvements in transmission, as well as in its infrastructure over this period. Note that the investments refer only to corporate generation assets, since this company does not have any interest in SPE and the company does not have transmission concession, being only in charge of performing the operation and maintenance of these assets.
The following table shows AmGT's planned investment figures for PDNG 2019-2023.
PDNG19 - 23 | |||||||
Exploration and Equity Interest System |
Segment |
Investments (Amounts in thousands of reais) | |||||
2019 |
2020 |
2021 |
2022 |
2023 |
Total | ||
Corporate |
Transmission |
9,358.98 |
0.00 |
0.00 |
0.00 |
0.00 |
9,358.98 |
Generation |
19,570.97 |
10,447.00 |
2,020.00 |
1,020.00 |
550.00 |
33,607.97 | |
Infrastructure |
8,741.18 |
2,305.00 |
2,305.00 |
3,435.00 |
3,405.00 |
20,191.18 | |
TOTAL |
37,671.13 |
12,752.00 |
4,325.00 |
4,455.00 |
3,955.00 |
63,158.13 | |
Source: DFPP |
6
Classification: Public Technical Note DGEG-001/2019
Table3: Investments provided in PDNG 2019-2023 of AmGT
Centrais Elétricas do Norte do Brasil SA - Eletronorte is a company of the Eletrobras Group, created in June 1973. It is headquartered in the city of Brasilia and operates in the segments of Generation, Transmission and Sale of Electricity. Eletronorte has corporate assets in the Northern Region of Brazil, as well as interests in SPE.
Eletronorte's generation portfolio comprises six corporate assets and three interests in SPE, in water and thermal sources in diesel oil. Tucuruí Hydro Power Plant is worth mentioning, which is the second largest 100% Brazilian plant and is among the three largest reservoirs in the country.
The following table provides a summary of generation assets, containing the most relevant technical information.
Power plant |
Primary Energy Source |
State |
Type |
System |
Generation Facility Configuration |
Type of Turbine /UG |
Cycle Type |
Eletrobras Installed Power Capacity (MW) |
TPP Senador Arnon Afonso Farias de Melo 1 |
Diesel oil |
RR |
Corporate |
Isolated |
(2x30,94-1x24,0) |
-- |
Simple |
85.99 |
HPP Tucurui |
Water |
PA |
Corporate |
SIN |
(12x350+11x390+2x22.5 |
Francis |
-- |
8,535.00 |
HPP Samuel |
Water |
RO |
Corporate |
SIN |
(5x43.35) |
Kaplan |
-- |
216.75 |
HPP Curuá-Una |
Water |
PA |
Corporate |
SIN |
(2x10 +1x10.5) |
Kaplan |
-- |
30.30 |
HPP Coaracy Nunes |
Water |
AP |
Corporate |
SIN |
(2x2441x30) |
Kaplan |
-- |
78.00 |
TPP Araguaia |
Diesel oil |
MT |
Corporate |
SIN |
(22x1,059) |
-- |
Simple |
23.10 |
HPP Dardanelos 2 |
Water |
MT |
SPE |
SIN |
(1x29 +4x58) |
Francis |
-- |
63.95 |
HPP Belo Monte 3 |
Water |
PA |
SPE |
SIN |
Pimental (6x38.8) Beto Monte (18x611) |
Bulb Francis |
-- |
2,000.17 |
HPP Sinop 4 |
Water |
MT |
SPE |
SIN |
(2x200.9) |
Kaplan |
-- |
49.23 |
|
|
|
TOTAL (MW) |
|
|
|
11,082.49 |
Explanatory notes: | |
1- |
Resolution No. 2.894/2011 * Transfers Thermal Power Plant Senador Amon Farias de Mello from Eletronorte to Boa Vista Energia SA until February 10, 2012. Order No. 318/2014 - extends the deadline until the effective interconnection of the Isolated System of Boa Vista to SIN. |
2- |
HPP Dardanelos holds an interest of 24.5% in CHESF and 24.5% in ELETRONORTE. The total Installed Power Capacity of this venture is 261 MW |
3- |
HPP Belo Monte holds an interest of 15% in ELETROBRAS. 15% in CHESF and 19.98% in ELETRONORTE. The total Installed Power Capacity of this venture is 11,233,10 mw. The total operating power of this venture is 10,010.96 MW. |
4- |
HPP SINOP holds an interest of 24.5% in ELETRONORTE. The total Installed Power Capacity of this venture is 401.88 mw. The total operating power of this venture is 200.94 mw. |
Source: Investor Information 3Q19 |
Table 4: Eletronorte Generation Assets
7
Classification: Public Technical Note DGEG-001/2019
The current Business and Management Master Plan (PDNG) currently in force encompasses the investments planned for the 2019-2023 cycle. The figures presented by Eletronorte in PDNG 19-23 consider necessary investments in its generation transmission and (corporate and SPE) assets, as well as its infrastructure over this period.
The following table shows Eletronorte's planned investment figures for PDNG 2019-2023.
|
|
PDNG 19 - 23 |
|
|
|
| |
Exploration and Equity Interest System |
Segment |
|
Investments (Amounts in thousands of reais) |
| |||
2019 |
2020 |
2021 |
2022 |
2023 |
Total | ||
Corporate |
Transmission |
195,109.36 |
321,720.61 |
549,117.67 |
459,009.85 |
247,418.34 |
1,772,375.83 |
Generation |
29,434.75 |
65,736.33 |
14,825.93 |
8,640.00 |
10,836.00 |
129,473.00 | |
Environmental |
20,700.00 |
27,900.00 |
27,900.00 |
27,900.00 |
0.00 |
104,400.00 | |
Infrastructure |
21,883.61 |
15,300.00 |
15,300.00 |
15,300.00 |
15,300.00 |
83,083.61 | |
Telecom |
36,940.92 |
12,630.96 |
12,630.96 |
3,888.00 |
0.00 |
66,090.84 | |
TOTAL |
304,068.64 |
443,287.89 |
619,774.56 |
514,737.85 |
273,554.34 |
2,155,423.28 | |
Source: DFPP |
|
|
|
|
|
|
Table5: Corporate Investments provided in PDNG 2019-2023 of Eletronorte
PDNG 19 - 23 | |||||||
Exploration and Equity Interest System |
Segment |
Investments (Amounts in thousands of reais) | |||||
2019 |
2020 |
2021 |
2022 |
2023 |
Total | ||
SPE |
Transmission |
329,391.00 |
334,523.00 |
40,000.00 |
170,000.00 |
112,850.00 |
986,764.00 |
Generation |
76,355.00 |
0.00 |
53,900.00 |
67,375.00 |
94,325.00 |
291,955.00 | |
TOTAL |
405,746.00 |
334,523.00 |
93,900.00 |
237375.00 |
207,175.00 |
1,278,719.00 | |
Source: DFPP |
|
|
|
|
|
|
Table6: Investments provided in PDNG 2019-2023 of Eletronorte
The following table summarizes the technical characteristics of the portfolio of generation, corporate businesses and interest in Special Purpose Entities (SPE) of Amazonas GT and Eletronorte.
8
Classification: Public Technical Note DGEG-001/2019
Company |
Power plant |
Primary Energy Source |
UI |
Type |
System |
Generation Facility Configuration |
Type of Turbine /UG |
Cycle Type |
Eletrobras Installed Power Capacity (MW) |
Amazonas GT |
HPP Balbina |
Water |
AM |
Corporate |
SIN |
5 x 51.50 MW |
Kaplan |
|
249.75 |
TPP Aparecida |
Natural Gas |
AM |
Corporate |
SIN |
Block I (2x40 MW) Block II (2x43 MW) |
GE (LM 6000) GE (LM 6000) |
Simple |
166 | |
TPP Mauá 1 |
Natural Gas/OPGE Oil |
AM |
Corporate |
SIN |
Block III (2x55 MW) Block IV (10x15 MW) |
GE (MS 70006) Wärtisilä (18V46B) |
Simple |
260 | |
TPP Mauá 3 |
Natural Gas |
AM |
Corporate |
SIN |
2 TG x 189.55 MW 1 TV X 211.65 MW |
Siemens (TG: CGT6- 5000F4) Siemens (TV: SST6- PAC5000) |
Combined |
590.75 | |
TPP Anamã |
Natural Gas |
AM |
Corporate |
Isolated |
5 x 433 kW |
Guascor (SFGLD 360) |
Simple |
2.17 | |
TPP Anon |
Natural Gas |
AM |
Corporate |
Isolated |
5 x 914 kW |
Guascor (SFGM-S60) |
Simple |
4.57 | |
TPP Caapiranga |
Natural Gas |
AM |
Corporate |
Isolated |
5 x 433 kW |
Guascor (SFGLD 360) |
Simple |
2.17 | |
TPP Codajás |
Natural Gas |
AM |
Corporate |
Isolated |
6 x 914 kW |
Guascor (SFGM-560) |
Simple |
5.48 | |
TPP Cristiano Rocha 2 |
OC1A Oil / Natural Gas |
AM |
|
SIN |
5 x 17.07 kW |
Wärtisilä (18V46 GD) |
Simple |
85 | |
TPP Menauara 2 |
OC1A Oil / Natural Gas |
AM |
|
SIN |
5 x 17.07 kW |
Wärtisilä (18V46GD) |
Simple |
67 | |
TPP Ponta Negra 2 |
OC1A Oil / Natural Gas |
AM |
|
SIN |
5 x 17.07 kW |
Wärtisilä (18V46) |
Simple |
66 | |
TPP Tambaqui 2 |
OC1A Oil / Natural Gas |
AM |
|
SIN |
5 x 16.06 kW |
MAN |
Simple |
75 | |
TPP Jaraqui 2 |
OC1A Oil / Natural Gas |
AM |
|
SIN |
5 x 16.23 kW |
MAN |
Simple |
75 | |
Eletronorte |
TPP Senador Amon Afonso Farias de Meão |
Diesel oil |
RR |
Corporate |
Isolated |
(2 x 30.9 + 1x24.0) |
-- |
Simple |
85.99 |
HPP Tucurui |
Water |
PA |
Corporate |
SIN |
(12x350+11x390+2 x22.5) |
Francis |
-- |
8535.00 | |
HPP Samuel |
Water |
RO |
Corporate |
SIN |
(5x43.35) |
Kaplan |
-- |
216.75 | |
HPP Curuá-Una |
Water |
PA |
Corporate |
SIN |
(2x10 +1x10.5) |
Kaplan |
-- |
30.30 | |
HPP Coaracy Nunes |
Water |
AP |
Corporate |
SIN |
(2x24 +1x30) |
Kaplan |
-- |
78.00 | |
TPP Araguaia |
Diesel oil |
MT |
Corporate |
SIN |
(22x1,059) |
-- |
Simple |
23.10 | |
HPP Dardanelos 4 |
Water |
MT |
SPE |
SIN |
(1x29 +4x58) |
Francis |
-- |
63.95 | |
HPP Belo Monte 5 |
Water |
PA |
SPE |
SIN |
Pimental (6x38.8) Belo Monte (18x611) |
Bulb Francis |
-- |
2000.17 | |
HPP Sinop 6 |
Water |
MT |
SPE |
SIN |
(2x200.9) |
Kaplan |
-- |
49.23 | |
|
|
|
|
TOTAL (MW) |
|
|
|
12,731.38 | |
|
Explanatory note: 3 - Out of operation and not able to return. Procedures for formal decommissioning are ongoing. Installed power capacity refers to Blocks III (natural gas) and IV (PGE oil); 2- Independent Energy Producers (PIE), which in 2025 (end of contract) will be reverted to AmGT. 3- Resolution No. 2.894/2011 - Transfers Thermal Power Plant Senador Amon Farias de Mello from Eletronorte to Boa Vista Energia SA until February 10, 2012. Order No. 318/2014 - extends the deadline until the effective interconnection of the Isolated System of Boa Vista to SIN. 4 - HPP Dardanelos holds an interest of 24.5% in CHESF and 24.5% in ELETRONORTE. The total Installed Power Capacity of this venture is 261 mw 5- HPP Belo Monte holds an interest of 15% in ELETROBRÁS, 15% in CHESF and 19.96% in ELETRONORTE. The total Installed Power Capacity of this venture is 11,233,10 MW. The total operating power of this venture is 10,010.60 MW. 6- HPP SINOP holds an interest of 24.5% stake in ELETRONORTE. The total Installed Power Capacity of this venture is 401.88 MW. The total operating power of this venture is 200.94 MW. Source: Investor Information 3Q19 |
Table 7: Consolidation of generation assets after the merger of the companies
Regarding the transmission business portfolio, the following table presents the technical characteristics, Km of transmission line and transformation capacity of the companies Amazonas GT and Eletronorte.
