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INVITATION

 

CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS summons all its shareholders to attend its 58th Annual Shareholder’s Meeting, as follows:

 

Date: April 27, 2018

 

Time (Brasília): 2 p.m.

 

Location: Corporate Headquarters, Setor Comercial Norte, Quadra 6, Conjunto A, Bloco A, 6th and 8th floors, of Ed. Venâncio 3000, Asa Norte, Zip Code 70716-900, Brasília-DF;

 

Matters to be submitted for resolution at the Annual Shareholders’ Meeting:

 

1.            Receive the Administration's accounts, examine, discuss and vote on the Administration Report and the Complete Financial Statements of the Company for the fiscal year ending as of December 31, 2017;

 

2.            Deliberate on the proposal of the Company’s management for distribution of the results connected to the accounting year ending on December 31, 2017;

 

3.            Elect up to 03 (three) members of the Company's Board of Directors as follows: (i) one member to be appointed by the Ministry of Mines and Energy (MME) to take office of a former director appointed by the latter and who resigned; (ii) a member to be appointed by MME due to the creation of a new vacancy on the Board of Directors as resolved at Eletrobras’ 168th Extraordinary General Meeting, held on November 30, 2017; and (iii) to grant to the holders of preferred shares the election of a member to the Board of Directors, in a separate vote, provided that the statutory requirements are met;

 

4.            Appoint, among the members of the Company’s Board of Directors, its Chairman;

 

5.            Set the global compensation of the Managers, members of the Company’s Fiscal Council and Audit and Risk Council; and

 

6.            Elect alternate members of the Company's Fiscal Council.

 

The Company prepared this Management Proposal to meet the good corporate governance practices and transparency requirements, aiming to guide and enlighten all Shareholders about the matters to be deliberated upon, hereby placing its Investor Relations Department at disposal to clear up any additional doubts.

 

Service Channels

 

 

MINISTRY OF MINES AND ENERGY

CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS

(Public company)

CNPJ No. 00.001.180/0001-26

CALL NOTICE

58^th Annual Shareholders’ Meeting

 

The company hereby calls the Shareholders of Centrais Elétricas Brasileiras S.A. - Eletrobras (“Company”) to meet at the Company’s headquarters, in Brasília, Distrito Federal, Setor Comercial Norte, Quadra 06, Conjunto A, Bloco A, 6th e 8th floors, part, Ed. Venâncio 3000, Asa Norte, Zip Code 70716-900, on April 27, 2018, at 2 p.m., at the Annual Shareholders’ Meeting to deliberate on the following Agenda:

 

1.    Receive the Administration's accounts, examine, discuss and vote on the Administration Report and the Complete Financial Statements of the Company for the fiscal year ending as of December 31, 2017;

 

2.    Deliberate on the proposal of the Company’s management for distribution of the results connected to the accounting year ending on December 31, 2017;

 

3.    Elect up to 03 (three) members of the Company's Board of Directors as follows: (i) one member to be appointed by the Ministry of Mines and Energy (MME) to take office of a former director appointed by the latter and who resigned; (ii) a member to be appointed by MME due to the creation of a new vacancy on the Board of Directors as resolved at Eletrobras’ 168th Extraordinary General Meeting, held on November 30, 2017; and (iii) to grant to the holders of preferred shares the election of a member to the Board of Directors, in a separate vote, provided that the statutory requirements are met;

 

4.    Appoint, among the members of the Company’s Board of Directors, its Chairman;

 

5.    Set the global compensation of the Managers, members of the Company’s Fiscal Council and Audit and Risk Council; and

 

6.    Elect alternate members of the Company's Fiscal Council.

 

 

Pursuant to paragraph one of article 126 of the Brazilian Corporations Law and the decision of I. the CVM Board in CVM case RJ-2014/3578, on November 4, 2014, a shareholder may be represented at the general meeting: (i) if an individual, by a proxy appointed less than 1 (one) year ago (which is a shareholder, manager of the Company or lawyer duly registered under the Brazilian Bar Association); (ii) if a legal entity, by its legal representatives or by a proxy appointed in accordance with its corporate documents and in accordance with the Brazilian Civil Code; and (iii) if an investment fund, by its administrator and/or manager, or by a proxy 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 Annual Shareholders' Meeting hereby called, the shareholder may exercise the voting right by means of the completion and delivery of the Remote Voting Ballot (“Voting Ballot”) made available by the Company on the Company's websites (www.eletrobras.com/ir) and the Brazilian Securities and Exchange Commission –CVM website (www.cvm.gov.br).

 

 

The Shareholder or its legal representative, in order to ensure admission to the General Meeting, pursuant to article 5 of CVM Instruction 481, shall submit the following documents:

 

·   Official ID card with photo;

 

·   Certified photocopy of the latest corporate document (bylaws or articles of association), in the case of a legal entity;

 

·   Original or authenticated photocopy of power of attorney granted by shareholder; and

 

·    The original shareholding position statement, provided by the depositary institution or custody, identifying the condition of shareholder.

 

Pursuant to the first paragraph of article 19 of the Company's Bylaws, it is requested that documents evidencing the condition of shareholder and its representation be submitted within 72 (seventy-two) hours before the Annual Shareholders’ Meeting called, at the Superintendence Investor Relations Department - DFR, Market Assistance Division - DFRM, at Avenida Presidente Vargas, No. 409 - 9th Floor, in the city of Rio de Janeiro, State of Rio de Janeiro, during the time from 8 a.m. to 12 p.m. and 2 p.m. to 5 p.m. It will be admitted at the Annual Shareholders' Meeting called, however, to all shareholders who appear with the necessary documentation to participate in the conclave.

 

The resolutions at the Annual Shareholders’ Meetings now convened shall be passed by a majority of votes, and each shareholder's vote shall be proportional to its shareholding in the Company's share capital.

 

The shareholders shall have access, at the Superintendence of Investor Relations - DFR, Market Relations and Compulsory Loan Department – DFRM, at Av. Presidente Vargas, no. 409 – 9th floor, in the city of Rio de Janeiro, RJ and at the Company websites (www.eletrobras.com/ir), Brazillinan Securities Commission - CVM (www.cvm.gov.br) and B3 S.A. – Brasil, Bolsa, Balcão (www.bmfbovespa.com.br), to the entire documentation connected to the business which shall be addressed at the Annual Shareholders’ Meeting , under the terms of Article 133, Paragraph 1 of the Brazilian Corporations Law and Article 9 of CVM Instruction 481.

 

Brasília, March 26, 2018.

 

José Guimarães Monforte

Chairman of the Board of Directors

                                                                                               

 

 

MANAGEMENT PROPOSAL

 

1.  Procedures inherent to the Annual Shareholders’ Meeting called hereunder

 

To facilitate the understanding and attendance of the Shareholders to the Annual Shareholders' Meeting summoned hereunder, the Company lists, below, some relevant information regarding the procedures for installation, participation and conduction of the meeting. (“Management Proposal”)

 

1.1.  Right to Vote

 

·         Shareholders owning common shares:

 

They will have the right to vote on all items on the Agenda for the day, except in the election for the vacancy on the Board of Directors directed to preferred shareholders.

 

·         Shareholders holding preferred shares:

 

Pursuant to this Management Proposal, due to the Company's losses for the year ended December 31, 2017, the Company's management proposes to not pay dividends or interest on capital, even though there are balances of reserves of profits, despite the loss of the fiscal year. However, considering that the decision will be up to the stockholders at the Annual Shareholders’ Meeting here called (“ASM”), at the resolution in item 2 of the agenda, we clarify that:

 

1.    If the proposal of the management of non-payment of dividends is approved by the ASM, the holders of preferred shares will acquire the voting rights for the subsequent agenda items (that is, for all items of the agenda from item 3) pursuant to paragraph 1 of article 111 of Law 6,404 of December 15, 1976, as amended ("Brazilian Corporation Law");

 

2.    Considering that the Votting Ballot (as defined below) must be submitted within 7 days before the ASM, pursuant to article 21-B of CVM Instruction 481, as amended, the shareholders holding preferred shares, when submitting the Votting Ballot, will not yet have acquired the aforementioned voting right, since it is the responsibility of the ASM to decide on the payment of dividends and/or interest on capital, since there is a balance of profit reserve, despite the loss of the fiscal year;

 

3.    With regard to item 3 of the agenda, which deals with the election of the Board of Directors Members, the shareholders holding preferred shares may elect their representatives, in a separate election, subject to the conditions set forth in section 2.3, subitem (iii) of this Management Proposal, in the Company's by-laws, Brazilian Corporation Law and Federal Law No. 13,303/2016 (“State Law”), regardless of the payment or not of dividends.

 

 

1.2.  Opening of the Annual Shareholders’ Meeting

 

Pursuant to article 125 of the Brazilian Corporations Law, in order to call the Annual Shareholders’ Meeting to order on first call, it is necessary that shareholders and/or their legal representatives holding at least twenty-five percent (25%) of the Company's voting capital duly attend.

 

 

If said percentage is not attained, a new call notice shall be sent with, at least, 8 (eight) days of notice, after which the Annual Shareholders’ Meeting shall be installed by the presence of any number of shareholders.

