Brookfield refrains from higher bid for Brazil's Renova -source

Energy of Minas Gerais

05/10/2017 21:30

SAO PAULO, Oct 5 (Reuters) - Brookfield Asset Management Inc 
 BAMa.TO  has refrained from improving an original bid for 
Brazilian renewable power company Renova Energia SA  RNEW11.SA , 
after due diligence proceedings showed liabilities that were 
unaccounted for, a person with direct knowledge of the situation 
said on Thursday. 
    Brookfield is leaning toward presenting a bid to Cia 
Energética de Minas Gerais SA and Light SA, valuing their 
combined 67 percent voting stake at the equivalent of 9 reais 
($2.85) per unit of Renova, said the person, who asked for 
anonymity because the transaction remains private.  
    A final round of auditing in Renova showed an unnamed 
project bore a shortfall that had been previously unaccounted 
for, the person said, without elaborating. Brookfield may pay  
Cemig and Light 7 reais per unit outright, with the rest being 
disbursed after completion of the Alto Sertão III project, the 
person said. 
    A spokesman for New York-based Brookfield's Brazilian unit 
declined to comment. 
    Reuters had reported on Friday that Brookfield was 
considering offering Cemig  CMIG4.SA  and Light  LIGT3.SA  up to 
11.75 reais per Renova unit to facilitate a deal. Each Renova 
unit consists of one common and two preferred shares. 
    In addition to the auditing impasse, Cemig's precarious 
financial situation also played a role on Brookfield's decision, 
the person said. Cemig, Brazil's most indebted utility, has 
struggled to sell assets this year, and faces 9 billion reais in 
debt maturities by year-end 2018.  urn:newsml:reuters.com:*:nL2N1MA26E 
    Units of Renova shed 1.2 percent to 9.27 reais on Thursday, 
after five straight sessions of gains. Speculation of an 
imminent deal with Brookfield has driven units 29 percent higher 
over the past month. 
    The offer has yet to be submitted formally to Cemig, Light 
and Renova, the person said, noting that it could be submitted 
"within days."  
    Getting the nod from both Cemig and Light would enable 
Canada-based Brookfield to take control of Renova more 
assertively and expand faster in Brazil's renewable power 
industry. 
    Brookfield could pump extra capital into Renova following 
the deal's completion and even take the company private, the 
person said. 
    ($1 = 3.1530 reais) 
 
 (Reporting by Guillermo Parra-Bernal; Editing by Richard Chang) 
 ((guillermo.parra@tr.com; Tel: +55-11-5644-7714; Mob: 
+55-119-8346-7153; Reuters Messaging: 
guillermo.parra.thomsonreuters.com@reuters.net)) 
 
Keywords: RENOVA ENERGIA M&A/BROOKFIELD ASSET