Company |
Transmission Line Km |
Substations - Transformation Capacity (MVA) |
Amazonas GT |
390 |
1365 |
Eletro norte |
12706 |
34683 |
Source: Eletrobrás Management Report 2018 |
Table 8: Information on the Eletronorte Transmission System
It is worth mentioning that AmGT does not hold the transmission concession, but only provides these services. An auction is scheduled for the first half of 2020 by ANEEL to transfer the assets and the responsibility for the operation and maintenance for the new controller to operate the transmission assets.
9
Classification: Public Technical Note DGEG-001/2019
The transfer of controlling interest from Amazonas GT to Eletronorte will increase Eletronorte's asset base, making it a more robust company, both from a technical and operational point of view.
Eletronorte currently has two thermal power plants in its generation facilities: TPP Araguaia (23.1 MW, diesel), located in the state of Mato Grosso, and TPP Senador Arnon Afonso Farias de Mello (85.99 MW, diesel), located in the state of Roraima. With the transfer, the company will be able to operate in the natural gas generation segment with the technical knowledge and experience previously acquired by AMGT, as a result of the recent implementation of TPP Mauá 3 and the operation of other gas thermal plants in its portfolio.
Following the transfer of controlling interest, Eletronorte will have a total of 22 generation assets (including corporate plants and interests in special purpose entities - SPE), totaling 12,731.38 MW of installed power capacity, consolidating itself as the second largest generator among the Eletrobras Companies. The 1,649.89 MW increase in installed power capacity represents an increase of 14.9% over Eletronorte's current installed power capacity. The assets will be distributed as shown below.
Figure 1: Map of Brazil with assets after merger
10
Classification: Public Technical Note DGEG-001/2019
The transfer of controlling interest of Amazonas GT will help Eletronorte to fulfill its original mission of “producing large-scale electricity in the Amazon region”, a role similar to that performed in other regions of the country by other Eletrobras Companies.
It should be considered that the expansion of generation in Brazil, among the various axes under discussion, involves the implementation of hydro power plants in the Amazon region and the implementation of natural gas thermal plants, both "opportunities" located/present in the North Region of the state.
Despite experiencing a troubled scenario with regard to the environmental licensing of new plants, the first axis is the technical domain of the current Eletronorte (historically through the construction of HPP Balbina and HPP Tucuruí until its equity interest in the two hydro power plants that recently entered commercial operation in the region - HPP Belo Monte and HPP Sinop). For the second axis, Amazonas GT has expertise not only evidenced in the recent implementation of TPP Mauá 3 but also in the operation of older plants, such as TPP Aparecida. The fusion of such knowledge, therefore, will strengthen the company's regional presence.
Eletronorte currently has an ongoing Systemic Team Training and Improvement Program, which aims, inter alia, to develop systems for certifying knowledge of the entire workforce and enable production teams to act systematically. The Program aims to enable the operation and maintenance of assets to work with local and corporate cores of skills, in an integrated and optimized manner (Systemic Teams).
These Systemic Teams seek to:
- Enhance the operational performance of Generation Plants;
- Reduce PMSO costs;
- Optimize the use of employee skills;
- Optimize the technical resources (test equipment, test, inventories, etc.); and
11
Classification: Public Technical Note DGEG-001/2019
- Operate and maintain current and new facilities in order to achieve high technical performance and maintain costs within established values in order to provide profits.
Currently, there are O&M professionals working in hydro power generation plants, thermal plants and providing O&M service to Norte Energia (HPP Belo Monte), with the potential to build a competent, agile and multifunctional technical team, providing the company with an increase in its level of competitiveness and efficiency. AMGT's operation and maintenance teams after transfer thereof to Eletronorte will be able to participate in this Plan, thus promoting notable gains in economies of scale and efficiency for the new company.
Additionally, considering that there are regional offices in the state of Amazonas, of both companies, there is room for streamlining in this regard, which should be studied considering the new portfolio of Eletronorte after the transfer and the recent remunerated dismissal plans.
The merged company following the transfer of controlling interest from Amazonas GT to Eletronorte will have a much broader perspective for entering new businesses than each company separately. This will happen not only because it will be a more capitalized company, but also due to its geographic coverage and spectrum of expertise in power generation technologies.
It should be noted that the lucrative and promising natural gas generation segment will be included in Eletronorte's portfolio and expertise following the transfer of AMGT, which in turn will have greater investment capacity. In parallel, note that both companies have decommissioned thermal assets, which can be seen as new business opportunities to be modeled. The table below lists these assets per company:
Company |
Power plant |
Primary Energy Source |
State |
System |
Generation Facility Configuration |
Type of Turbine /UG |
Cycle Type |
Total Power (MW) |
Amazonas GT |
TPP Maué |
Natural Gas OPGE oil |
AM |
SIN |
Block III (2x55 MW) Block IV (10x15 MW) |
GE (MS 7000B) Wärtsilä (18V4f.B) |
Simple |
260 |
Eletronorte |
TPP Rio Acre |
Diesel oil |
AC |
SIN |
2x21.3 MW |
GE LM2500 |
Simple |
42.60 |
TPP Santana |
Diesel oil |
AP |
SIN |
(3x21.5 +4x15.7) MW |
GE LM 2500 Wärtsilä (18V46GD) |
Simple |
127.30 | |
TPP Rio Madeira |
Diesel oil |
RO |
SIN |
(3x21.3 + 1x36) MW |
GE LM2500 GE LM6000 |
Simple |
99.90 |
Table 9: Decommissioned generation assets
Note that although TPP Mauá Block III and Block IV are considered to be assets of AmGT, given that there are still grants for these ventures, these units are decommissioned.
12
Classification: Public Technical Note DGEG-001/2019
In addition, note that the new company will have a clear competitive advantage if it is interested in participating in the transmission asset concession auctions that currently include AMGT's operation and maintenance services. The future scenario points to an alliance between Eletronorte's expertise in operation and maintenance of transmission assets and AMGT's specific knowledge of these assets to be auctioned. The auction is scheduled for the first half of 2020.
This Technical Note was intended to identify the technical benefits and operating synergies arising from the transfer of controlling interest from Amazonas GT to Eletronorte. In this regard, the following points stand out:
a) Expansion of Eletronorte's Generation Asset Portfolio - With a greater number of generation assets, the company will expand its project portfolio through diversified operations in the energy market of the North Region. The new Eletronorte, which is more robust from a technical and operational point of view, will be consolidated as the second largest generator among the Eletrobras Companies with 12,731.38 MW of installed power capacity;
b) Strengthening of Eletronorte's Regional Presence in the North Region - Upon merger, Eletronorte will effectively operate in the state of Amazonas, expanding its business to impose itself in the face of the new reality of the local and national energy markets;
c) Operational Optimization of Generation Assets - the corporate merger of the companies will bring advantages, namely: alignment of operational goals and objectives, investment opportunities in employee training, savings in reducing materials costs and outsourced labor and greater integration among employees, in addition to economies of scale and efficiency gains for the new company; and
d) New Business Prospects - The new company, arising from the merger process, will reach many different markets and audiences, expanding business possibilities in the energy sector and gaining strength from market risks and uncertainties. The transfer of controlling interest will enable Eletronorte to acquire greater capacity to operate in the energy market, increasing its revenue and thus allowing greater investments. Thus, opportunities such as expansion by Gas-fired power plant and possible participation in auctions of transmission assets, currently operated by AMGT, should be considered.
13
Classification: Public Technical Note DGEG-001/2019
Prepared by:
ALEXANDRE FREIRE MAGALHÃES
Generation Asset Management - DGEG
ANDERSON LIMA ROCHA
Generation Asset Management - DGEG
DANIEL BRUNO DA SILVA
Generation Asset Management - DGEG
Agreed:
JONATAN ROSS
Generation Asset Expansion and Management - DGE
14
NATIONAL ELETRIC ENERGY AGENCY – ANEEL
ORDINANCE No. 3,189, NOVEMBER 14, 2019
Original Text
THE ECONOMIC AND FINANCIAL SUPERVISOR OF THE NATIONAL ELETRIC ENERGY AGENCY – ANEEL, in the use of the powers delegated to it through Ordinance No. 4,659, of July 18, 2017; considering the provisions of Law No. 9,427 of December 26, 1996; Normative Resolution No. 484 of April 17, 2016; and what is contained in Case No. 48500.005698/2019-63, decides: to agree in advance to the transfer of corporate control of Amazonas Geração e Transmissão de Energia S.A. – Amazonas GT, currently held by Centrais Elétricas Brasileiras S.A. – Eletrobras, to Centrais Elétricas do Norte do Brasil – Eletronorte. The deadline for implementation of the operation is up to 120 (one hundred and twenty) days from the date of publication of this Ordinance and the company, whose shareholding control has been changed, shall send to ANEEL’s Superintendence of Economic and Financial Supervision a certified copy of the supporting documents of formalization of the operation, within 30 (thirty) days from the date of its execution.