 

1.3.  Qualification and Participation in the Shareholders’ Meeting

 

To participate in the Annual Shareholders' Meeting called herein, the Shareholders should prove the quality of holders of shares issued by the Company, upon presentation of 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 two (2) days before the date of the Annual Shareholders’ 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

 

(d) an authenticated copy of the updated documents of the shareholder and of the document that invests the representative with sufficient powers for representation within the Annual Shareholders’ Meeting, duly registered at the competent bodies, accompanied by their respective publications, in the case of a legal entity.

 

For the purposes of the documents described in item (d), the Company will accept (i) bylaws and articles of association, 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 organ 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, 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 organ.

 

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 organ.

 

 

In case of investment funds, the representative shall prove that he is an administrator 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 5 October 1961, promulgated by Decree No. 8,660, of 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 Bylaws, it is requested that the delivery of the documents evidencing the condition of shareholder and its representation occurs up to seventy-two (72) hours before the Annual Shareholders’ Meeting called, in the Superintendence of Investor Relations - DFR, Department of Market Relations and Compulsory Loan - DFRM, at Avenida Presidente Vargas, No. 409 – 9th Floor, in the city of Rio de January, State of Rio de Janeiro – Zip Code: 20071-003, during the time from 8 a.m. to 12 p.m. and 2 p.m. to 5 p.m.

 

1.4.  Representation at the Annual Shareholders' Meeting

 

Pursuant to paragraph one of article 126 of the Brazilian Corporations Law and the decision of I. the CVM Board in CVM case RJ-2014/3578, on November 4, 2014, a shareholder may be represented at the general meeting: (i) if an individual, by a proxy appointed less than 1 (one) year ago (which is a shareholder, manager of the Company or lawyer duly registered under the Brazilian Bar Association); (ii) if a legal entity, by its legal representatives or by a proxy appointed in accordance with its corporate documents and in accordance with the Brazilian Civil Code; and (iii) if an investment fund, by its administrator and/or manager, or by a proxy appointed in accordance with its corporate documents and in accordance with the Brazilian Civil Code rules.

 

 

1.5.  Distance Voting

 

Pursuant to the authority provided in CVM Instruction 481, Eletrobras will make available to the General Meeting hereby convened the possibility of participation at a distance through the Distance Voting Ballot, of which the model follows in the annex to this Proposal in the form of its Annex 06 ("Voting Ballot").

 

In order to participate in the Annual Shareholders’ Meeting in this modality, the shareholders of the Company shall fill in the proper fields, sign the Voting Ballot and send 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.

 

 

In this sense, Eletrobras informs that the Bookkeeping Agent of its shares, namely, Banco Bradesco S.A. ("Bookkeeping Agent"), under the terms of an agreement entered into with the Company, will receive the Company's network of bank branches spread throughout the national territory, observing the procedures established by the Bookkeeping Agent. Shareholders or their representatives should appear at any bank branch of the Bookkeeping Agent, with a valid original document with a photo and, in the case of shareholders considered legal entities and/or represented by a proxy, the competent proxy documents should 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 Ballots, the shareholders of the Company may also, at their exclusive discretion, send the Voting Ballot directly to such agents.

 

Also, pursuant to CVM Instruction 481, shareholders who so wish may also forward the Voting Ballot directly to the Company and, in this case, should abide by the following rules:

 

(i)            The Voting Ballot will only be received when physically sent by post, addressed to the Company's Investor Relations Office, located in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Presidente Vargas, 409, Centro, 9th floor, or when sent by e-mail, to the following e-mail address: [email protected], and the originals, in the latter case, should be forwarded to the Company before the scheduled date for the Annual Shareholders’ Meeting called hereunder;

 

(ii)           The Voting Ballot shall contain 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, observing, for this reason, the requirements and formalities referred to in item 1.2 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, observing the terms and procedures established in CVM Instruction No. 481.

 

The Voting Ballot received by the Bookkeeping Agent, the Custodian Agent (as the case may be) and/or by the Company up to seven (7) days prior to the date of the General Meeting pursuant to art. 21-B of CVM Instruction 481. The Voting Ballot that is delivered after this deadline will be considered invalid and will not be processed by the Company.

 

 

After the expiration of the period above, if there remain unfilled items of the Voting Ballots presented, the Company informs that it will consider them as an instruction equivalent to abstaining from voting connected to such matters.

 

2.  Matters to be submitted for resolution at the Annual Shareholders’ Meeting hereby convened

 

2.1.  Receive the Administration's accounts, examine, discuss and vote on the Administration Report and the Complete Financial Statements of the Company for the fiscal year ending as of December 31, 2017;

 

In accordance with article 132 of the Brazilian Corporations Law, within 4 (four) months after the end of the accounting year, the shareholders of the companies governed by it should meet to, among other matters, deliberate on the approval of the Financial Statements for the previous fiscal year.

 

The Company informs the shareholders, that from this date (inclusive) the Complete Annual Financial Statements, accompanied by the Independent Auditor's Report and the Report of the Company’s Fiscal Council for the fiscal year ending on December 31, 2017 are available for reference at the Company's headquarters or at the website of its Investor Relations Department - DFR, as well as at the websites of the Company (www.eletrobras.com/ir), of the Brazilian Securities Commission - CVM (www.cvm.gov.br) and B3 S.A. – Brasil, Bolsa, Balcão (www.bmfbovespa.com.br) the Company's Annual Financial Statements, together with the Management Report, the Independent Auditors' Report and the Company's Fiscal Council's Report and the Eletrobras Annual Report of the Audit and Risks Committee, not configured as a Statutory Audit Committee for the purposes of CVM Instruction 308 of May 14, 1999, "CVM Instruction 308" for the fiscal year ended on December 31, 2017. Accordingly, the Company emphasizes that, pursuant to the terms of Article 133 of the Brazilian Corporations Law, the notices referring to the availability of the abovementioned documentation were published in the newspapers usually used by the Company.

 

The publication of the Company's Complete Annual Financial Statements, together with Management’s Report and the Independent Auditors' Report for the fiscal year ending on December 31, 2017, will occur in a timely manner, in accordance with paragraph 3 of article 133 of the Brazilian Corporations Law.

 

Additionally, in compliance with CVM Instruction 481, the Company, 1 (one) month in advance of the date set for the holding of the Annual Shareholders’ Meeting, to be held on April 27, 2018, informs the following concerning the documents listed below:

                                                                  

·       Complete Annual Financial Statements; Management Report on corporate affairs and main administrative facts; Independent Auditors' Report; Opinion of the Fiscal Committee and Eletrobras' Annual Report of the Audit and Risk Committee, not configured as a Statutory Audit Committee for the purposes of CVM Instruction 308 of May 14, 1999, "CVM Instruction 308", all relating to the accounting year ended on December 31, 2017:

 

The Company's Complete Annual Financial Statements, including the Administration Report concerning corporate business and major administrative facts, the Auditor's Report of KPMG Auditores Independentes, the Opinion of the Fiscal Council (including the Main Audit Subjects -  NBCTA 701) and and Eletrobras' Annual Report of the Audit and Risk Committee, not configured as a Statutory Audit Committee for the purposes of CVM Instruction 308 of May 14, 1999, "CVM Instruction 308”, which approved them, for the fiscal year ending as of December 31, 2017, were filed with the CVM and B3 S.A. – Brasil, Bolsa Balcão (“B3”), on March 26 2018, and are available on the Company’s website (www.eletrobras.com/ir), the Brazilian Securities Commission - CVM website (www.cvm.gov.br) and that of B3 website (www.bmfbovespa.com.br).

 

11

 

 

2.3.        Elect up to 03 (three) members of the Company's Board of Directors as follows: (i) one member to be appointed by the Ministry of Mines and Energy (MME) to take office of a former director appointed by the latter and who resigned; (ii) a member to be appointed by MME due to the creation of a new vacancy on the Board of Directors as resolved at Eletrobras’ 168th Extraordinary General Meeting, held on November 30, 2017; and (iii) to grant to the holders of preferred shares the election of a member to the Board of Directors, in a separate vote, provided that the statutory requirements are met;

 

On April 28, 2017, the current members of the Company's Board of Directors were elected, for a unified term of two (2) years, in effect, until the Annual Shareholders’ Meeting to be held in 2019. At the time, pursuant to the current bylaws, a total of ten (10) members were then elected pursuant to the Company's Bylaws, 9 (nine) members of the Board of Directors, since holders of preferred shares issued by the Company failed to meet statutory requirements to promote the separate election of a member of the Board of Directors.

 

On November 30, 2017, the Company's shareholders decided at its 167th Extraordinary General Meeting to amend the Bylaws which, among other matters, changed the number of members of the Board of Directors to 11 (eleven) members, increasing by one (1) the number of directors appointed by the Ministry of Mines and Energy ("MME"), which now total 07 (seven) members. This change, therefore, resulted in the need to elect an additional member for the Company's Board of Directors, to be appointed by MME.

 

Additionally, on July 28, 2017, the then counselor Elena Landau, nominated to the Board of Directors by MME, presented an instrument of resignation to the position, being conducted to the chairmanship of the Board of Directors Mr. José Guimarães Monforte.

