Brookfield Asset Management is considering increasing its offer for Renova Energia SA by 25 percent, in a bid to sway the two largest shareholders in the Brazilian renewable power company to exit their controlling stakes, two people with direct knowledge of the matter said on Tuesday.
Under terms of a revised bid, Brookfield would offer power utility Cia Energética de Minas Gerais SA and subsidiary Light SA 11.25 reais per unit of Renova, said the people, who asked for anonymity because the transaction is private. Each Renova unit comprises a common share and two preferred shares.
Reuters reported on July 7 that Brookfield had originally submitted a bid valuing Renova at the equivalent of 9 reais per unit. Cemig and Light own a combined 64.4 percent voting stake in Renova.
Brookfield declined to comment. Cemig and Light did not have an immediate comment on the proposal.
Canada-based Brookfield would have to disburse about 1 billion reais (US$321 million) to win control of Renova under a revised bid, the people said. Brookfield could either pump an extra 800 million reais into Renova or take the company private, Reuters reported earlier this month.
Renova has struggled with a severe cash crunch over the past couple of years. Financing conditions for Renova, which was founded in 2001, worsened significantly when a partnership with renewable energy company SunEdison Inc collapsed weeks before the latter filed for bankruptcy protection in the United States.
Exiting Renova could allow Cemig, Brazil’s No. 3 power utility, a faster refinancing of almost 4 billion reais of debt maturing this year. Chief Financial Officer Adezio Lima said in August that a partial or full sale of Cemig’s and Light’s stakes in Renova could take up to 60 days.
(Reporting by Guillermo Parra-Bernal; Editing by Alden Bentley and Bill Rigby)
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