TICIANA FREITAS DE SOUSA
|
|
CAE/CAAS Rua da Quitanda, 196, 25º andar, Centro, Rio de Janeiro – RJ Tel.: (21) 2514-5641
RCAE 096, 12/12/2019. |
CERTIFICATE OF THE MINUTES OF THE NINTH SIXTH MEETING OF THE STATUTORY AUDIT AND RISK COMMITTEE - CAE OF CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS
NIRE 53300000859/CNPJ nº 00001180/0001-26
It is hereby certified, for the due purposes, that on December 12th of December 2019, at 9:00 am, the Statutory Audit and Risk Committee - CAE of Eletrobras inaugurated a meeting held at the Company's Central Office, at Rua da Quitanda, nº 196, 25th floor, Downtown, Rio de Janeiro - RJ. The meeting was coordinated by the Board Member MAURO GENTILE RODRIGUES DA CUNHA. The meeting was also attended, by memebers Mr. LUÍS HENRIQUE BASSI ALMEIDA and the Directors DANIEL ALVES FERREIRA and FELIPE VILLELA DIAS. Advice to Eletronorte and Eletrobras Board of Directors: Proposal to transfer the shares held in Amazonas GT to Eletronorte and call of the 176th Eletrobras EGM. RES 855, dated 12.09.2019 (Eletrobras) and RD 0383, dated 10.21.2019 (Eletronorte): After reasoning on the matter, in light of the presentation made, and based on the support material provided, the Committee, in advice to the Board of Directors of Eletrobras, opined favourable to the proposal to convene the 176th Extraordinary General Meeting of Eletrobras to resolve on the transfer of all shares representing Amazonas Geração e Transmissão de Energia SA - AmGT by Eletrobras to Eletronorte, pursuant to Board Resolution RES-855, of December 9, 2019, considering the additional clarifications that were provided by Management in response to the Committee’s questions. The Committee requested that such clarifications be submitted in writing to the Board of Directors for subsidy in deliberation. This certificate is drawn up and signed by me, FERNANDO KHOURY FRANCISCO JUNIOR, Advisor to the Board of Directors of Eletrobras and Deputy Secretary of Governance.
Rio de Janeiro, December 16, 2019.
FERNANDO KHOURY FRANCISCO JUNIOR |
Substitute Secretary of Governance |
|
MEMORANDUM |
|
Date: 11/29/2019
PRJE ─ 0325/2019 |
From: |
Cristiane Vieira de Paiva Villela |
To: |
André de Avellar Torres |
Subject: |
Call of 176th EGM of Eletrobras |
Reference: |
Memorandum DFR-105/2019 EMP–2019/0832 |
Mrs. Head of DFR sends us, through the abovementioned memorandum, a matter requesting an analysis1 of this PRJE, from a legal point of view, of Eletrobras’ Management Proposal, to be held on January 17, 2020, to deliberate on the following agenda:
“1. To approve the transfer of all shares representing the share capital of Amazonas Geração e Transmissão de Energia S.A. (hereinafter referred to as AmGT), equivalent to 489,068,809 common shares, by Eletrobras to Centrais Elétricas do Norte do Brasil S.A. (“Eletronorte”), for BRL 3,130,227,000.00 (three billion, one hundred and thirty million, two hundred and twenty-seven thousand reais), as of December 31, 2018, to be adjusted and paid, in accordance with the terms and conditions set forth in the Datio in Solutum and Other Agreements Contract Draft (Annex 10).”
Once the facts are reported, we proceed with the examination of the legal issues connected to the query under review, given that this analysis is limited to the review of the legal aspects of the Management Proposal, and therefore, the financial and business conditions are not the object of this opinion, nor are the convenience and timeliness of the transaction to be deliberated upon.
1. General Considerations related to the Shareholders’ Meetings
1 It should be emphasized that this examination shall be limited to the legal aspects of the subject, with no regard for technical, economic, financial aspects, and those that require the exercise of administrative discretion.
1
|
MEMORANDUM |
|
Date: 11/29/2019
PRJE ─ 0325/2019 |
1.1. Call:
Initially, regarding the call, we would like to clarify that, in accordance with the provisions of Articles 1242 et seq of Law No. 6404/76, the regular call of shareholders shall be made by means of publication of notices, and shall include, in addition to the venue, date and time of the Shareholders’ Meeting, the agenda and, in the case of a reform of the Articles of Incorporation, the indication of the matter.
It should be noted that Article 124, Paragraph 6 of Law No. 6404/76, which requires listed companies to submit, on the date of publication of the notice convening the annual and special meeting, documents related to the agenda on the Stock Exchanges on which their shares are mostly negotiated. It is also noted that such obligation is additional to those required by Articles 1333 and 1354, Paragraph 3 of the same legal provision.
2Article 124. The call shall be made by means of a notice published for a minimum of 3 (three) times, stating, in addition to the venue, date, and time of the meeting, the agenda and, in case of reform of the Articles of Incorporation.
Paragraph 1 The first call of the shareholders’ meeting shall be made:
I - in the closely-held corporations, at least eight (8) days before the publication of the first notice; if the meeting is not being held, a new notice will be published, in a second call, at least 5 (five) days in advance;
II - in the publicly-held company, the deadline for the first call shall be 15 (fifteen) days, and the second call for 8 (eight) days.
Paragraph 2 Except for reasons of Force Majeure, the shareholders’ meeting shall be held in the building where the company has its headquarters; whenever it will be held in another location, the notices shall clearly state the venue of the meeting, which in no case may be held outside the location of the headquarters.
Paragraph 3 In closed held corporations, a shareholder representing five percent (5%) or more of the capital stock shall be called by telegram or registered letter, issued with the advance provided for in Paragraph 1, provided that he/she has requested it in writing, to the company, indicating the full address and validity of the request, not exceeding two (2) fiscal years, and renewable; this notice does not exempt the publication of the notice provided for in Paragraph 1, and failure to comply will entitled the shareholder the right to compensation from the company’s management for damages.
Paragraph 4 Regardless of the formalities foreseen in this article, the shareholders’ meeting to be attended by all the shareholders shall be considered regular.
Paragraph 5 The Securities Commission may, at its sole discretion, by reasoned decision of its Board, at the request of any shareholder, and after hearing the company:
I - increase, to up to thirty (30) days, as of the date on which the documents related to the matters to be resolved are made available to the shareholders, the timely notice of publication of the first call notice of the shareholders’ meeting of the publicly-held company, when it concerns operations that, due to their intricateness, require a longer period for them to be known and analyzed by the shareholders;
II - discontinue, for up to 15 (fifteen) days, the course of the deadline prior to the call of an special shareholders’ meeting of publicly-held company, in order to take cognizance and review the proposals to be submitted to the meeting and, if applicable, inform to the company, until the termination of the discontinuance, the reasons why it considers that the proposed deliberation to the meeting breaches legal or regulatory provisions.
Paragraph 6 Publicly-held companies with shares listed for trading on a stock exchange shall, at the date of publication of the notice convening the meeting, send to the stock exchange on which their shares are mostly traded, the documents made available to shareholders for deliberation in shareholders’ meeting.
3Article 133. The managers should communicate, no later than 1 (one) month before the date scheduled for the shareholders' meeting, by notices published in the manner set forth in Article 124, which are available to shareholders:
I - the management’s report on the corporate business and the main administrative facts of the accounting year then ended;
II - copy of the financial statements;
III - the opinion of independent auditors, if any.
IV - the opinion of the fiscal board, including dissenting votes, if any; and
V - other documents relevant to the subjects included in the agenda.
Paragraph 1 The notices shall state the place or places where the shareholders may arrange copies of these documents.
Paragraph 2 The company shall submit a copy of these documents to the shareholders who request it in writing, under the conditions set forth in Paragraph 3 of Article 124.
Paragraph 3 The documents referred to in this article, except for those included in items IV and V, shall be published at least 5 (five) days before the date set for holding the shareholders’ meeting.
Paragraph 4 The shareholders’ meeting that gathers all shareholders may consider as remedied the absence of publication of notices or failure to comply with the deadlines referred to in this article; but publishing the documents before the meeting is held is mandatory.
Paragraph 5 The publication of the notices is exempted when the documents referred to in this article are published until 1 (one) month before the date scheduled for holding the ordinary shareholders’ meeting.
4 Article 135. The special shareholders’ meeting that aims at the reform of the Articles of Incorporation shall be opened in the first call with the attendance of shareholders representing at least 2/3 (two thirds) of the voting capital, but may be opened, in a second instance, with any number.
(...)
Paragraph 3 The documents relevant for the matter to be discussed at the special shareholders’ meeting shall be made available to the shareholders at the company's headquarters on the occasion of the publication of the first notice convening the shareholders' meeting.
2
|
MEMORANDUM |
|
Date: 11/29/2019
PRJE ─ 0325/2019 |
With respect to the opening of the shareholders’ meeting, Article 1255 of Law No. 6404/76 establishes that the meeting is opened in the first call with the attendance of shareholders representing at least 1/4 of the capital with voting rights and, on second call, any number thereof.
In this regard, it should be noted that opening quorum (Article 125 of Law No. 6404 / 76) is different from the deliberation quorum (Articles 1296 and 1367 of Law No. 6404/76). The first is the minimum number of shareholders that the law establishes for the accomplishment of the bidding process, and the second stands as the minimum number of votes required to approve certain matters and is therefore a requirement for the validity of the deliberations.
5Article 125. Subject to the exceptions provided for by law, the shareholders' meeting shall be convened, at first call, with the presence of shareholders representing at least 1/4 (one fourth) of the voting capital stock; and, on second call, it shall be opened with any number.
Sole Paragraph. Non-voting shareholders may attend the shareholders’ meeting, and discuss the matter referred for deliberation.
6 Article 129. The resolutions of the shareholders’ meeting, except for the exceptions provided by law, shall be taken by absolute majority of votes, not counting blank votes.
7 Article 136. The approval of shareholders representing at least one-half of the voting shares is required if a higher quorum is not required by the company’s Articles of Incorporation, and whose shares are not admitted to trading on stock exchange or over-the-counter market, for a deliberation on:
I - the creation of preferred shares or class increase of existing preferred shares, without proportion to the other classes of preferred shares, unless already established or authorized by the Articles of Incorporation;
II - change in the preferences, advantages and conditions of redemption or amortization of one or more classes of preferred shares, or creation of a new class of higher preference;
III - reduction of the mandatory dividend;
IV - consolidation of the company, or its merger into another one;
V - participation in a group of companies (Article 265);
VI - chance of the corporate purpose;
VII - end of the company’s liquidation status;
VIII - establishment of the beneficiary parties;
IX - company’s spin-off;
X - company’s dissolution.
Paragraph 1 - In the cases of items I and II, the effectiveness of the deliberation depends on prior approval or ratification, over a non-extendable term of one year, by holders of more than half of each class of preferred shares impaired, gathered at a special meeting convened by the managers, and instituted according to the formalities of said Law.
Paragraph 2 - The Securities Commission may authorize the reduction of the quorum provided for in this article in the case of publicly-held company with dispersed shares in the market, whose 3 (three) last shareholders’ meetings have been held with the presence of shareholders representing less than half of the voting shares. In this case, the authorization of the Securities Commission shall be mentioned in the call notice and the deliberation with a reduced quorum may only be adopted on a third call.
Paragraph 3 - The provisions of paragraph 2 of this article shall also apply to the special shareholders’ meetings referred to in paragraph 1.