 

Pursuant to article 39 of the Company's Bylaws, in view of the resignation of Mrs. Elena Landau to the position of member of the Board of Directors of Eletrobras, the Board of Directors elected Mr. Mauro Gentile Rodrigues Cunha, appointed by the MME, to hold the position until the next General Meeting, which is the object of this call. Therefore, it is also necessary to deliberate on his election to the position by the Company's shareholders.

 

In turn, pursuant to the Company's Bylaws, shareholders holding preferred shares will be entitled to elect, by a majority vote, up to one (01) member to the Board of Directors, provided that they ten percent (10%) of the capital stock. In accordance with Official Letter Circular/CVM/SEP/No.02/2018, for the purposes of calculating the minimum percentage of 10% (ten percent), the total number of Company shares should be considered, excluding only those shares held in treasury. In the same sense, pursuant to the decision of the CVM's High Collegiate in CVM Administrative Procedure No. RJ-2014/4375, the Company reiterates that for the purpose of verifying the quorum required, only those shares held by the holders of preferred shares issued by the Company that are present at the General Meeting. It should be noted that pursuant to CVM Instruction 481, shareholders who participate through the Voting Ballot should be considered present at the General Meeting. Separate voting to be made by the holders of preferred shares is prohibited from participating in the controlling shareholder or entities in which it directly or indirectly exercises decisive influence. Pursuant to Official Letter Circular/CVM/SEP/No.02/2018, the voting impediment is allocated to the shareholder, and it is up to him to assess whether his vote is to some extent influenced by the controlling shareholder and, if he decides to vote in the separate election, it should be able to present, if questioned after the meeting, elements to demonstrate that there was no such influence.

 

 

All members of the Board of Directors who are elected at the Annual Shareholders' Meeting hereby called shall have a term of office until the Annual Shareholders’ Meeting to be held in 2019.

 

Considering the election of members to the Board of Directors, the information about the candidates appointed by the controlling shareholders, pursuant to items 12.5 to 12.10 of the Reference Form, as required by CVM Instruction 481, is in Annex 3 (Board of Directors) of this document.

 

The Company emphasizes that on June 30, 2016 and December 27, 2016, respectively, the State Law and Decree No. 8,945, were edited, which dealt with the establishment and regulation of the legal statutes of state-owned companies, mixed capital companies and their subsidiaries, among which Eletrobras is found.

 

The State-Owned Companies Act, in its Article 17, establishes that managers and members of the Fiscal Council of the Company should meet certain eligibility requirements in order to be elected and take office, and the Decree No. 8,945/16, which regulates it, in its article 22, that all appointments will be studied by an Eligibility Committee, responsible for verification, for each of the candidates, of these eligibility requirements listed in article 28 of the above-mentioned Decree.

 

This obligation covers both the candidates appointed by the Federal Government, as well as the candidates nominated by minority shareholders, and those elected by the employees of the Company, in accordance with article 22 of the referenced Decree.

 

The Transitory Internal Eligibility Committee (CITE) was created in January 2017, pursuant to articles 14 and 64, paragraph 1, of Decree No. 8,945/16 to provide an opinion in order to assist shareholders in the appointment of Directors and Fiscal Council Members on the fulfillment of the requirements and absence of fences for the respective elections, with scope for Eletrobras holding company and all its subsidiaries.

 

In May 2017, the Management, People and Eligibility Committee was created, which replaced CITE, through DEL-148/2017.

 

Accordingly, all candidates should meet the requirements of Law No. 13,303 of June 30, 2016 ("State Law"), Decree No. 8,945, of December 27, 2016, which regulates the State Law, of those envisaged in the Brazilian Corporation Law and the one established in the Policy for Indications in the Holding Company and the Subsidiaries, Associates, Foundations and Associations of Eletrobras Companies.

 

In this sense, all indications will be assessed by the Management, People and Eligibility Committee, responsible for verifying each of the candidates, of meeting the eligibility requirements listed in Article 28 of the Decree that regulates the State Law.

 

Accordingly, and in accordance with the Official Letter Circular/CVM/SEP/02/2018, Management informs that candidates nominated by the controlling shareholder in the Voting Ballot, to compose the Company's Board of Directors, have their profiles evaluated by the Management, People and Eligibility Committee meeting held on March 22, 2018, having all been approved. Candidates to be appointed by the holders of preferred shares shall be submitted to the evaluation by the Management, People and Eligibility Committee, in the form of the State Law and its regulation.

 

 

The information required by CVM Instruction 481 regarding each of them composes Annex 02 of this Management Proposal.

 

2.4.  Appoint, among the members of the Company’s Board of Directors, its Chairman;

 

The Eletrobras’ Bylaws, in its Article 32 establishes that the Company’s Board of Directors shall comprise eleven (11) members, elected by the General Meeting, which shall appoint the Chairman amongst them.

 

In addition to this, Articles 38 and 39 also provide that, in the event of vacancy of the position of the Chairman of the Board of Directors, the substitute shall be elected at the first meeting of the Board of Directors, remaining in office until the next General Meeting, and, that, in the event of vacancy of the position of director, the substitute shall be appointed by the remaining directors and shall serve until the first General Meeting, pursuant to article 150 of the Brazilian Corporations Law.

 

From the reading of the aforementioned provisions, it is understood that in case of resignation of the Chairman of the Board of Directors, the other directors will elect their substitute, who will remain in office until the next general meeting.

 

According to the Relevant Fact published by Eletrobras on July 28, 2017, the then Chairman of the Company's Board of Directors, Mrs. Elena Landau, resigned the position, the other member of the Board of Directors was elected in her place, Mr. José Guimarães Monforte.

 

Accordingly, in view of the provisions of the Company's Bylaws, and considering this call for ASM, the shareholders shall designate, among the members of the Company's Board of Directors, the chairman of the board, who will perform the function until the end of the term currently in force.

 

In this regard, the Company's Management proposes that Mr. José Guimarães Monforte be elected to the position of Chairman of the Company's Board of Directors, and reports that all the information about Mr. José Guimarães Monforte, current Chairman of the Company's Board of Directors, required under the terms of CVM Instruction 481, are set forth in Annex 03.

 

2.5.  Set the global compensation of the Managers, members of the Company’s Fiscal Council and Audit and Risk Council; and

 

The Brazilian Corporations Law and the Company's Bylaws assign to the Shareholders’ Meeting the responsibility to set the overall compensation of the managers, members of the Fiscal Council and members of the Audit and Risk Council. Therefore, it is necessary to establish the total amount of remuneration of managers, members of the Fiscal Council and members of the Audit and Risk Council of de Company for the period corresponding to their remaining term of office, which will close at the next Annual Shareholders’ Meeting. 

 

 

Therefore, considering the responsibilities, the time dedicated to their duties, competence and professional reputation, the risks they assume and the market value of this type of service, the Company proposes that it be approved as global compensation for the Managers, members of the Fiscal Council and members of the Audit and Risk Council, for the period corresponding to its remaining term of office, which will be terminated at the next Annual Shareholders’ Meeting, the amount of:

 

 

a)    BRL 17,039,893.57 (seventeen million, thirty-nine thousand, eight hundred and ninety-three reais and fifty-seven cents) as the global amount to be allocated and distributed to the members of the Board of Executive Officers and the Board of Directors;

 

b)    BRL 573,172.85 (five hundred and seventy-three thousand, one hundred and seventy-two reais and eighty-five cents) for the Fiscal Council’s members as the global amount to be allocated and distributed to its members; and

 

c)    BRL 2,627,042.41 (two million, six hundred and twenty-seven thousand, forty-two reais and forty-one cents) for the Audit and Risk Council’s members as the global amount to be allocated and distributed to its members.

 

Considering the remuneration of Managers, members of the Fiscal Council and members of Audit and Risk Council, the proposal for the remuneration of directors and members of the Fiscal Council is further detailed in Annex 04 of this document and the information indicated in Section 13 of the Reference Form, as required by CVM Instruction 481, in Annex 04 of this document.

 

 

2.6.  Elect alternate members of the Company's Fiscal Council.

 

Under the terms of Eletrobras' Bylaws, the Fiscal Council will be composed of 05 (five) members and respective alternates, with a term of office of 02 (two) years, being:

 

(i)            3 (three) members elected by majority shareholders, (01) being nominated by the Ministry of Finance;

 

(ii)           1 (one) member elected by the majority of minority shareholders holding common shares, in a separate vote, pursuant to the Brazilian Corporation Law; and

 

(iii)          1 (one) member elected by a majority of minority shareholders holding preferred shares, in a separate vote, pursuant to the Brazilian Corporate Law.

 

At the Company's 57th Annual Shareholders’ Meeting, held on April 28, 2017, the members of the Fiscal Council were elected as follows:

 

 

 

On October 6, 2017, Mr. Felipe Vital Nunes Pereira resigned as a member of the Fiscal Council of Eletrobras, and Mr. Marcio Leão Coelho, then alternate, assumed the position of effective member of the Fiscal Council.

