© Reuters. Power Transmission Lines 8/29/2018 REUTERS/Ueslei Marcelino
By Ricardo Brito and Letícia Fucuchima
BRASÍLIA AND SÃO PAULO (Reuters) – Justice Ricardo Lewandowski, of the Federal Supreme Court (STF), decided to ratify a conciliation agreement between Itaú Unibanco (BVMF:) and the State of Paraná involving the electric energy company Copel (BVMF::) ) to extinguish a long legal dispute.
The agreement, which amounts to 1.7 billion reais, paves the way for the privatization of Copel, as it releases the company’s shares to carry out the stock exchange offering that will dilute Paraná’s stake in the electricity company’s capital.
The impasse concerns a historical debt of more than 20 years related to the former state bank Banestado. Itaú claimed the credit with Copel shares that had been pledged as collateral.
The agreement guarantees the government of Paraná a discount of 62% of the total debt, which was 4.5 billion reais. With this, the State must pay the bank a total of 1.7 billion reais, in three installments, over the next two years.
The last installment of the payment will be anticipated if the offer of shares for the privatization of Copel takes place during the 2023 fiscal year, said Itaú, in a material fact.
The governor of Paraná, Ratinho Junior (PSD), celebrated the agreement, pointing out that the debt could break the state if it entered the queue of writs.
“This demonstrates the government’s responsibility with the public accounts, as we obtained a relevant discount from this negotiation. We are putting an end to one of the biggest legal processes in the State of Paraná”, said Ratinho Junior, in a note.
In a four-page decision taken on the eve of retiring from the STF, Lewandowski said that, after examining the file, he found that the terms signed between the parties are in line with what had been discussed in previous conciliation hearings.
“Furthermore, the clauses to be ratified aim to put an end to the conflict that has lasted for more than 20 years, bringing stability and legal security to the parties’ businesses,” said the minister.
Lewandowski’s monocratic decision must still be endorsed by the plenary of the STF. In the virtual session, Minister André Mendonça asked for a view, while Ministers Gilmar Mendes, Dias Toffoli, Alexandre de Moraes and Luiz Fux had accompanied the rapporteur Lewandowski.
CASE
The case, which has been under discussion for about 20 years, involves an operation carried out in 1998 between the State of Paraná and the former state bank Banestado, which was later privatized and bought by Itaú.
In the operation, Banestado acquired “rotten writs” and, in guarantee, the government of Paraná offered Copel shares. As the State of Paraná did not pay the debt, Itaú proposed, in the early 2000s, the execution of an extrajudicial title, on the grounds that the credit, as it had a real guarantee, should not be paid through a writ.
The imbroglio surfaced this year amid the movement of PT deputies opposed to the privatization of Copel, which has already received authorization from the local Legislature to proceed. The deputy from Paraná, Arilson Chiorato, president of the PT in the state, and the national president of the PT, Gleisi Hoffmann, federal deputy for Paraná, even asked to join the process as amicus curiae, but were denied.
ADVANCE IN PRIVATIZATION
The solution of the judicial imbroglio is a “significant” step towards the privatization of Copel, evaluated Bradesco BBI, in a report.
“Otherwise, with the shares blocked as collateral, the State would not be able to sell them and the total primary offer for privatization would have to be much higher”, said analysts Francisco Navarrete, João Fagundes and André Silveira.
They also highlighted the disclosure by the government, this Tuesday, of the grant bonus values that the electric company will have to pay to renew the concession of three hydroelectric plants, in a process that will take place in parallel with the privatization.
“The federal government is allowing the privatization of Copel to flow in the best possible way, and is not trying to interfere or make the process unfeasible, as many feared”, wrote the analysts.
The privatization of the electricity company from Paraná should follow the model adopted for Eletrobras (BVMF:), with a stock offering aimed at reducing the participation of the controlling shareholder, the State of Paraná, and turning the company into a “corporation”.
Last month, Copel executives stated that the share offering is in the “construction” phase, working with advisors on “valuations” and “due diligence”, which will later be submitted for approval by the State Audit Court (TCE- PR). The expectation is to carry out the operation in the second half of this year, based on the company’s financial results for the second quarter.