Paragraph 4 It shall be included in the minutes of the general meeting that deliberate on the matters under items I and II, if there is no previous approval, that the resolution shall only be effective after its ratification by the special shareholders’ meeting set forth in Paragraph 1.
3
|
MEMORANDUM |
|
Date: 11/29/2019
PRJE ─ 0325/2019 |
With respect to the deliberation quorum, it should be noted that, as a general rule, Law No, 6404/76, under Article 129, established the majority principle while setting forth in the head provision that the deliberations shall be taken by absolute majority of votes of the attending shareholders, not counting blank votes, that is, those that do not contain any statement. Thus, the deliberations taken at a shareholders’ meeting regularly called and opened, are binding on all shareholders, even absent or dissenting.
Subsequently, under the terms of Article 133, of Law No. 6404/76, the managers should report, until one month before the date set for the OGM, for notices published in the manner set forth in Article 124, that the documents provided for in its head provision are available to shareholders, provided that such documents, except for the opinion of the fiscal board, and other documents connected to matters included in the agenda8, shall be published within a period of not more than 5 (five) days before the date set for the publication of the notices, when such documents are published up to one month before the date set for the holding of Shareholders’ Meeting. It should be noted that failure to publish the notices or failure to comply with the deadlines referred to in Article 124 of Law No. 6404/76 may be remedied by the attendance at the Shareholders’ Meeting of all shareholders, but, however, publishing the documents prior to the Shareholders’ Meeting is mandatory.
8At this point, we bring up the understanding of jurist Modesto Carvalhosa, according to which “although the company is required to disclose, prior to the shareholders’ meeting, the documents referred to in new subsections IV and V, Law no. 10303, of 2001, in the new paragraph 3 of this Article 133, exempts these documents from the publication before the shareholders’ meeting is held. Therefore, shareholders interested in analyzing these documents shall not be able to count on their publication before the shareholders’ meeting, and they should arrange a copy at the places stated by the company in the published notices. Nevertheless, the published notices should mention the opinion of the Fiscal Board and the existence of divergent votes, if any, as well as other documents referring to the matters included in the agenda.” (emphasis added.)
4
|
MEMORANDUM |
|
Date: 11/29/2019
PRJE ─ 0325/2019 |
In addition, the Securities Commission (CVM) issued CVM Instruction No. 481/2009, which established requirements related to the disclosure of information that must be provided by management to shareholders prior to the holding of shareholders’ meetings of publicly-held companies.
Accordingly, publicly-held companies should comply with the provisions of the aforementioned CVM Instruction 481/2009. In this regard, there shall be also applicable those provisions under Articles 6 and 9 of said Instruction, according to which:
“Article 6 The Company should make available to the shareholders, through an electronic system on the CVM web page:
I - information and documents provided for in the other articles of this Chapter III, and in Chapter III-A; and
II - any other information and documents relevant to the exercise of the right to vote in the meeting.
Sole Paragraph. The documents and information should be provided up to the date of publication of the first call notice of the meeting, except if Law No. 6404 of 1976, this Instruction or other rule of CVM establish a longer term.
(...)
Article 9 The Company should provide, not later than 1(one) month before the date scheduled for the ordinary shareholders' meeting, the following documents and information:
I - the management’s report on the corporate business and the main administrative facts of the accounting year then ended;
II – copy of the financial statements;
III - management's comment on the company's financial situation, pursuant to item 10 of the reference form;
IV – report of independent auditors;
V - opinion of the fiscal board, including dissenting votes, if any; and
VI – the remote voting bulletin, referred to under Article 21-F.
5
|
MEMORANDUM |
|
Date: 11/29/2019
PRJE ─ 0325/2019 |
Sole Paragraph. By the date set forth in the head provision, the company should also provide the following documents:
I – Standardized Financial Statements Form - DFP;
II - proposal for the allocation of net income for the year that establishes at least the information stated in Annex 9-1-II to this Instruction; and
III – opinion of the audit committee, if any.”
1.2. Voting Right
Initially, it is found that Eletrobras’ preferred shares do not grant their holders the right to vote at meetings, according to Article 89, subsection II of the Company's Articles of Incorporation10.
In this regard, it is found that the prohibition of voting by preferred shareholders in shareholders’ meetings is mitigated by Law No. 6404/76, as these shareholders will acquire the right to vote, if the company fails to pay to them the set or minimum dividends to which they are entitled, a right that they shall keep until the payment of such dividends. This is inferred by the provisions under Article 111, Paragraph 111 of Law No. 6404/76.
9 Article 8. Eletrobras’ shares shall be:
(...)
II - preferred, registered shares without right to vote in Shareholders’ Meetings.
10 “Article 4 - Each ordinary share shall correspond to one vote in the deliberations of the shareholders’ meeting.
Sole Paragraph. Preferred shares shall not have voting rights, shall be entitled to:
(...)
IV the right to elect and dismiss a member of the Board of Directors in a separate vote, under the conditions established in Law 6404/76 and its amendments.”
11 “Article 111. The Articles of Incorporation may fail to grant the preferred shares some of the rights recognized to the ordinary shares, including voting rights, or grant it with restrictions, subject to the provisions under Article 109.
Paragraph 1 Preferred shares without entitled to voting shall acquire the right to exercise such right if the company, over the period established in the Articles of Incorporation, does not exceed three (3) consecutive years, fails to pay the set or minimum dividends to which they are entitled, and such right shall be maintained until payment, if such dividends are not cumulative, or until the cumulative arrears are paid.”
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In this regard, the Management Proposal clarifies that:
“The Company reports that the holders of preferred shares are temporarily entitled to vote, pursuant to Article 111 of the Corporations Act, however, said right shall automatically cease with the payment of dividends stated at the 59th OGM (April/2019), expected to occur by December 30, 2019, therefore, prior to the date of the 176th AGE. Once the payment is made, any votes of preferred shareholders for the 176th AGE, even if previously sent by remote bulletin, shall be disregarded, since on the date of the 176th EGM there will no longer be the right to vote by the preferred shareholders.”
1.3. Remote Voting
CVM, by amending CVM Instruction 481/2009, regulated the remote voting provided for in the sole paragraphs of Articles 121 and 127 of Law No. 6404/1976, introducing into the Brazilian capital market a tool for distance voting referred to as ballot paper.
In this vein, the ballot paper for remote voting became mandatory12for publicly traded companies with shares listed on the stock exchange.
Therefore, said companies are required to make available to their shareholders the remote voting ballot paper up to one month prior to the date scheduled for the ordinary shareholders’ meeting and the shareholders’ meetings convened to deliberate on the election of members of the Board of Directors and Fiscal Council, abiding by
12Article 21-A. The shareholder may exercise the vote in shareholders’ meetings by completing and delivering the ballot paper.
Paragraph 1 Up to 1 (one) month before the date set for the meeting, the company should make the remote ballot paper available:
I – in the event of the shareholders’ meeting;
II - whenever the shareholders’ meeting is called to deliberate on the election of members:
a) of the fiscal board; or
b) of the board of directors, when the election becomes necessary due to vacancy of the majority of the positions of the board, by vacancy in a board that has been elected by multiple vote or to fill the vacancies dedicated to the separate election provided for under Articles 141, Paragraph 4 and 239 of Law No. 6404, of 1976; and
III - whenever a special shareholders’ meeting is called to occur on the same date scheduled for the shareholders’ meeting.
Paragraph 2 Without prejudice to the provisions of subsection II of Paragraph 1, the company may allow the remote ballot paper at any special shareholders’ meeting, abiding by the terms and conditions established in this Chapter III-A, except for Section IV.
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the provisions of CVM Instruction 561/2015, without prejudice to distance voting being used for shareholders’ meetings convened to deliberate on other matters, at the discretion of the company.
Therefore, in light of CVM Instruction 481/2009, Eletrobras should make available to its shareholders the Remote Voting Bulletin, pursuant to the provisions under Article 21-F of said Instruction.
1.4. No Preemptive Right
Article 25313 of Law No. 6404/76 provides that, in proportion to the shares they hold in the company’s capital, shareholders shall have preemptive rights to (i) purchase shares of the wholly-owned subsidiary if the company decides to dispose of them in whole or in part; and (ii) subscribe to the capital increase of the wholly-owned subsidiary if the company decides to admit other shareholders.
At this point, attention should be drawn to the guideline established in OFFICIAL LETTER/CVM/SEP/No. 3/2019:
“The CVM Board, at the meetings held on March 29, 2011 and August 16, 2016 (CVM Proceeding No. RJ2010/13425 and SEI CVM Proceeding No. 19957.003452/2016-48) 61, deemed that the provisions of this article shall only apply to companies converted into wholly-owned subsidiaries, owing to the merger of shares (Article No. 252 of Law No. 6404/76).”
13 Article 253. In proportion to the shares they own in the company's capital, the shareholders shall have preemptive rights to:
I - acquire shares of the capital of the wholly owned subsidiary, if the company decides to sell them in whole or in part; and
II - subscribe to the capital increase of the wholly owned subsidiary, if the company decides to admit other shareholders.
Single paragraph. The shares or the capital increase of the wholly-owned subsidiary shall be offered to the Company's shareholders at a general meeting called for this purpose, applying, as appropriate, the provisions of article 171.
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In fact, Amazonas Geração e Transmissão de Energia S.A – AmGT was established upon the divesture of Amazonas Energia, becoming a wholly-owned subsidiary of Amazonas Energia through asset drop down operation.
In the context of return to private sector, it should be noted that the resolution of the Investment Partnership Program Board - CPPI No. 20/2017, in its Article 314, Paragraph 2, allowed that Amazonas Energia deducted its debts with Eletrobras, upon transfer of all shares issued by AmGT in favor of Eletrobras and/or third party. In this sense, a datio in solutum operation between Amazonas Energia and Eletrobras was carried out, with AmGT becoming the wholly-owned subsidiary of this holding company.
In this context, in light of the understanding adopted by CVM, warranting the preemptive right to the shareholders of Eletrobras is not allowable.
2. Business of the Extraordinary General Meeting
In accordance with Article 131 of Law No. 6404/7615, the Shareholders’ Meeting is ordinary (OGM) when it has as its object the matters listed in the exhaustive list in Article 132 of the same legal provision, and special (“EGM”) in the other cases16.
As a matter of fact, what the scope of responsibility of EGM includes derives from the particular business of OGM, being typical in the events established under Articles 135 and 136 of Law No. 6404/76, and atypical whenever so demands the company’s Articles of Incorporation, or, even more widely, when called to “resolve all business connected to the corporate purpose, and to make the deliberations deemed suitable for its protection and development,” according to Article 121 of the aforementioned Legal Provision.
14 Article 3 Eletrobras shall, before the actual transfer of controlling interest, make adjustments in the distributors, upon conversion of debt in capital or assumption of the debts of the distributors with Eletrobras and/or third party, at the following sums:
(...)
Paragraph 2 Without prejudice to the provisions in Paragraph 1 of this Article, Amazonas Distribuidora may deduct debts with Eletrobras, by transferring all shares issued by Amazonas Geração e Transmissão S.A. - Amazonas GT in favor of Eletrobras and/or third party, the value of which shall be deducted from the amount of adjustment indicated in Item VI of this Article.