 

On March 23, 2018, the Company received, from certain shareholders, a request for inclusion in the ASM's Voting Ballot of candidates for alternate positions that were not filled at the 57th ASM ("Shareholders Request").

 

After the initial analysis of the request, the Company chose to include, on the ASM’s agenda, the election of the currently open alternate positions, namely:

 

(i)            Alternate of the Fiscal Council Member Marcio Leão Coelho, to be appointed by the Federal Union shareholder;

 

(ii)           Alternate of the Fiscal Councilor Patrícia Valente Stierle, to be elected by a majority of the minority shareholders holding preferred shares, in a separate vote, pursuant to the Brazilian Corporation Law; and

 

(iii)          Alternate of Fiscal Council member Ronaldo Dias, to be elected by a majority of the minority shareholders holding common shares, in a separate vote, pursuant to the Brazilian Corporate Law.

 

The State Law, in its article 17, establishes that the managers and members of the Company's Fiscal Council must meet certain eligibility requirements so that they can be elected and sworn in their positions, and Decree No. 8,945/16, which Article 22 which states that all indications will be assessed by an eligibility committee, responsible for verifying, for each of the candidates, the fulfillment of the eligibility requirements listed in Article 28 of the aforementioned Decree.

This obligation affects both candidates nominated by the Federal Government and candidates nominated by minority shareholders, and those elected by the Company's employees, pursuant to article 22 of said Decree.

The Transitory Internal Eligibility Committee (CITE) was created in January 2017, pursuant to articles 14 and 64, paragraph 1, of Decree No. 8,945/16 to provide an opinion in order to assist shareholders in the appointment of Board of Directos Members and Fiscal Council Members on the fulfillment of the requirements and absence of fences for the respective elections, with scope for Eletrobras holding company and all its subsidiaries.

In May 2017, the Management, People and Eligibility Committee was created, which replaced CITE, through DEL-148/2017.

Accordingly, all candidates must meet the requirements of the State Law, Decree No. 8,945, of December 27, 2016, which regulates the State Law, the Brazilian Corporate Law, and what isestablished in the Indications' Policy in the Holding and in the Subsidiaries, Affiliates, Foundations and Associations of Eletrobras Companies.

 

In this sense, all indications will be assessed by the Management, People and Eligibility Committee, responsible for verifying each of the candidates, of meeting the eligibility requirements listed in Article 28 of the Decree that regulates the State Law.

Accordingly, and in accordance with CVM/SEP/No.02/2018, Management informs that candidates to be appointed by the shareholders must be submitted to the Management, People and Eligibility Committee, accordly to the State Law and its regulations.

Regarding the Shareholders' Request, the Company pointed out the need for corrections and informs that, once fulfilled within the term established by CVM Instruction 481, the Voting Ballot may be re-submitted to include the candidate indicated by the shareholders. The other shareholders of the Company may, in compliance with the formal and temporary requirements indicated in said instruction, indicate other candidates for positions for inclusion in the Voting Ballot. The shareholder Federal Goverment, given the short time between the decision to include this item in the agenda of the ASM, has not yet indicated whether any candidate will be indicated.

The information regarding the candidates that are indicated by shareholders, before the ASM, will be disclosed by the Company in the "Notice to Shareholders" category, available on the Company's websites (www.eletrobras.com/ir), the Brazilian Securities and Exchange Commission (CVM) website (www.cvm.gov.br) and B3 SA - Brasil, Bolsa, Balcão website (www.bmfbovespa.com.br) as provided for in the applicable regulation.

 

 

Brasília, March 26, 2018.

 

 

José Guimarães Monforte

Board of Directors Chairman

 

 

18

 

 

 

Another important step was also taken in order to improve our corporate governance practices, in compliance with Law 13,303 (“State-Owned Companies Act") and Decree 8,945, in promoting a comprehensive reform of Eletrobras' Bylaws, as well as the establishment of sigle Competence Policy for the whole group.

 

December 2017 marked the start of the first bipolar of the Belo Monte transmission system, two months ahead of the deadline stipulated by the National Electric Energy Agency (ANEEL). With 2,100 km of length, the project, under the responsibility of Belo Monte Transmissora de Energia is an ultra-high voltage direct current line connecting the Xingu (Pará) substation to the Estreito substation, in Minas Gerais, with capacity to transmit up to 4,000 MW. 

 

Eletrobras' transmission line network, on December 31, 2017, added 1,475 km of corporate transmission lines in partnership with its transmitting park. In total investments, Eletrobras made BRL 1.6 billion, of which BRL 1.0 billion in corporate investments and BRL 0.6 billion through special purpose companies (SPEs).

 

On the other hand, in generation, in 2017, Eletrobras, through corporate investments or through SPEs, invested BRL 0.97 billion, which BRL 1.5 billion is related to investments in SPEs. One of the highlights was the start-up of the Mauá 3 thermal plant in Amazonas, whose installed capacity is 591 MW.

 

In addition to this, BRL 167 million were invested in research, infrastructure and environmental quality.

 

Regarding the highlights in social and environmental actions, attention may be drawn to the signing of the Open Letter "Private Sector Supports Carbon Pricing in Brazil". It is a document of private sector support for carbon pricing, developed by the Climate Enterprise Effort, with support from the World Bank's Carbon Pricing Leadership Coalition (CPLC). Attention may be drawn to also highlight the adhesion to "Positioning on carbon pricing mechanisms", a document launched in 2016 by the Business Climate Effort.

 

The results attained were recognized in the market. In November, Eletrobras achieved the Governance Indicator Certification - IG-SEST Level 1 (level of excellence).  The indicator is an innovation developed by the Office of Coordination and Governance of State Enterprises to bring more effectiveness and transparency in the monitoring of good governance practices by state companies.

 

All these results and acknowledgments were made possible thanks to the commitment of our employees, who were engaged in this process of transformation of the company. In addition to this, our other stakeholders believed in management's plans and gave us full support so that the company could work on and present the data in this report. While we appreciate this support and this commitment, we stress that they are essential for overcoming the challenges that arise in 2018.

 

 

Assessment of Indicators

 

The table below presents the evolution of indicators considered important by the Administration for the evaluation of the Company and it financial situation and assets:

 

 

20

 

 

21

 

 

22

 

 

23

 

 

 

(i) loan contracts and relevant financing

 

Financing taken out by the Company:

 

The financing raised by Eletrobras corresponds mainly to financing contracted with BNDES, Caixa Econômica Federal and Banco do Brasil, as well as to multilateral international agencies such as IDB, BIRD, CAF and JBIC. Such contracts follow the standard clauses generally applicable to contracts with multilateral agencies, which are agreed in negotiations with these entities, and generally have a guarantee provided by the Federal government. Eletrobras also carried out bond issues in the international market.

 

The following are loan and financing contracts relating to Eletrobras holding: (i) loan obtained from the World Bank; (ii) loan obtained from the BNP Paribas; (iii) the Certificates of Bank Credit - CCBs signed with the Banco do Brasil - CCBs signed with the Banco do Brasil - BB and Caixa Econômica Federal - CEF; and (iv) the bonus released in 2009 and 2011. These contracts together total 93.72% of the debt raised by the Company. The contracts with BNP Paribas and the World Bank in 2007 and 2011 are worth USD 430 million and USD 495 million, respectively, and are paid in semi-annual installments. The interest rate of the first contract is composed by LIBOR plus the spread of 0.75%. The payments are made in the months of June and December, and their expiration date shall happen on December 20, 2021. For the contract concluded with the World Bank, the interest rate is also composed of LIBOR plus the spread of 0.6% for the part of the balance with variable interest (approximately 20% of the current balance) and fixed rate of 2.42% p.a. for the remainder of the outstanding balance. Payments are made in the months of March and September and their maturity will occur on September 15, 2023. The outstanding balance of the two contracts, on December, 31,2017, was USD 140.5 million and USD 196.9 million, respectively. The amount raised with BB and CEF consists of three parts: the first of BRL 2.5 billion, maturing in July 25, 2022; the second of BRL 2.0 billion, maturing in October 25 2022; and the third, also of BRL 2.0 billion, maturing on January 25, 2023, totaling BRL 6.5 billion. Payment of installments is made on a monthly basis and interest on the CCBs that are part of the agreement is 119.5% of CDI. Finally, the Bonds contracted in 2009 and 2011 have a value of USD 1.0 billion and USD 1.75 billion. The first operation was contracted with Credit Suisse, and the second with Santander and Credit Suisse. The first launch is due on July 30, 2019 and the second on October 27, 2021. Compensatory interest is 6.875% for the first Bonus and 5.75% for the second.

 

Eletrobras Companies, as of December 31, 2017, were parties to passive contracts between loans, financing and bonus, which totaled BRL 45.1 billion, of which BRL 5.9 billion represented short-term obligations and BRL 39.2 billion corresponded to long-term obligations (BRL 45.6 billion as of December 31, 2016 and BRL 46.4 billion as of December 31, 2015), whose breakdown by currency is as follows:

 

 

25

 

 

 

(b) JBIC: Loan from the Eximbank, the former name of Japan Bank International Corporation, with guarantee from the Federal Government, in November, 1998, amounting to  ¥  4.5 billion, equivalent at the time of signature of the contract, to USD 300.0 million for a period of 20 years and a variable interest rate equivalent to the JLT Prime rate, plus a spread of 0.2%. Interest on the loan is paid semi-annually in April and October. The outstanding balance of this financing on December 31, 2017 was BRL 32.4 million.

