A. Requirements for Approval of Transfer of Shareholding Control of Concessionaires
Law 8,987/95 was also amended by Law 11,196/05 with the purpose of facilitating the transfer of shareholding control of concessionaires to lenders, so as to enable the financial restructuring of the concessionaire and assure the continuity of the public services. This mechanism, also known as step-in rights, is typically used in project finance transactions (but which had not been available, until now, under concession agreements).
The transfer of shareholding control of public service concessionaire to the lender will only be possible upon demonstration of fiscal and legal good standing of the lender. It is worth noting that, pursuant to Law 11,196/05, the granting authority may exempt the lender from demonstrating satisfaction of technical capacity requirements. Thus, it is a faculty of the grating authority, and not an obligation.
Moreover, we note that, as already contemplated in Law No. 11,079/04, the assumption by the lender of the shareholding control of the concessionaire must envisage the financial restructuring thereof. In this regard, Law 11,196/05 establishes that the obligations and responsibilities of the concessionaries and their controlling shareholders will fully remain with the same during the period in which control is transferred to lenders.
B. Fiduciary Assignment of Credits
Finally,
Law 11,196/05 has amended Law 8,987/95 in order to permit the fiduciary assignment of a portion of the operational credits of the public services concessionaires to lenders, such receivables being most of the times represented by tariffs payable by end consumers of the services rendered.
For purposes of validity and effectiveness of the fiduciary assignment of the credits of public service concessionaires, which shall only be instituted under financing agreements with a term greater than 5 (five) years, satisfaction of the following requirements is necessary: (i) registration of the Fiduciary Assignment Agreement with the competent Registry of Deeds and Documents; and (ii) official notification thereof to the granting authority as a requisite for validity of the assignment therewith. The assigned credits shall be deposited into a blocked account linked to the underlying credit agreement, with the obligation of the depositary financial institution to transfer the funds to the lenders as the debt service obligations become due and return any surplus to the concessionaire. A financial institution may be indicated by the lender for the collection and deposit of assigned credits.
The changes described herein may promote much needed Brazilian infrastructure projects, especially under the project finance structure, insofar as they offer better guarantees and flexibility to financiers and market players.