15 Article 131. The shareholders’ meeting is ordinary when it deals with the matters provided for in article 132, and special in the other cases.
16Article 132. Annually, in the first 4 (four) months following the end of the accounting year, there shall be 1 (one) shareholders’ meeting to: I - take the accounts of the managers, examine, discuss, and vote on the financial statements; II - resolve on the allocation of net income for the year and the distribution of dividends; III - elect the managers and members of the fiscal board, when applicable; IV - approve the inflation adjustment of capital (Article 167) .
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In this case, it is incumbent on of the shareholders’ meeting to resolve on the agenda business, pursuant to the provisions under Article 17, item I17 of the Articles of Incorporation of ELETROBRAS with Article 1, Item I18 of Decree 1091/1994.
Once the general questions are resolved, we will examine the legal aspects of the Call for Bids regarding Eletrobras’ Extraordinary General Meeting – EGM.
Considering that the only meeting in question is the transfer of all the shares representing the capital of Amazonas Geração e Transmissão de Energia S.A. (“AmGT”), from Eletrobras to Eletronorte, and that such transaction shall be performed by means of the execution of the Contract of Datio in Solutum and Other Covenants (“CONTRACT”), proceeding to the analysis of the legal aspects underlying the instrument.
Initially, we refer to opinion No. PRJE 0176/2018, dated December 7, 2018, which analyzed the general aspects, from the legal point of view, of the transfer of AmGT shares by ELETROBRAS.
Therefore, regarding the adoption of the datio in solutum as a form of extinction of the debt previously existing between ELETROBRAS and ELETRONORTE, we stress that it is legally possible, given the fulfillment of the requirements under Articles 356 et seq. of the Civil Code, without prejudice to compliance with Article 24519 of Law No. 6404/76 (“LSA”) and Article 320 of Normative Resolution ANEEL No. 699/2016 (“RN 699”), which deals with the necessary commutability21 of obligations established between related parties.
17 Article 17. In addition to cases provided for by law, the Shareholders’ Meeting shall meet whenever the Board of Directors deems it convenient and, in particular, to deliberate on the following matters:
I - sale, in whole or in part, of shares of the capital stock of Eletrobras or its subsidiaries;
18Article 1 Government-owned companies, government-controlled companies and their subsidiaries, directly or indirectly controlled by the Federal Government, may only perform the corporate acts referred to in this decree upon the decision of a shareholders’ meeting especially convened to resolve on the following businesses:
I - sell, in whole or in part, shares of its capital or that of its subsidiaries; proceed to the opening of its capital; increase its capital by subscription of new shares; waive the rights to subscribe for shares or debentures convertible into shares of subsidiaries; issue debentures convertible into shares or sell them, if held in treasury; sell debentures convertible into shares held by it issued by controlled companies; or, issue any other securities, in Brazil or abroad; (omissis)
19 “Art. 245. The directors may not, to the detriment of the company, favor a related, controlling or controlled company, and shall ensure that intercompany transactions, if any, comply with strictly commutative conditions or with adequate compensatory payment; and are liable to the Company for losses and damages resulting from acts committed in violation of the provisions of this article. ”
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Also regarding the general aspects of the transaction, we remind you that the regular transfer of AmGT’s shares to ELETRONORTE requires the grant of consents of some government agencies, provided for in Clause 2.1 of the CONTRACT, namely:
a) National Electric Energy Agency (“ANEEL”) –
With respect to such consent, the Management Proposal, in Item 2.7, establishes that the business was approved by Aneel, through order No. 3189, dated November 14, 2019, and was 120 days from the publication of said order were warranted for implementation. If the operation is not completed within this period, further approval will be required.
b) SEST - Secretariat of Coordination and Governance of Public Corporations (“SEST”), pursuant to Article 98, VI, “a,” of Decree 9745/2019, as we are dealing with the assumption by a public corporation of the control of another company - Eletronorte.
20 “Art. 3º The acts and legal transactions between Electric Sector Agents and their Related Parties shall be established under strictly commutative conditions, including, when appropriate, bidding processes, so as not to burden the parties disproportionately. ”
21 According to article 2 ANEEL Normative Resolution 699: “VI - The commutation of the contracting is verified when its economic and financial clauses are compatible with those practiced in the market in legal acts or business dealing with substitute goods or services.”
22Recalling that the operation in question does not fall under Article 19 of RN No. 699, which provides for exceptions to its qualification thereunder.
23 “Art. 18. Electric Sector Agents shall forward to ANEEL, in cases where prior consent is required, legal acts and dealings with Related Parties prior to their conclusion.
Sole paragraph. It does not violate the provisions of the caput the contracts previously entered into with express suspensive condition, which subordinates the validity and effectiveness of the legal business to ANEEL's approval, provided that the contracting parties do not initiate, for any act, the execution of the contract. ”
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The Third Clause, in turn, in Items 3.3.5, 3.3.6, and 3.3.7, indicate the ways to be adopted if the share price is higher or lower than the value of ELETROBRAS’ debt with ELETRONORTE, as well as the reduction of the amount paid by ELETRONORTE as a result of the contracting of Delloite, of the total amount of the operation, in which there is no legal obstacle.
Clauses IV, 11.11, 11.12 and 11.13 regulates the statements to be made by the parties to carry out the transaction.
In point of fact, Clause V addresses the limits of ELETROBRAS’ liability as a seller to ELETRONORTE, as the purchaser of AmGT shares.
As a result, ELETROBRAS shall not be liable to ELETRONORTE for “asset shortfalls, subsequent liabilities and contingencies,” which are accounting concepts connected to possible equity variations that may be ascertained by ELETRONORTE, despite all independent audit work performed at AmGT. In the same vein, the clause also exempts ELETROBRAS from liability for any incompleteness or insufficiency of any information provided by the audit report, as well as direct, indirect losses or loss of profits that may result from such situations.
It should be noted that such clause, in a very similar wording, was also used in the contracts for purchase and sale of shares of the energy distributors that already belonged to ELETROBRAS, as well as in the contracts for purchase and sale of the shares of SPEs, object of ELETROBRAS’ divestment program, therefore representing a market condition.
In turn, ELETROBRAS shall be held liable in the following cases: a) intentional misstatements or omissions of the same nature; b) subsequent contingencies and asset shortfalls in relation to the financial statements of Amazonas GT dated December 31, 2018 until the date of the actual transfer of the shares of Amazonas GT to ELETRONORTE, whether or not known to ELETRONORTE; c) within six months of the transfer of controlling interest, owing to losses or gains, a taxable event prior to the actual transfer of the controlling interest actually incurred by AmGT, and which are no longer in any way booked in Amazonas GT balance sheet, and exceeding 10% (ten percent) of the final value of the transaction and d) owing to any substantial error, fraud or simulation found by ELETRONORTE in the financial statements that served as the basis of AmGT’s valuation, by means of filing of an annulment action of the meeting by ELETRONORTE, pursuant to Article 134, Paragraph 3 with Article 28624 (biennial prescription), all under Law No. 6404/76.
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Also with respect to item “c” above (clause 5.1.12), it should be noted that a 50% (fifty percent) apportionment was established for each party in the event of any recognition of losses or gains actually incurred by the Amazonas GT, and which are no longer in any way booked on Amazonas GT balance sheet, and which exceed 10% (ten percent) of the final transaction amount. It is a contingent price forecast, which is in line with the provisions under Article 48725 of the Civil Code.
Clause 6.1 established the obligation of ELETRONORTE to arrange, within 120 days after the commencement of the effects of this CONTRACT, “(...) the replacement or release of any and all collateral posted by Eletrobras under the scope of Amazonas GT, except for the collateral provided for by Eletrobras in the Gas Contract, OC 1902/2016, which shall remain under Eletrobras responsibility.”
The aforementioned exception is based on the assumption necessary for the execution of said Gas Contract in 2011, namely that the collateral was posted by ELETROBRAS in favor of CIGÁS and PETROBRAS. Therefore, any change to these terms could easily lead to the parties recognizing a deal braker.
In addition, the fact that, strictly speaking, ELETROBRAS shall continue, initially, to post the collateral on behalf of AmGT, which shall become its indirect subsidiary, so that, in the actual merger by ELETRONORTE, it starts posting the collateral on behalf of this subsidiary, given that we do not find legal obstacle in this regard.
Finally, with regard to confidentiality, such a commitment was governed by clause VII.
In view of the foregoing, no legal obstacles are foreseen for deliberation of the agenda business.
24 “Art. 286. The action to annul the deliberations taken in the general or special meeting, irregularly summoned or installed, violating the law or the statute, or riddled with error, deceit, fraud or simulation, shall expire in 2 (two) years from the deliberation.”
25 Article 487. It is permissible for the parties to set the price according to indices or parameters, provided that they can be objectively determined.
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It should be noted that, as established in Article 826 of the Securities Commission (CVM) Instruction No. 481, whenever a related party has a special interest in approving a matter submitted to the shareholders’ meeting, the company shall provide shareholders with specific documents and information.
This requirement aims at preserving commutability in transactions involving related parties, which meets the provisions under Article 24527of Law No. 6404/76, as well as the guidelines that are part of the Eletrobras Companies’ Related Party Transaction Policy.
In this regard, it should be noted that this Management Proposal by DFR (Annex 09) was attached to the information required by the aforementioned Instruction, in order to evidence the commutativity of the intended operation.
As for the internal approval of the issue, it should be approved by the Board of Executive Officers, in accordance with Article 4728, items I and III of ELETROBRAS’ Articles of Incorporation, followed by the referral to the Company’s Board of Directors, based on Article 3629, items V and IX of ELETROBRAS’ Articles of Incorporation, for subsequent call of the Shareholders’ Meeting of ELETROBRAS, in accordance with Article 17, item I30 of the Articles of Incorporation of ELETROBRAS with Article 1, Item I31 of Decree 1091/1994.
26 Article 8 Whenever a related party, as defined by the accounting rules dealing with this matter, has a special interest in approving a business referred to the meeting, the company should provide shareholders with at least the following documents and information: I – Name and qualification of the concerned party;
II – nature of the related party’s relationship with the company; III - number of shares and other securities issued by the company owned by the concerned related party, either directly or indirectly; IV - any existing balances payable and receivable between the involved parties; V - detailed description of the nature and extent of the interest in question; VI - management’s recommendation regarding the proposal, highlighting the advantages and disadvantages of the operation for the company; and VII - if the matter submitted for the approval of the meeting is a contract subject to the provisions of Article 245 of Law No. 6404 of 1976, a) thorough statement, prepared by the managers, that the contract abides by commutative conditions, or provides for̂ the appropriate compensatory payment; and b) analysis of the terms and conditions of the contract in light of the terms and conditions that are prevalent in the market.
27 Article 245. The managers may not, to the detriment of the company, favor affiliate, parent company or subsidiary, thus they should ensure that transactions among companies, if any, strictly comply with commutative conditions or with appropriately compensatory payments; thereby being also held liable for loss and damage resulting from acts performed in breach of the provisions under this article.