 

(c) KfW: Loan with the Kreditanstalt für Wiederaufbau – KfW, with a guarantee from the Federal Government, amounting to € 13,3 million, with funds originating in negotiations of protocols for financing of renewable energy projects that have occurred in the years 2000 and 2001, and that resulted in the signing of the agreement on financial cooperation between the Governments of Germany and Brazil, on November 27, 2003. The contract for the first installment was signed on December 12, 2008. The loan term is 30 years, and that of the interest rate is 2%. The interest on the loan is paid semi-annually in June and December. Payment of principal will only begin as of December 2018.

 

On November 1, 2012, the second installment of the financing agreement entered into with KfW, worth € 45.9 million, was guaranteed by the Federal Government, with a grace period of 5 years and a total term of 30 years . The average interest rate used in this financing is 2.94% p.a. Interest on the loan is paid semi-annually in June and December. The payment of principal only started as of December 2017. The funds were allocated through Eletrobras to the São Bernardo Complex Project, belonging to the subsidiary Eletrosul, which is aimed at the implementation of four Small Hydroelectric Power Plants (PCHs) in the State of Santa Catarina. The outstanding balance of this financing on December 31, 2017 was BRL 230.1 million.

 

(d) China Development Bank/BNP Paribas: Loan by the China Development Bank and BNP Paribas, signed in April 2007, amounting to USD 430.0 million, whose funds were used in the financing of the Candiotti II Thermal Plant, of the CGTEE subsidiary. The transfer agreement was signed between this subsidiary and Eletrobras. The proceeds of the loan were fully paid up until May 2010. There were no guarantees. The payment of interest and principal on the loan is made semi-annually in the months of June and December. The outstanding balance of this financing on December 31, 2017 was BRL 465.1 million.

 

(e) Loan unionited in "A/B loan", via CAF: Loan unionited in the "A/B loan" modality, raised with CAF in August 2008. The loan, amounting to USD 600.0 million, was structured as follows: (i) Part A, of USD 150.0 million, directly with CAF, with a maturity of 12 years; and (ii) Part B, corresponding to USD 450.0 million, with a union of 16 banks, with a seven-year term. The contracted interest rate consists of the variation of LIBOR plus a spread of 2.05% to 1.5% for part A and part B). There were no guarantees. Interest and principal payments on the loan are made semi-annually in the months of February and August. On December 31, 2017, the open balance of this financing was BRL 177.6 million.

 

(f)  CAF and BBVA, HSBC, Mercantil, Santander, Sumitomo Mitsui Banking Corporation and Bank of Tokyo-Mitsubishi: In November 2010, Eletrobras concluded a USD 500.0 million "A/B loan" unionited loan with CAF and BBVA, HSBC, Santander, Sumitomo Mitsui Banking Corporation and Bank of Tokyo-Mitsubishi. The transaction was structured in such a way that Part A of USD 125.0 million was under the responsibility of CAF, while Part B of USD 375.0 million was contributed by a union formed by the other banks. The loan has a settlement term of 10 years for Part A and seven years for Part B. The contracted interest rate is composed of LIBOR plus a spread of 2.75% for part A and 1, 75% for Part B. Interest on the loan is paid semi-annually in May and November. The outstanding balance of this financing via CAF on December 31, 2017 was BRL 191.5 million.

 

 

(g) World Bank: Loan raised with World Bank, amounting to USD 495.0 million, with the Federal Government’s consent, whose contract was signed on February 24, 2011. The funds will be used to finance the Energia + Project, whose main objective is to improve the quality of the services provided and contribute to reach and maintain the economic and financial balance of Eletrobras distribution companies. The loan gas a bond posted by the National Treasury. Payment of interest and principal on the loan is made semi-annually in the months of March and September. The principal began to be paid in March 2016. The outstanding balance of this financing in December 31, 2017 was BRL 656.0 million.

 

(h) BNDES: On June 24, 2013, Eletrobras signed with BNDES (the Brazilian Development Bank) a Bank Credit Note - CCB, amounting to 2.5 billion, paid at the Selic Rate plus 2.5% spread. The term of the contract is 5 (five) years and it has a grace period of 12 months, being amortized over 8 successive semi-annual payments. The funds were intended for working capital and the operation has a guarantee from the Federal Government. The first withdrawal of this loan, amounting to BRL 2.0 billion, occurred on June 28, 2013. The second withdrawal, amounting to BRL 500 million, was made on December 16, 2013. The outstanding balance of this contract on December 31, 2017 was BRL 615.9 million.

 

 

(i)  Caixa Econômica Federal and Banco do Brasil: A loan was agreed to in August 2014 between the Caixa Econômica Federal, Banco do Brasil and Eletrobras, in the amount of BRL 6.5 billion, with a guarantee from the Federal Government, and with BRL 4.0 billion provided by the Banco do Brasil and BRL 2.5 billion by the Caixa Econômica Federal. The term of the operation is eight years, two of grace period, counting from the disbursements. The amortization of principal is performed on a monthly basis and started in August 2016, and the compensation shall be of 119.5% CDI. The operation is intended for investing working capital and financing investments of Eletrobras Companies, in accordance with PDG/2014. The entire amount has already been released. The outstanding balance of these operations as of December 31, 2017 was BRL 5.22 billion.

 

Furthermore, Eletrobras Companies, executing in concert with CEF, have corporate financing agreements to finance its own projects. The debit balance with the institution, on 12/31/2017 was BRL 4.5 billion.

 

As for Banco do Brasil, Eletrobras Companies also have corporate financing agreements with the same purpose. The outstanding balance of these contracts, on 12/31/2017 was BRL 1.8 billion.

 

(j)  Notes - Bonus: (a) Credit Suisse and Santander: On October 27, 2011 Eletrobras ended a bond release operation on the international market, amounting to USD 1.75 billion, with the Banks Santander and Credit Suisse acting as the global structuring entities of this operation. The bonds were issued with a maturity of 10 years due on October 27, 2021, with full recovery on the due date and with a semiannual interest rate coupon of 5.75% per year. There was no issuance discount, which allowed obtaining a yield, return to the investor, at a rate equivalent to a 5.75% coupon; (b) Credit Suisse: Eletrobras concluded on July 30, 2009 the bond issue operation in the international market, amounting USD 1.0 billion, with Bank Credit Suisse acting as the global structuring entity of this operation. The bonds were issued with a term of 10 years, maturing on July 30, 2019, with full redemption on the maturity date and with semi-annual interest coupon at the rate of 6.875% pa; The outstanding balance of these operations as of December 31, 2016 was BRL 9.27 billion.

 

For more information about the bonds issued by Eletrobras abroad, see section 18.5 of the Eletrobras Reference Form.

 

 

In addition to this, on December 31, 2017, the following financial agreements were in place relating to the subsidiaries of Eletrobras:

 

(a) IDB: Furnas signed, on December 22, 2011, a financing agreement with the Inter-American Development Bank – IDB amounting to USD 128.6 million. The financing has a 20-year term, with a four-year grace period and interest rate based on the Libor rate and incident on the outstanding balance. Such financing is guaranteed by the Federal Government. On December 31, 2017, the outstanding balance of the contract was BRL 349.6 million.

 

(b) BNDES: BNDES finances several corporate projects of the Eletrobras Companies, such as the Batalha, Simplício, Baguari and Tucuruí hydroelectric plants and the Angra 3 thermonuclear plant, in addition to other expansion and maintenance projects. These loans cost between TJLP and TJLP + 4% p.a. and repayment terms for up to 2036 (average debt term of 15.5 years). On December 31, 2017, the outstanding balance of the contracts was BRL 8.7billion.

 

(c) Caixa Econômica Federal: Eletronuclear executed, in 2013, a financing agreement with Caixa Econômica Federal, amounting to BRL 3.8 billion, for the purchase of imported equipment and payment of foreign services connected to the construction of Angra 3 Thermonuclear Plant. The agreement, however, became effective only in 2015, when the negotiations with the Federal Government were concluded, so that it could provide a guarantee to Eletronuclear, upon presentation of a counter-guarantee. As a counter-guarantee, Eletronuclear offered the Federal Government a pledge of its receivables from the Angra 1 and Angra 2 projects. The contract has a fixed interest rate of 6.5% per annum, with a repayment term of 25 years, with a grace period of five years. On December 31, 2017, the amount of BRL 2.8 billion had been withdrawn and, on the same date, the balance due was BRL 3.2 billion. Over the year of 2016, there was disbursement of financing to Furnas with Caixa Econômica Federal (FINISA) amounting to BRL 1.130.000. In addition to this, Eletronorte approved, on January 12, 2017, a loan amounting to BRL 500,000 with Caixa Econômica Federal through a Bank Credit Certificate (CCB), with an endorsement from Eletrobras, with the purpose of financially strengthening the flow of subsidiary. The line of credit will be made available to the extent that raising is required.

