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Equatorial and CPFL acquire ailing Rede group


Thursday, 24 January 2013

Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados and Machado, Meyer, Sendacz e Opice Advogados have helped Equatorial Energia and CPFL Energia agree to acquire the beleaguered Rede group, owner of a number of electricity distributors, as part of a wider debt restructuring which is thought to be the largest and most complex since Brazil’s bankruptcy law was enacted in 2005.

On 19 December, Equatorial Energia and CPFL Energia agreed to pay Rede’s controlling shareholder, Jorge Queiroz de Moraes Junior, a symbolic fee of 1 real for the acquisition. The companies have also committed to making the necessary investment to allow the nine Rede group companies to resume operations.

Lilla, Huck, Otranto, Camargo Advogados and Felsberg, Pedretti e Mannrich Advogados advised Rede for the deal. Mattos Filho advised Equatorial Energia, while CPFL turned to Machado Meyer.

The agreement was made possible after Brazil’s electricity regulator, ANEEL, stepped in to help the financially distressed companies. ANEEL allowed the Rede companies to enter into a judicial restructuring process as an exception, on the grounds that it would preserve the companies’ value for their creditors, as well as enabling the electricity distributors to continue operations.

Last August the government provisionally prohibited public utility companies from undergoing judicial restructuring processes over concerns that the procedure would prevent them from providing important public services. That move was in response to the in-court restructuring of Celpa, another former Rede company and holder of the Pará electricity distribution concession, although that process ended favourably when Equatorial successfully signed an agreement to acquire Celpa as part of the in-court restructuring last September.

Equatorial Energia and CPFL Energia’s agreement to buy the remaining Rede companies is subject to ANEEL’s consent and approval of Rede’s creditors to the in-court restructuring plan.

Lilla Huck partner Raquel Colangelo notes that the case is “truly complex and sophisticated”, in part because of the negotiations between Rede’s international bondholders that need to agree on the terms of the restructuring.

Mattos Filho partner Marcelo Ricupero says combination of the in-court reorganisation of five companies, the recent changes in law as well as the negotiation between the two acquirers, Equatorial and CPFL, all increased the challenge of pushing the deal through.

Should the transaction be approved, Equatorial will become a bigger player in Brazil’s electricity distribution sector, giving it greater coverage in the north and northeast of Brazil.

Counsel to Equatorial

Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados

Partners Eduardo Secchi Munhoz and Marcelo Sampaio Góes Ricupero, and associates Rafael Medeiros Mimica, Ana Luisa Vasconcellos Absy, Manoela de Barros Pimentel Penteado de Almeida and Carolina Amadeu Vasconcelos

Counsel to Rede Group

Lilla, Huck, Otranto, Camargo Advogados

Partners Raquel Otranto Colangelo, Luís Gustavo Haddad, Bruno Robert, Ana Carolina Barbuio Rogerio Carmona Bianco and Luiz Felipe Pereira Gomes Lopes

Felsberg, Pedretti e Mannrich Advogados 

Partners Thomas Benes Felsberg and Joel Luís Thomaz Bastos, and associates Bruno Kurzweil de Oliveira and Paulo Fernando Campana Filho

Counsel to CPFL

Machado, Meyer, Sendacz e Opice Advogados

Partners Ricardo de Lima Assaf and Paloma Valeria Martins Lima, and associate Ana Carolina Katlauskas Calil.

Fonte: Latin Lawyer on-line 24.1.2013.

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