28 Art. 47. In the exercise of its duties, it is incumbent upon the Executive Board, especially:
(...)
I - prepare and submit to the Board of Directors the fundamental guidelines of the administrative organization of Eletrobras, as well as approve the referral of other matters within the scope of said Board;
(...)
III - manage Eletrobras, take appropriate measures for the faithful execution of the Board of Directors' directives and resolutions, and, except in the case of mandatory submission to the Board of Directors, express its opinion on acts and approve contracts in accordance with the current authority policy , including, but not limited to, such acts or contracts, the granting of financing to public utility concessionaires under its control, and the borrowing in Brazil or abroad;
29 Article 36. In the exercise of its duties, the Board of Directors shall, without prejudice to the competences provided for in the legislation in force:
(...)
V - to comment on acts and approve contracts in accordance with the current policy of authority, including, among these acts or contracts, but not limited to, the granting of financing to public utility concessionaires, under its control. , and borrowing at home or abroad;
(...)
IX - call the Shareholders' General Meeting, in the cases provided for by Law No. 6,404 of 1976, or whenever deemed convenient;
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It should also be noted that approving or not the terms of the Management Proposal reviewed hereunder stands as a question of administrative merit, lacking legal status. Therefore, this analysis is not the responsibility of this advisory, being in charge of the judgment of convenience and timeliness of the manager.
It should be noted that the legal opinion set out in this opinion is purely opinionated, which is the position which we think is more in line with the legal provisions applicable to this case.
As a result, in accordance with paragraph 4 of the Manual of Good Consulting Practice of the Office of the General Counsel for the Federal Government, we would like to render it clear that any stamps in the documents forwarded to PRJE merely stand as a mechanism for certification of the sheets actually reviewed by the counsel, and thus not replace or disregard the corresponding legal opinion.
In view of the foregoing, pursuant to the adjudication upon the merits, and the above considerations, besides taking the favorable position of the competent Departments into account, hereby there is approval of the Management Proposal for the 176th EGM of Eletrobras, along with the Report to the Board of Executive Officers, the draft Resolution and the draft Contract of Datio in Solutum and Other Covenants only for the purpose of controlling what has been reviewed by this PRJE, given that the content of such documents is the responsibility of the Financial Department.
To the best of our knowledge, this is the opinion.
30 Article 17. In addition to cases provided for by law, the Shareholders’ Meeting shall meet whenever the Board of Directors deems it convenient and, in particular, to deliberate on the following matters:
I - sale, in whole or in part, of shares of the capital stock of Eletrobras or its subsidiaries;
31Article 1 Government-owned companies, government-controlled companies and their subsidiaries, directly or indirectly controlled by the Federal Government, may only perform the corporate acts referred to in this decree upon the decision of a shareholders’ meeting especially convened to resolve on the following businesses:
I - sell, in whole or in part, shares of its capital or that of its subsidiaries; proceed to the opening of its capital; increase its capital by subscription of new shares; waive the rights to subscribe for shares or debentures convertible into shares of subsidiaries; issue debentures convertible into shares or sell them, if held in treasury; sell debentures convertible into shares held by it issued by controlled companies; or, issue any other securities, in Brazil or abroad; (omissis)
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To PRJ, taking the relevance of the subject into account.
On November 29, 2019.
Cristiane Vieira de Paiva Villela
Acting Manager of PRJE
16
Art. 8th Whenever a related party, as defined by the accounting rules dealing with this matter, has a special interest in approving a matter submitted to the general meeting, the company must provide shareholders with at least the following documents and information:
I – name and qualification of the related party concerned;
Centrais Elétricas do Norte – Eletronorte subsidiary of Eletrobras.
II – nature of the related party’s relationship with the company;
Eletrobras is a majority shareholder of Eletronorte with a 99,664% interest (source: Note 35.3 of Eletrobras Fiancial Statements 3Q2019) of the share capital.
III – number of shares and other securities issued by the company owned by the related party concerned, directly or indirectly;
Eletronorte does not hold any Eletrobras shares.
However, Eletronorte’s capital stock is described below, and Eletrobras is the parent company.
IV – any existing balances payable and receivable between the parties involved;
As per Note 35.3 of the Quartely Financial Information ended on September 30, 2019 of Eletrobras, the table below shows the balances due by Eletronorte to Eletrobras:
V – detailed description of the nature and extent of the interest in question;
The proposal proposes the transfer of all Amazonas Geração e Transmissão – AmGT shares belonging to Eletrobras to Eletronorte, for thet amount of BRL 3,130,227,000.00 (three billion, one hundred and thirty milion, two hundred and twenty seven thousand reais), as of December 31, 2018, subject to the following conditions:
1.1. Form of Payment:
1.1.1. Donation in payment: through the settlement of debts of Centrais Elétricas de Rondônia S.A (hereafter referred to as “Ceron”) and Boa Vista Energia SA (hereafter referred to as “Boa Vista”), assumed by Eletrobras with Eletronorte, in the process of privatization of the distribuitors, pursuant to CPPI Resolution No. 20/2017, and subsequent amendments, in the amount of BRL 2,936,049,450.30 (two billion, nine hundred and thirty six million, forty-nine thousand, four hundred and fifty reais and thirty cents) December 31, 2018, to be updated as per item 1.2 below (hereafter referred to as “Debt”);
1.1.2. Considering that there is a difference between the balance of AmGT amounts and the debt due to Eletronorte, and AmGT’s amount exceeds the debt due by Eletrobras to Eletronorte, Eletronorte shall pay the residual amount, observing all the provisions of item 2.4 above, under the following conditions:
Conditions: Payment in currency:
Payment Deadline: On the share transfer date.
If, after restatement the resulting amount is lower than the debt, the difference will remain as a balance due by Eletrobras to Eletronorte, under the same conditions as the current agreement.
1.2. The amounts of AmE GT's purchase by Eletronorte and the outstanding debt will be adjusted as follows:
1.2.1. Eletrobras Debt Balance with Eletronorte: Updated by SELIC Rate;
1.2.2. AmGT Amount: (i) between the valuation base date (ie 12/31/2018) and the last audited financial statement (quarterly or annually), by AmGT's Shareholders' Equity variation; and (ii) between the date of the last audited financial statement and the effective transfer of the shares, the amount will be updated by SELIC.
Further details of the transaction are described in the management proposal and its attachments.
VI – management’s recommendation on the proposal, highlighting the advantages and disadvantages of the operation for the company:
· Optmization of Eletrobras corporate structure;
· Operational synergy in the North of the country;
· Settlement of Eletrobras’debt with Eletronorte;
· Tax optimization at Eletronorte, as it collects PIS and Cofins on debt financial income;
· Reduction of Eletrobras financial expenses.
VII – if the matter submitted for the approval of the meeting is a contract subject to the rules of art. 245 of Law No. 6,404 of 1976:
a) a detailed statement by the directors that the contract meets commutative conditions or provides for adequate compensatory payment, and; e
An independent external consultant was hired, which carried out the economic and financial assessment of AmE GT as well as technical-operational, accounting, tax and legal Due Diligence. The two companies involved validated the external consulstant’s studies, and the transfer of shares was approved by the deliberative bodies of both companies.
b) analysis of contract terms and conditions in the light of prevailing market terms and conditions.
c) The Giving Payment Agreement and other covenants, attached, observe conditions similar to those that Eletrobras practices in other transactions with the market, such as disposal of SPEs that ocurred in 2018.
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CONTRACT OF DATIO IN SOLUTUM AND OTHER AGREEMENTS
ENTERED INTO BY AND BETWEEN
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS
AND
CENTRAIS ELÉTRICAS DO NORTE DO BRASIL S.A. – ELETRONORTE
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By means of this private instrument, on one side,
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – Eletrobras – government-controlled company, incorporated under Law No. 3890-A, dated April 25, 1961, headquartered in Brasilia, Federal District, and head office at Rua da Quitanda, nº 196, Rio de Janeiro, State of Rio de Janeiro, registered with CNPJ/MF (Brazilian Corporate Taxpayers’ Registry) under No. 00.001.180 /0001-26, hereby represented by its legal representatives under the terms of this Articles of Incorporation, hereinafter simply referred to as “Eletrobras”
And, on the other side,
Centrais Elétricas do Norte do Brasil S.A. – Eletronorte, government-controlled corporation, incorporated under the terms of Law 5,824, dated November 14, 1972, controlled by Centrais Elétricas Brasileiras S.A. – Eletrobras, headquartered in Capital Federal, SCN, Quadra 06, Conjunto A, blocos B e C, Entrada Norte 2, Distrito Federal – DF, ZIP CODE: 70.716-901, registered with CNPJ/MF under No. 00.357.038/0001-16, and registered with the Commercial Registry of the Federal District under NIRE (Identification Number of the Registry of Companies) No. 53300002819, duly authorized to sign this instrument by resolution No. 855/2019, herein represented by its legal representatives under the terms of its Articles of Incorporation, hereinafter simply referred to as “Eletronorte.”
Jointly also referred to as Parties and, separately, as Party.
Whereas:
· Eletrobras has been working to streamline its activities with the purpose of achieving greater efficiency and profitability, as directed by the Eletrobras System PDNG;
· the said rationalization process covered the privatization of power distribution companies, including the divestiture of the activities of Generation and Transmission of Amazonas Energia
· as a result of financial adjustments established by CPPI Resolution no. 20/2017, as subsequently amended, aiming to facilitate the privatization of the power distribution companies Centrais Elétricas de Rondônia S.A. – CERON and Boa Vista Energia S.A. (“Distribution Companies”), Eletrobras assumed the debts of such Distribution Companies together with Eletronorte (“DEBT”);
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· The DEBT referred to above, in historical values, amounts to of BRL 2,609,490,507.00 (Two Billion, Six Hundred and Nine Million, Four Hundred and Ninety Thousand and Five Hundred and Seven Brazilian Reais) assumed on October 30, 2018 in the process of privatization of CERON plus BRL 283,761,153.00 (Two Hundred and Eighty-three Million, Seven Hundred and Sixty One Thousand, One Hundred and Fifty-three Brazilian Reais) assumed on October 12, 2018 in the process of privatization of Boa Vista Energia;
· on September 30, 2019, the DEBT was adjusted and amounted to BRL 3,071,615,574.00 (Three Billion, Seventy One Million, Six Hundred and Fifteen Thousand, Five Hundred and Seventy-four Brazilian Reais), which is adjusted by SELIC, under the terms of the respective contracts;
· Eletrobras intends to settle the DEBT with the datio in solutum of all shares it holds in Amazonas GT Capital (“DATIO”), without prejudice to the payment by Eletronorte of a complementary amount, accordingly.