 

(d) Banco do Brasil: Jointly, the companies Furnas, Eletrosul and Chesf hold corporate financing agreements with Banco do Brasil totaling, on December 31, 2017 a debt balance of BRL 1.8 billion. These loans have their expiration dates between February 2018 and December 2023 and a cost pegged to the CDI plus a spread ranging from 1% to 2.12% p.a.

 

 

The financing taken out by Eletrobras is divided into contracts with and without bonds posted. When guaranteed, the forms of guarantee are used are (i) corporate guarantee; (ii) guarantee provided by the Federal Government, upon presentation of counter-guarantees; or (iii) real guarantee (in particular, fiduciary assignment of receivables, pledge of receivables or pledge of shares of SPEs).

 

The financing contracted with CAF, JBIC, BNP/CBD and bonus issued abroad are not guaranteed, and as of December 31, 2017, they had a total debit balance of BRL 9.93 billion.

 

On the other hand, financing with EXIM Bank, KfW, and the World Bank is guaranteed by the Federal Government and, as of December 31, 2017, had a total debit balance of BRL 0.93 billion.

 

In addition to the guarantee provided by the Federal Government, Eletrobras Holding contracts signed loan agreements with Banco do Brasil/Caixa Econômica Federal and BNDES, and as a counter-guarantee to the Federal Government, it pledged receivables relating to financing agreements concluded with Itaipu.

 

Enterprise	Bank	Mode (corporate/SPE)	Participation	Amount	Debtor Balance 12/31/17
Norte Energia	BNDES	SPE	15.00%	R$ 2.025,00	R$ 2.400,90
Norte Energia	CEF	SPE	15.00%	R$ 1.050,00	R$ 1.312,34
Norte Energia	BTG Pactual	SPE	15.00%	R$ 300,00	R$ 374,95
Norte Energia	Garantia de Fiel Cumprimento de Contrato	SPE	15.00%	R$ 39,22	R$ 23,83
Rouar	CAF	SPE	50.00%	R$ 30,94	R$ 32,31
Mangue Seco 2	BNB	SPE	49.00%	R$ 40,95	R$ 34,77
Santa Vitória do Palmar Holding S.A.	BNDES	SPE	49.00%	R$ 197,95	R$ 201,41
Santa Vitória do Palmar Holding S.A.	BRDE	SPE	49.00%	R$ 98,00	R$ 101,35
Santa Vitória do Palmar Holding S.A.	Emissão de Debêntures	SPE	49.00%	R$ 44,10	R$ 57,76
Eólica Hermenegildo I S/A	BNDES	SPE	99.99%	R$ 109,57	R$ 105,00
Eólica Hermenegildo I S/A	BRDE	SPE	99.99%	R$ 47,76	R$ 46,01
Eólica Hermenegildo II S/A	BNDES	SPE	99.99%	R$ 109,59	R$ 105,02
Eólica Hermenegildo II S/A	BRDE	SPE	99.99%	R$ 47,78	R$ 46,02
Eólica Hermenegildo III S/A	BNDES	SPE	99.99%	R$ 93,37	R$ 89,47
Eólica Hermenegildo III S/A	BRDE	SPE	99.99%	R$ 40,70	R$ 39,21
Eólica Chuí IX S/A	BNDES	SPE	99.99%	R$ 31,56	R$ 30,24
Eólica Chuí IX S/A	BRDE	SPE	99.99%	R$ 13,76	R$ 13,25
ESBR	BNDES	SPE	20.00%	R$ 727,00	R$ 881,52
ESBR	BNDES	SPE	20.00%	R$ 232,50	R$ 238,77
ESBR	BNDES REPASSE	SPE	20.00%	R$ 717,00	R$ 864,74
ESBR	BNDES REPASSE	SPE	20.00%	R$ 232,50	R$ 236,69
Cerro Chato I, II e III	Banco do Brasil	Corporativo	100.00%	R$ 223,42	R$ 72,32
RS Energia	BNDES	Corporativo	100.00%	R$ 126,22	R$ 42,62
Artemis Transmissora de Energia	BNDES	Corporativo	100.00%	R$ 170,03	R$ 11,55
UHE Mauá	BNDES	Corporativo	100.00%	R$ 182,42	R$ 127,38
UHE Mauá	BNDES/Banco do Brasil	Corporativo	100.00%	R$ 182,42	R$ 127,39
UHE Passo de São João	BNDES	Corporativo	100.00%	R$ 183,33	R$ 115,73
SC Energia	BNDES/Banco do Brasil	Corporativo	100.00%	R$ 50,00	R$ 6,97
SC Energia	BNDES/BDRE	Corporativo	100.00%	R$ 50,00	R$ 6,95
SC Energia	BNDES	Corporativo	100.00%	R$ 103,18	R$ 13,97
SC Energia	BNDES	Corporativo	100.00%	R$ 67,02	R$ 19,01
UHE São Domingos	BNDES	Corporativo	100.00%	R$ 207,00	R$ 159,97
RS Energia	BNDES	Corporativo	100.00%	R$ 41,90	R$ 28,58
RS Energia	BNDES	Corporativo	100.00%	R$ 9,41	R$ 7,03
RS Energia	BNDES	Corporativo	100.00%	R$ 12,00	R$ 7,27
UHE Passo de São João	BNDES	Corporativo	100.00%	R$ 14,75	R$ 9,56
Projetos Corporativos Eletrosul	Banco do Brasil	Corporativo	100.00%	R$ 250,00	R$ 167,12
Teles Pires	BNDES	SPE	24.50%	R$ 296,94	R$ 327,60
Teles Pires	BNDES/Banco do Brasil	SPE	24.50%	R$ 294,00	R$ 325,56
Teles Pires	Emissão de Debêntures	SPE	24.72%	R$ 160,68	R$ 182,01
Livramento Holding	BNDES	SPE	49.00%	R$ 29,26	R$ 20,78
Transmissora Sul Brasileira de Energia S.A.	BNDES	SPE	80.00%	R$ 209,97	R$ 166,64
Transmissora Sul Brasileira de Energia S.A.	Emissão de Debêntures	SPE	80.00%	R$ 62,04	R$ 88,39
Complexo São Bernardo	KfW	Corporativo	100.00%	R$ 29,85	R$ 52,77
Complexo São Bernardo	KfW	Corporativo	100.00%	R$ 136,06	R$ 177,36
Complexo Eólico Livramento - Entorno II	CEF	Corporativo	100.00%	R$ 200,00	R$ 207,59
Projetos Corporativos Eletrosul 3	FIDC DI	Corporativo	100.00%	R$ 690,00	R$ 691,42
São Luis II e III	BNDES	Corporativo	100.00%	R$ 13,65	R$ 6,97
Miranda II	BNDES	Corporativo	100.00%	R$ 47,53	R$ 16,38
Ribeiro Gonç./Balsas	BNB	Corporativo	100.00%	R$ 70,00	R$ 53,40
Lechuga/J. Teixeira	BASA	Corporativo	100.00%	R$ 25,72	R$ 18,24
Substação Nobres	BNDES	Corporativo	100.00%	R$ 10,00	R$ 5,84
Subestação Miramar/Tucuruí	BNDES	Corporativo	100.00%	R$ 31,00	R$ 19,50
Ampliação da Subestação Lechuga	BNDES	Corporativo	100.00%	R$ 35,01	R$ 22,51
Norte Brasil Transmissora	BNDES	SPE	49.00%	R$ 514,50	R$ 427,81
Norte Brasil Transmissora	Emissão de Debêntures	SPE	49.00%	R$ 98,00	R$ 143,15
Linha Verde Transmissora	BASA	Corporativo	100.00%	R$ 185,00	R$ 191,15
Manaus Transmissora	BNDES	SPE	30.00%	R$ 120,30	R$ 87,11
Estação Transmissora de Energia	BNDES	Corporativo	100.00%	R$ 505,48	R$ 362,13
Estação Transmissora de Energia	BASA	Corporativo	100.00%	R$ 221,79	R$ 202,76
Estação Transmissora de Energia	BASA	Corporativo	100.00%	R$ 221,79	R$ 200,56
Rio Branco Transmissora	BNDES	Corporativo	100.00%	R$ 138,00	R$ 100,14
Transmissora Matogrossense Energia	BASA	SPE	49.00%	R$ 39,20	R$ 33,94
Transmissora Matogrossense Energia	BNDES	SPE	49.00%	R$ 42,78	R$ 26,57
Brasventos Miassaba 3	BNDES	SPE	24.50%	R$ 30,98	R$ 25,11
Belo Monte Transmissora de Energia S. A.	State Grid Brazil S.A.	Corporativo	100.00%	R$ 294,70	R$ 350,78
Belo Monte Transmissora de Energia S. A.	BNDES	SPE	24.50%	R$ 412,83	R$ 429,89
Belo Monte Transmissora de Energia S. A.	BNDES REPASSE	SPE	24.50%	R$ 214,38	R$ 226,38
Norte Energia	BNDES	SPE	19.98%	R$ 2.697,30	R$ 3.197,99
Norte Energia	CEF	SPE	19.98%	R$ 1.398,60	R$ 1.748,03
Norte Energia	BTG Pactual	SPE	19.98%	R$ 399,60	R$ 499,44
Implantação do PAR e PMIS	BNDES	Corporativo	100.00%	R$ 361,57	R$ 278,87
Porto Velho Transmissora de Energia	BNDES	Corporativo	100.00%	R$ 283,41	R$ 229,15
Reforço à Estrutura de Capital de Giro	CEF	Corporativo	100.00%	R$ 400,00	R$ 229,15
UHE Sinop	BNDES	SPE	24.50%	R$ 256,27	R$ 227,48
Reforço à Estrutura de Capital de Giro 2	CEF	Corporativo	100.00%	R$ 500,00	R$ 479,42
Angra III	BNDES	Corporativo	100.00%	R$ 6.181,05	R$ 3.650,44
ESBR	BNDES	SPE	20.00%	R$ 727,00	R$ 881,52
ESBR	BNDES	SPE	20.00%	R$ 232,50	R$ 238,77
ESBR	BNDES REPASSE	SPE	20.00%	R$ 717,00	R$ 864,74
ESBR	BNDES REPASSE	SPE	20.00%	R$ 232,50	R$ 236,69
Manaus Transmissora	BNDES	SPE	19.50%	R$ 78,20	R$ 56,62
Norte Energia	BNDES	SPE	15.00%	R$ 2.025,00	R$ 2.400,90
Norte Energia	CEF	SPE	15.00%	R$ 1.050,00	R$ 1.312,34
Norte Energia	BTG Pactual	SPE	15.00%	R$ 300,00	R$ 374,95
IE Madeira	BASA	SPE	24.50%	R$ 65,42	R$ 74,72
IE Madeira	BNDES	SPE	24.50%	R$ 455,50	R$ 338,22
IE Madeira	Emissão de Debêntures	SPE	24.50%	R$ 85,75	R$ 124,48
Projetos Corporativos Chesf 1	Banco do Brasil	Corporativo	100.00%	R$ 500,00	R$ 224,22
Projetos Corporativos Chesf 2	CEF	Corporativo	100.00%	R$ 400,00	R$ 151,11
IE Garanhuns S/A	BNDES	SPE	49.00%	R$ 175,15	R$ 139,12
Projetos Corporativos Chesf 3	BNDES	Corporativo	100.00%	R$ 727,56	R$ 361,91
Projetos Corporativos Chesf 4	BNDES	Corporativo	100.00%	R$ 475,45	R$ 209,49
UHE Sinop	BNDES	SPE	24.50%	R$ 256,27	R$ 227,48
Projetos Corporativos Chesf 5	CEF	Corporativo	100.00%	R$ 200,00	R$ 188,70
UHE Batalha	BNDES	Corporativo	100.00%	R$ 224,00	R$ 135,60
UHE Simplício	BNDES	Corporativo	100.00%	R$ 1.034,41	R$ 586,34
UHE Baguari	BNDES	Corporativo	100.00%	R$ 60,15	R$ 32,77
DIVERSOS	Banco do Brasil	Corporativo	100.00%	R$ 750,00	R$ 754,11
Rolagem BASA 2008	Banco do Brasil	Corporativo	100.00%	R$ 208,31	R$ 208,38
Projetos de Inovação	FINEP	Corporativo	100.00%	R$ 268,50	R$ 138,91
Financiamento corporativo	Banco do Brasil	Corporativo	100.00%	R$ 400,00	R$ 315,51
UHE Santo Antônio	BNDES	SPE	39.00%	R$ 1.594,16	R$ 1.951,04
UHE Santo Antônio	BNDES	SPE	39.00%	R$ 1.574,66	R$ 2.014,18
UHE Santo Antônio	BASA	SPE	39.00%	R$ 196,33	R$ 229,60
UHE Santo Antônio	Emissão de Debêntures	SPE	39.00%	R$ 163,80	R$ 212,21
UHE Santo Antônio	Emissão de Debêntures	SPE	39.00%	R$ 273,00	R$ 348,33
Centroeste de Minas	BNDES	SPE	49.00%	R$ 13,83	R$ 7,61
Brasventos Miassaba 3	BNDES	SPE	24.50%	R$ 30,98	R$ 25,11
IE Madeira	BASA	SPE	24.50%	R$ 65,42	R$ 74,72
IE Madeira	BNDES	SPE	24.50%	R$ 455,50	R$ 338,22
IE Madeira	Emissão de Debêntures	SPE	24.50%	R$ 85,75	R$ 124,48
Teles Pires	BNDES	SPE	24.50%	R$ 296,94	R$ 327,60
Teles Pires	BNDES/Banco do Brasil	SPE	24.50%	R$ 294,00	R$ 325,56
Teles Pires	Emissão de Debêntures	SPE	24.72%	R$ 160,68	R$ 182,01
Caldas Novas Transmissão	BNDES	SPE	49.90%	R$ 2,54	R$ 1,49
Caldas Novas Transmissão	BNDES	SPE	49.90%	R$ 5,54	R$ 4,29
Belo Monte Transmissora de Energia S. A.	State Grid Brazil S.A.	Corporativo	100.00%	R$ 294,70	R$ 350,78
Belo Monte Transmissora de Energia S. A.	BNDES	SPE	24.50%	R$ 412,83	R$ 429,89
Belo Monte Transmissora de Energia S. A.	BNDES REPASSE	SPE	24.50%	R$ 214,38	R$ 226,38
Plano de Investimentos 2012-2014	BNDES	Corporativo	100.00%	R$ 441,30	R$ 208,42
Empresa de Energia São Manoel	BNDES	SPE	33.33%	R$ 438,00	R$ 450,59
Empresa de Energia São Manoel	Emissão de Debêntures	SPE	33.33%	R$ 93,33	R$ 112,16
Projetos Corporativos Furnas 1	Banco do Brasil	Corporativo	100.00%	R$ 50,00	R$ 50,02
Projetos Corporativos Furnas 2	Banco do Brasil	Corporativo	100.00%	R$ 35,00	R$ 35,01
Amazonas	Confissão de Dívida - Petrobras/BR	Corporativo	100.00%	R$ 2.405,98	R$ 4.019,44
Eletroacre	Confissão de Dívida - Petrobras/BR	Corporativo	100.00%	R$ 91,77	R$ 78,39
Boa Vista	Confissão de Dívida - Petrobras/BR	Corporativo	100.00%	R$ 19,32	R$ 14,12
Projeto Corporativo	CEF	Corporativo	100.00%	R$ 94,91	R$ 45,50
Projeto Corporativo Ceal	Banco IBM S/A	Corporativo	100.00%	R$ 10,74	R$ 4,07
TOTAL				R$ 47.425,62	R$ 46.658,26

29

 

 

 

 

Other Guarantees not connected with the Projects

 

 

 

 

(ii)      Other long-term relationships with financial institutions

 

On December 31, 2017, Eletrobras did not have other long-term relationships with relevant financial institutions other than those already indicated in the previous item.

 

(iii)     Degree of subordination between the debts

 

Eletrobras debts are guaranteed by the Federal Government; through real guarantees (notably pledging of receivables from financing of Itaipu) or do not have any guarantee. The securities subsidiaries of Eletrobras are provided in large part by Eletrobras itself, through a surety or guarantee, also there are cases of real guarantees on securities representing the shareholders' equity of the SPEs and/or on the receivables.

 

Considering the total current liabilities and noncurrent liabilities of the Company, the amount of BRL11.7 billion connected to unsecured obligations on December 31, 2017 (compared to BRL 121.3 billion on December 31, 2016 and BRL 93.1 billion on December 31, 2015). In turn, the amount of BRL18.4 billion corresponded to obligations guaranteed by rights as of December 31, 2017 (compared to BRL 11.6 billion on December 31, 2016 and BRL 14.8 billion in 31 of December 2015).

 

Among the debts guaranteed by the Federal Government, in two of them, the Bank Credit Note signed with the BNDES amounting to BRL 2.5 billion, and the Bank Credit Notes signed with Banco do Brasil and Caixa Econômica Federal, amounting to BRL 6.5 billion, Eletrobras presents as counter-guarantee to the Federal Government a pledge of the receivables arising under Financing Contracts concluded by Eletrobras with Itaipu.

 

(iv)     Contractual Restrictions

 

Eletrobras as a debtor

 

The loan and financing agreements made by Eletrobras, as well as the international bonds, were entered into in accordance with the practices adopted in the international market for such operations. Obligations assumed ("covenants") are usually contained in contracts with companies of the same type of credit risk at the time of agreeing to the obligations.

 

In the "A/B loan", international bonus, unionited loan agreements between CAF and commercial banks, Eletrobras is subject to clauses usually practiced in the market, including: existence of corporate guarantees, requirements for change of control compliance with the necessary licenses and authorizations and limitation to the significant sale of assets.