The Parties agree to enter into this Contract (“Contract”) in accordance with the following Clauses and conditions:
Clause I – Object
1.1. The purpose of this Contract is the datio in solutum by Eletrobras, to settle the DEBT with Eletronorte, which on September 30, 2019 amounted to BRL 3,071,615,574.00 (Three Billion, Seventy One Million, Six Hundred and Fifteen Thousand, Five Hundred and Seventy-four Brazilian Reais), through the transfer of 497,946,334 (Four Hundred and Ninety-seven Million, Nine Hundred and Forty-six Thousand and Three Hundred and Thirty-four) common shares with no par value, issued by Amazonas GT and owned by Eletrobras (“Shares”), duly paid-in, representing 100% of the share capital of Amazonas GT.
1.2. Eletrobras states that it is the legitimate owner and holder of the Shares and that no encumbrances are currently levied on them, and such Shares are therefore free and clear of any encumbrances.
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1.3. Hereby, subject to the terms and conditions set forth herein, Eletrobras irrevocably and irreversibly pays the Amazonas GT Shares to Eletronorte through dation in solutum, which, in turn, irrevocably and irreversibly accepts such assets, under the terms of Article 356 of the Civil Code, pursuant to the clauses below.
1.4. The delivery of the transfer of the Shares object of this Contract shall be made through the execution of the transfer instrument in the Amazonas GT Nominative Share Transfer Book by the legal representatives of the Parties.
Clause II – Effectiveness Conditions
2.1. The DATIO provided for in this Contract shall only be effective upon the implementation of the following conditions:
2.1.1. Grant of consent by the National Electric Energy Agency – ANEEL, through the issuance of the corresponding administrative act, for the transfer of controlling interest of Amazonas GT to Eletronorte, pursuant to ANEEL Normative Resolutions 484/2012 and 699/2016;
2.1.2. Grant of consent by the Secretariat of Coordination and Governance of Public Corporations – SEST, pursuant to Article 98, VI, “a” of Decree 9.745/2019;
2.2. If any of the conditions of effectiveness are not met within 12 (twelve) months, extendable for an equal period as of the execution of this Contract, the Parties shall return to the status quo ante without reimbursement of any costs incurred or indemnities between them.
Clause III – Price, Payment and Transfer of all Shares
3.1. Eletrobras DEBT with Eletronorte, which is the object of the DATIO and assumed in the context of the privatization of the Distribution Companies, amounts to BRL 3,071,615,574.00 (Three Billion, Seventy one Million, Six Hundred and Fifteen Thousand, Five Hundred and Seventy-four Brazilian Reais), on the base date of September 30, 2019.
3.2. The price of all Amazonas GT Shares (“SHARE PRICE”) is BRL 3,130,227,000.00 (Three Billion, One Hundred and Thirty Million, Two Hundred and Twenty-seven Thousand Brazilian Reais), to be updated by the positive variation of SELIC proportionally per day (pro rata die), from the date of the last audited quarterly or annual balance sheet used as the basis of the adjustment provided for in Clause 3.3.1 below until the business day immediately prior to the payment date (the “DATIO Price”), abiding by clause 3.4 below.
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3.3. The “SHARE PRICE” was defined as the result of the valuation, according to the economic-financial valuation report (Valuation) prepared by the independent consulting firm hired by Eletronorte, under common agreement with Eletrobras, Deloitte Touche Tohmatsu Consultores Ltda. (Deloitte), on the base date of December 31, 2018.
3.3.1. In addition to the adjustment under the terms of Item 3.2, the “SHARE PRICE” shall be adjusted between the valuation base date and the date of the last available audited quarterly or annual financial statement to reflect Amazonas GT’s most current equity structure. Such adjustment shall consider the variation in Amazonas GT’s shareholders’ equity based on the last available audited quarterly or annual financial statement.
3.3.2. The balance adjustments contained in Item 3.3.1 shall be net of adjustments already made and considered in the valuation ascertainment directed by Due Diligence.
3.3.3. The full Valuation Report based on the balance sheet audited on December 31, 2018 is part of this Contract.
3.3.4. If, on the business day immediately prior to the date of payment, the amount of SELIC has not been disclosed for a certain period, for the purpose of adjustment of the Purchase Price, as per Clause 3.2 above, the value of the last SELIC disclosed shall be taken into consideration.
3.3.5. If the “SHARE PRICE” is higher than the DEBT value, Eletronorte shall pay the difference to Eletrobras (“Residual Price”), in currency, on the same date as the DATIO is made, in compliance with Clause 3.4.
3.3.6. Should the “SHARE PRICE” be lower than the DEBT value, the remaining balance remains as Eletrobras’ debt to Eletronorte, under the same original terms and conditions of the Debt Assumption Instrument executed under the scope of the privatization of the Distribution Companies, and an amendment or discharge to such instrument between the Parties should be executed to reflect the DATIO herein agreed.
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3.3.7. The “SHARE PRICE” shall also be deducted with the amount paid by Eletronorte, referring to the amount payable by Eletrobras, as a result of the Hiring of Deloitte Touche Tohmatsu for the valuation of Amazonas GT under the scope of this operation, amounting to One Hundred and Eighty Thousand Brazilian Reais (BRL 180,000.00), according to the Commitment Instrument executed between the parties on April 30, 2019.
3.4. Parties shall operationalize the DATIO and any payment referred to in clause 3.3.5, including the execution of discharge or amendment, within 30 (Thirty) days of arranging the last consent necessary, as provided for in 2.1 and its sub-items.
3.5. Parties shall sign the Amazonas GT Share Transfer Book within 10 (Ten) days of arranging the last consent necessary, as provided for in Clause 2.1 and its sub-items.
Clause IV – Declarations
4.1. Eletrobras represents that:
a) Without restriction, as of the date of this Contract, (i) it is the legitimate owner and holder of the Shares, with all that they represent and any rights granted to it; (ii) Amazonas GT shares are free and cleared of any liens, undertakings, charges, options, usufruct and other claims of any nature, subject to the requirements established under law for the DATIO and transfer of its controlling interest, except for guarantees offered to financing agents; (iii) the duly audited balance sheet and financial statements of Amazonas GT as of December 31, 2018, including the management and audit notes, fairly present the consolidated financial condition of this company and were prepared in accordance with accounting principles accepted in Brazil; (iv) Amazonas GT’s corporate books and records are faithful, accurate and complete in all material respects, in compliance with applicable law; and (v) the representations set forth in this Clause shall be repeated and ratified on the date of the actual transfer of the interest of Eletrobras in Amazonas GT to Eletronorte.
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b) It is a government-controlled corporation, duly incorporated, validly existing in accordance with the laws of the Federative Republic of Brazil, which is in good standing in accordance with applicable laws and has full legal capacity to hold, own and dispose of its assets and goods and to conduct its Business as currently conducted;
c) There are no advances for future capital increase from Eletrobras to the Company.
d) The legal representatives designated for the execution of this Contract have the legal capacity to do so and to perform all other acts and to assume all related obligations;
e) The execution of this Contract, duly authorized by Eletrobras’ management bodies, is in accordance with its Articles of Incorporation and the laws to which it is subject;
f) It has full capacity and legitimacy to enter into this Contract, which is a valid and binding instrument for itself and enforceable in accordance with its terms;
g) The execution and fulfillment of this Contract do not generate conflicts, nor represent breaches of any other agreements, Contracts or instruments already entered into by Eletrobras or render untrue representations made by it to third party;
h) It has provided all the documents and information necessary for the delivery of this operation and for the preparation of the Valuation Report by Deloitte Touche Tohmatsu Ltda.
4.2. In turn, Eletronorte states that:
a) It has full capacity and legitimacy to enter into this Contract, which is a valid and binding instrument for itself and enforceable in accordance with its terms;
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b) The execution and fulfillment of this Contract do not create conflicts, nor represent breaches of any other agreements, Contracts or instruments already entered into by Eletronorte or render untrue representations made by it to third party;
c) The legal representatives designated for the execution of this Contract have the legal capacity to do so and to perform all other acts and to assume all related obligations;
d) The execution of this Contract, duly authorized by Eletronorte’ management bodies, is in accordance with its Articles of Incorporation and the laws to which it is subject;
e) It received and became aware of all documents and information made available by Eletrobras for the delivery of this operation and for the preparation of the Valuation Report by Deloitte Touche Tohmatsu.
f) Eletronorte has the financial capacity to fully comply with all obligations under this Contract, including any payment of the Residual Price of Clause 3.3.5 and the replacement of guarantees (with the exception of the collaterals of Gas Contract OC 1902/2006);
g) Eletronorte recognizes and expressly agrees that the “SHARE PRICE” was adjusted taking into consideration the documents and information requested and made available by Eletrobras and by Amazonas GT, as well as that the assumptions used in the preparation of the Valuation were defined upon mutual agreement between the Parties, accounting for the “SHARE PRICE”, abiding by clause 3.3.1. Therefore, it is the fair and final amount adjusted between the Parties, and there is nothing more to be claimed by Eletronorte in any way from Eletrobras.
Clause V – Responsibility for asset shortfalls, subsequent liabilities and contingencies
5.1. Pursuant to Clause 4.2, “g,” Eletrobras, including its respective managers, employees and agents, shall have no liability whatsoever and in whatever capacity, in whole or in part, individually, jointly and severally and/or jointly, to Eletronorte or any third party, for any act, fact, action or omission relating to Amazonas GT or its respective managers, even if carried out or happening prior to the date of execution of this Contract, as well as for any asset shortfall, subsequent liability and/or contingency of any nature of Amazonas GT, whether or not mentioned and/or identified during the Valuation conducted in Amazonas GT by Deloitte Touche Tohmatsu, or whether or not entered in Amazonas GT’s financial statements, whether or not mentioned in the reports prepared by Deloitte Touche Tohmatsu and/or any other material provided by Amazonas GT and/or by Eletrobras, neither for the sufficiency and/or completeness of any of the said information, being, therefore, exempt from any responsibility, in any case and in whatever way, individually or in full, jointly and severally and/or jointly, for any direct, indirect and loss of profits. Due to the provisions of this Clause, Eletronorte and its affiliates, as well as their respective successors, directors, employees and agents, may not demand any compensation against Eletrobras, as well as their respective directors, employees and agents, by any loss arising from any act, fact, action or omission relating to Amazonas GT, whether known or not, disclosed or not, happening at any time, including prior to the date of signing this Contract.
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5.1.1. Eletrobras shall be jointly and severally liable for representations and guarantees made intentionally incorrectly or intentionally omitted, as well as for losses or gains actually made by Amazonas GT, as a result of contingent liabilities and asset shortfalls or differences in relation to Amazonas GT’s financial statements, from December 31, 2018 until the date of the actual transfer of the shares of Amazonas GT to Eletronorte, whether or not known to Eletronorte, or not disclosed to it, except for the values of the adjustments already included in Valuation and those provided for under Clause 3.3.1.
5.1.2. If, within 6 (six) months from the actual transfer of controlling interest, losses or gains actually incurred by Amazonas GT are recognized and no longer recorded in the balance sheet of Amazonas GT and that exceed 10% (ten percent) of the final value of the transaction, the Parties undertake in respect of this amount, in the proportion of 50% (fifty percent) for each, except for the amounts of adjustments already included in Due Diligence and reflected in the Valuation and those set forth in Clause 3.3.1
5.1.2.1 The losses or gains dealt with in this clause shall be due to a triggering event prior to the transfer of the controlling interest of Amazonas GT to Eletronorte.
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5.2. The provisions under Clause 5.1 shall not be applicable in case of substantial error, fraud or simulation, under the terms of Article 134, Paragraph 3 of Law No. 6404/1976.
Clause VI – Obligations
6.1. In addition to the obligations set forth under this Contract, Eletronorte shall arrange, within 120 (one hundred and twenty) days after the implementation of the last condition of effectiveness established in Clause II, the replacement or release of any and all guarantees made by Eletrobras within the scope of Amazonas GT’s operations, except for the collateral posted by Eletrobras in the Gas Contract, OC 1902/2016, which shall remain under the responsibility of Eletrobras.
Clause VII – Confidentiality
7.1. Each Party undertakes to maintain and make its affiliates and its directors maintain, in confidentiality any and all Confidential Information of Amazonas GT or of the other Party, except for any Confidential Information that: (i) is publicly known; (ii) shall become of public knowledge, except as a result of the breach by such Party of its confidentiality obligations; or (iii) is legally acquired by such Party from another source without infringing the Law or confidentiality obligations.
7.2. If any of the Parties, or one of its affiliates or director , is required, as established under the law or by any competent governmental authority, or organized stock exchange or over-the-counter market where it has its securities traded, to disclose any Confidential Information, such Party, or affiliate or director, may do so, without giving rise to indemnities or charges, in which case it should: (i) provide only the portion of Confidential Information required to be disclosed; (ii) endeavor reasonable efforts to ask the party requesting such Confidential Information to give confidential treatment to such Confidential Information; and (iii) promptly inform the other Party that a disclosure of Confidential Information has been made and the content and extent of Confidential Information disclosed.
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7.3. In addition, the following shall not stand as a breach of the confidentiality obligation set forth under this Clause VIII: (i) the disclosure of Confidential Information to the directors or affiliates of either Party or their respective directors and employees who need access to its Confidential Information; (ii) the disclosure of Confidential Information to ANEEL, the Ministry of Mines and Energy, the Ministry of Economy, and/or other governmental authorities for the purposes set forth under this Contract, and the Parties shall, as far as possible, make all reasonable efforts to request confidential treatment of Confidential Information disclosed; and (iii) the disclosure of Confidential Information allowed under this Clause or as consented to by the holder of Confidential Information.
Clause VIII - Termination
8.1. This Contract may only be terminated until the actual transfer of Shares pursuant to Clause 3.5, in any of the following cases:
a) by the Parties, by sending a Notice to that effect to the other Party, if: (a) any governmental authority, whose approval is required for the accomplishment of the operation object of this Contract (“Operation”), expressly disapproves the Operation, provided that such disapproval does not arises from facts or circumstances relating directly or indirectly to the other Party in a willful manner; or (b) the conditions of effectiveness provided for under Clause II are not met within 24 (twenty-four) months from the date of execution of this Contract, extendable for the same period.
8.2. If this Agreement is terminated pursuant to Clause 8.1, a), all obligations of the Parties shall be deemed terminated without any payment or compensation being due and without any other liability of one Party to the other Party.
8.3. In any event of termination of this Contract, pursuant to this Clause, all terms, conditions and provisions of this Contract which, by their nature or by express provision, shall continue to be effective, shall remain valid and effective for a period of 2 (two) years, even after the termination of this Contract, notably the provisions under Clause VII, in this Clause VIII and in Clause X.
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Clause IX - Notices
9.1. Any and all Notices shall be in written and delivered personally or by means of: (i) registered letter with return receipt: (ii) renowned courier service, with mail tracking system and receiving protocol; or (iii) e-mail, upon receipt confirmation, in the address and to the representatives below:
9.1.1. If addressed to Eletrobras, notices should be addressed to Rua da Quitanda, 196, Ed. Mário Bhering, Centro, ZIP CODE: 20.091-005, Rio de Janeiro – RJ, to the care of Mr./Mrs. Generation Officer.
9.1.2. If addressed to Eletronorte, notices should be addressed to Eletronorte Headquarters, at SCN Quadra 6, Conjunto A Bloco C, 9º andar - Entrada Norte 1, Asa Norte CEP 70716-901 Brasília – DF, to the care of Mr./Mrs. Engineering Officer.
9.2. Any such notice shall be deemed to have been duly delivered on the date: (a) of the signature of the return receipt or the protocol of receipt, (b) of the delivery of the judicial or extrajudicial notice, or (c) the express confirmation of receipt of the e-mail.
9.3. The Parties may at any time change addresses, representatives and addressees to which Notices shall be sent or replicated by means of a Notice to the other Party to be made under this Clause.
Clause X - Ethics and Compliance
10.1. Each Party represents that it has not made and agrees that it should not, in connection with the activities established under this Contract, or in connection with any other operations, whether commercial or otherwise, involving the other Party, payment, offering, promise, or authorization for the payment or transfer of anything of value, directly or indirectly, to any public official or employee (including employees of state-owned companies or else those controlled by the government or public international organization) or to any political party, party official, or candidate for public offices, or to any other person or entity in a manner that may breach FCPA (the US Foreign Corrupt Practices Act) of 1977, as subsequently amended, and Brazilian Law No. 12846/2013.
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10.2. The Parties, including their directors and employees and all persons acting on their behalf, undertake to (i) remain in full compliance with FCPA, and any applicable anti-bribery, anti-corruption and conflict of interest laws, or any other laws, rules or regulations of similar purpose and effect, refraining from any conduct that may be prohibited to persons subject to FCPA, as well as in relation to Brazilian Law No. 12846/2013; and (ii) comply, as applicable, with the Eletrobras Code of Ethics and Compliance Manual made available on its website.
Clause XI – Final Provisions
11.1. This Contract is entered into on an irrevocable and irreversible basis and shall be binding on all Parties and their respective legal successors and permitted assigns. This Contract is solely for the benefit of the Parties and their respective successors and shall not revert to the benefit of any third party or confer upon anyone other than one of the Parties and their respective successors any rights or remedies under this Contract.
11.2. This Contract, as well as the rights and obligations inherent thereto, may not be assigned and/or transferred, in whole or in Part, without the prior written consent of the other Party, subject to the relevant regulatory provisions.
11.3. This Contract may only be amended by mutual agreement between the Parties, upon the execution of an Amendment.
11.4. If either Party tolerates any breach of any provision of this Contract, that does not mean that it has relieved the other Party of its obligations and that the breaching provision has been deemed revoked, and that act of free volition shall stand as a novation of the Clauses set forth herein.
11.5. If any Clause or condition of this Contract is held to be unlawful, invalid or unenforceable under Brazilian law, the remaining Clauses and conditions, if not directly impacted by the unlawfulness, invalidity or unenforceability, shall continue to be in full force and effect. If the alleged illegality, invalidity or unenforceability is of a temporary nature, the affected provision shall have its effects suspended until the time the conflict with Brazilian law ceases. Should the said unlawfulness, invalidity or unenforceability be of a permanent nature, the Parties, by mutual agreement, shall provide for a new provision to replace it and to preserve the content of this instrument.
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11.6. It is expressly and irrevocably established that the action or omission, as well as the abstention from the exercise by either Party of the rights or faculties entitled to it hereunder or the agreement with the delay in the fulfillment of the obligations of the other Party, as set forth in this Contract, shall not entail novation nor waiver of those rights or remedies, which may be exercised at any time in its sole discretion, unless otherwise stated in writing.
11.7. This Contract is governed by and construed in accordance with Brazilian law, binding upon the Parties by themselves, their successors in any capacity.
11.8. The Parties agree that this Contract stands as an extrajudicial enforceable title pursuant to Article 784, III of the Code of Civil Procedure in force and for the purposes of Articles 771 et seq. of the same statute.
11.9. Immediately after the execution of this Contract, subject to the implementation of the conditions of effectiveness, Eletronorte must register it with the relevant Registry of Securities and Documents.
11.10. The Parties shall cooperate with each other by providing any additional information related to Amazonas GT, as may be required by the other Party, to complete the transaction established under this Contract. From the date of execution of this Contract, the Parties shall cooperate and make their best efforts to obtain all consents, approvals and agreements and to arrange and provide all notices and filings with any governmental authority and corporate bodies that may be required with respect to the operation established under this Contract.
11.11. The Parties hereby represent, mutually and expressly, that this Contract has been entered into in accordance with the principles of probity and good faith, based on the free will of the Parties, consciously and well founded by the Parties and in full equity relationship, there being no doubt about any of its Clauses and conditions.
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11.12. The Parties represent that there is no pending or imminent prosecution, action, investigation or proceeding known to them against them or before any arbitral, administrative or governmental court which, if negatively decided, shall interfere with their ability to comply with the obligations under this Contract.
11.13. The representations made by the Parties to this Contract, or any other instrument that has been delivered or entered into as a result of this Contract, do not contain or shall not contain any inaccuracy or untruthfulness in any material act or fact, nor do they omit or shall omit the existence of any act or material fact, the knowledge of which is necessary to ensure that the representations made under this Contract are not misleading or else leading to wrongful interpretation.
11.14. This Contract, including its Annexes, contains the entire agreement between the Parties and with respect to the transaction that is the subject of this Contract, as set forth in Clause I.
11.15. The Parties shall bear their respective direct and indirect expenses incurred in connection with the negotiation and drafting of this Contract and the accomplishment of the operation provided for herein, unless otherwise agreed in writing by the Parties.
11.16. The headings of the Clauses of this Contract are for your reference and convenience only, and do not affect the interpretation of its provisions.
Clause XII – Venue
12.1. The Parties undertake to make reasonable efforts to amicably resolve any doubt, controversy or dispute related to or arising from the obligations under this Contract, before filing any action, claim or legal proceeding to do so.
12.2. The Parties elect the jurisdiction of the Special Judicial District of Brasília - DF to settle any disputes arising from this Contract.
Clause XIII – Effectiveness
13.1. Without prejudice to the conditions of effectiveness established under Clause II, this Contract shall be effective upon execution by the Parties and shall terminate upon full compliance by the Parties with all conditions set forth under this Contract.
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Clause XIV – Annexes
13.1. The following documents are Annexes to this Contract:
a) Valuation Report Prepared by Deloitte;
b) Due Diligence Report Prepared by Deloitte.
In witness whereof, the Parties execute this Contract for Donation in Payment in 3 (three) copies of equal content and for only one purpose, in the presence of the witnesses below.
Brasília, , 2019.
For Centrais Elétricas Brasileiras S.A. – Eletrobras:
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For Centrais Elétricas do Norte do Brasil S.A. – Eletronorte:
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Witnesses:
Name CPF (Brazilian Individual Taxpayers’ ID) |
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Name CPF (Brazilian Individual Taxpayers’ ID) |
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CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRÁS | ||
By: |
/S/ Elvira Baracuhy Cavalcanti Presta
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Elvira Baracuhy Cavalcanti Presta
CFO and Investor Relations Officer |
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.