 

Eletrobras acting as a guarantor

 

 

Eletrobras is the guarantor (corporate bond) of its subsidiaries Furnas and Eletrosul of the debentures issued by Teles Pires Participações, in whose writing Eletrobras undertakes to maintain financial covenants - Net Debt/Ebitda <= 4.0 and Ebitda/Financial Income> = 2.0.

 

In the financial year ending as of December 31, 2017, Eletrobras did not observed the covenants to which it was subject by virtue of these financing contracts signed as a debtor.

 

 

As referred to above, Eletrobras figures as cosigner in financing both corporate ventures of its subsidiaries, as well as of SPEs in which Eletrobras have a shareholding participation. In four contracts, there are specific covenants applicable to the guarantor, and these are:

 

·         Furnas (Baguari hydroelectric plant) - Financing contract concluded with the BNDES, in the nominal value of BRL 224 million, Eletrobras is the cosigner of Furnas (principal debtor), and contains an obligation to that Eletrobras note, quarterly, the capitalization index (corresponding to the ratio between its Net Assets and its Total assets), which should be at a minimum 0.3.

 

·         Furnas (Batalha Hydropower Plant) - Financing contract concluded by the BNDES, amounting to BRL 60.1 million, in which Eletrobras is the cosigner for Furnas (principal debtor) and contains an obligation to that Eletrobras observes, quarterly, the capitalization index (corresponding to the ratio between its Owners' Equity and its Total Assets), which should be at a minimum 0.3.

 

·         Centroeste de Minas S.A. (SPE) – Financing contract concluded with the BNDES, in the amount of BRL 28.7 million, in which Eletrobras is the guarantor in the proportion of the shareholding held by Furnas in the SPE (49%). This contract contains a requirement that Eletrobras observe, quarterly, the capitalization index (corresponding to the ratio between its Net and its Total assets), which should be at a minimum 0.3.

 

·         Teles Pires Participações S.A. (SPE): First private issue of debentures amounting to BRL 650 million, Eletrobras is up in proportion to the shareholdings held by Furnas and Eletrosul in SPE (49%), and FI-FGTS is the only debenture holder. The written document of issue includes a maintenance obligation, by Eletrobras, during the validity period of the debentures, of (i) the relationship between Net Debt and EBITDA, which should be equal to or less than 4.0 (four), determined on a quarterly basis; and (ii) the relationship between EBITDA and the Financial Result which should be equal to or greater than 2 (two), determined on a quarterly basis.

 

In the case of Teles Pires, there was a need for a General Meeting of Debenture Holders, held on December 27, 2017, where it was granted a "waiver" for noncompliance with said covenants until December 2018.

 

g) limits of financing already assumed and percentages already used

 

With respect to the operation of loan that was signed, on February 24, 2011, with the World Bank - BIRD, amounting up to USD 495 million, with a guarantee from the Federal Government, whose resources will be used for the “Projeto Energia +” for operational and commercial improvement of the Eletrobras distribution companies, up to December 31, 2017 disbursements of USD 271.8  million were made under that financing contract, which correspond to 54.9% of the total amount contracted.

 

Eletronuclear executed, in 2013, a financing agreement with Caixa Econômica Federal, amounting to BRL 3.8 billion, for the purchase of imported equipment and payment of foreign services connected to the construction of Angra 3 Thermonuclear Plant. The agreement, however, became effective only in 2015, when the negotiations with the Federal Government were concluded, so that it could provide a guarantee to Eletronuclear, upon presentation of a counter-guarantee. As a counter-guarantee, Eletronuclear offered the Federal Government a pledge of its receivables from the Angra 1 and Angra 2 projects. The contract has a fixed interest rate of 6.5% per year, with a term of repayment of 25 years, with five years grace period. On December 31, 2017, the amount of BRL 2.8 billion had been withdrawn and, on the same date, the balance due was BRL 3.2 billion.

 

 

 

h) significant changes in each item of the financial statements

 

The financial statements of Eletrobras have been prepared and are presented in accordance with the accounting practices adopted in Brazil, in compliance with the provisions of the Brazilian Corporate Laws – Law No. 6,404/1976 and subsequent amendments, observing the pronouncements issued by the Committee of Accounting Pronouncements (“CPC"), Federal Accounting Board resolutions ("CFC"), as well as the regulation of the Securities Commission ("CVM") and the National Electric Energy Agency (“ANEEL").

 

The consolidated financial statements of Eletrobras are presented in thousands of Brazilian Reais, except when expressly stated otherwise, and are aligned with the International Financial Reporting Standards ("IFRS (s)").

 

The Financial statements of Eletrobras consist of:

 

§  The Consolidated Financial Statements, prepared in accordance with the IFRSs issued by the International Accounting Standards Board - IASB and the accounting practices adopted in Brazil, identified as Consolidated - IFRS and BR GAAP; and

 

§  The individual Financial Statements of the parent company prepared in accordance with the accounting practices adopted in Brazil, identified as the Controlling Standard - BR GAAP.

 

Accounting practices adopted in Brazil include those included in Brazilian corporate laws as well as the pronouncements, the Guidelines and the Interpretations issued by the CPC and approved by the CVM and the CFC.

 

The other effects of adoption of IFRSs and of new pronouncements issued by the CPC may be found in item 10.4 of the Reference Form.

 

Financial year ending as of December 31, 2015

 

There has not been, in 2015, any significant change in the form of presentation of the financial statements of Eletrobras.

 

Financial year ending as of December 31, 2016

 

There has not been, in 2016, any significant change in the form of presentation of the financial statements of Eletrobras.

 

Financial year ending as of December 31, 2017

 

There has not been, in 2017, any significant change in the form of presentation of the financial statements of Eletrobras.

 

 

 

Comparison of balance sheet accounts on December 31, 2016 and 2017:

 

 

33

 

 

Increase of 59.8% in Cash and Cash Equivalents, from BRL 496 million on December 31, 2016 to BRL 792 million on December 31, 2017, mainly resulting from the item financial assets.

 

Financial Assets - Concessions and Itaipu

 

Increase of 209.1% in the financial assets – concessions and Itaipu, from BRL 2,338 million on December 31, 2016 to BRL 7,224 million on December 31, 2017, mainly resulting from the increase on the item Annual Allowed Revenue (RAP).

 

Assets classified as held for sale

 

Increase of 32.2% in noncurrent assets classified as held for sale, from BRL 4,406 million on December 31, 2016 to BRL 5,826 million on December 31, 2017, mainly due to the inclusion of the Distribution Companies in this item.

 

NONCURRENT ASSETS

 

The noncurrent assets posted a decrease of 10.25%, BRL 87,121 million on December 31, 2016 to BRL 78,193 million on December 31, 2017. The main variations were:

 

Right to Reimbursement

 

Decrease of 13.29% in the rights to reimbursement, of BRL 7,507 million on December 31, 2016 to BRL 6,509 million on December 31, 2017, mainly resulting from de the classification as Assests Held for Sale of 4 Distribution Companies.

 

Accounts Receivable

 

Decrease at 77.76% in Accounts Receivable, from BRL 2,079 million on December 31, 2016 to BRL 462 million on December 31, 2017, mainly resulting from de the classification as Assests Held for Sale of 4 Distribution Companies.

 

Financing and Loans

 

Decrease at 23.27% in financing and loans, from BRL 10,158 million on December 31, 2016 to BRL 7,795 million on December 31, 2017, mainly resulting from the reduction receivables from Itaipu.

 

 

 

35

 

 

The balance of current liabilities increased 9.79%, changing from BRL 31,139 million on December 31, 2016 to BRL 34,187 million on December 31, 2017. The main changes in current liabilities were as follows:

 

Onerous Contracts

 

The Onerous Contracts item suffered a decrease of 98.9%, from BRL 1,094 million on December 31, 2016 to BRL 12 million on December 31, 2017, mainly due to a set of reversals.

 

Liabilities directly associated with assets classified as held for sale

 

Increase de 47.45% in the liabilities directly associated with assets classified as held for sale, from BRL 5,175 million on December 31, 2016 to BRL 7,631 million on December 31, 2017, mainly resulting from de the classification as Assests Held for Sale of 4 Distribution Companies.

 

NONCURRENT LIABILITIES

 

The noncurrent liabilities posted an increase of 0.8%, BRL 95,296 million on December 31, 2016 to BRL 96,036 million on December 31, 2017. The main changes in current liabilities were as follows:

 

Obligation to demobilize assets

 

Obligation to demobilize assets increased by 76.2% from BRL 1,402 million on December 31, 2016 to BRL 2,470 million on December 31, 2017, mainly due to a study to update the cost estimate required to perform the decommissioning activities of the Angra 1 and Angra 2 plants. The study concluded by increasing the aforementioned estimate to BRL 4,190,415 thousand, of which BRL 1,923,878 thousand for the Angra 1 Plant and BRL 2,266,537 thousand for the Angra 2 Plant. The corresponding present value recorded in the liability is BRL 1,910,420 thousand.

 

 

OWNERS’ EQUITY

 

Shareholders' equity increased by 3.0%, from BRL 44,065 thousand on December 31, 2016 to BRL 42,753 thousand on December 31, 2017, mainly due to the absorption of the result of the year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparison of balance sheet accounts as of December 31, 2015 and 2016: