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Exclusive: Brazil to seize eight units of Rede Energia - sources
SAO PAULO/BRASILIA (Reuters) - Brazilian energy regulator Aneel plans to seize eight units of cash-strapped power holding company Grupo Rede Energia SA (REDE3.SA) on Friday, three sources with direct knowledge of the action said, sparking a slump in electricity shares and fanning worries about the current state of the sector.
Councilors at the Brasilia-based agency have already split the task of analyzing the current financial and operational state of distribution companies Celtins, Cemat, Enersul, CFLO, Caiuá, Bragantina, Vale Paranapanema and Nacional, said the sources, who declined to be identified because of the gravity of the situation.
The decision means that Aneel would takeover management of all those distribution assets, except Celpa, which filed for bankruptcy protection late in February and on Saturday will meet with creditors to renegotiate more than 2 billion reais ($1 billion) in liabilities, the sources said.
Aneel would not comment on the reports.
Aneel wants to guarantee the continuity of service by Rede Energia's distributors and to avoid Celpa's problems spilling over into other assets of the São Paulo-based holding company, which are also facing deteriorating market conditions and heavy debts, the sources added.
State intervention is growing in the sector, even as the government initially ruled out repossessing a series of important concession that are due to expire in the coming years, peaking in 2015.
The seizure will come a day after President Dilma Rousseff's administration issued a decree allowing regulators to seize operating licenses from power utilities that fail to meet contract requirements more rapidly.
The new rules, which were published in the government's official gazette on Thursday, are probably aimed at easing terms for a change in control especially for distressed power transmission and distributions companies, analysts told Reuters.
A basket of eight shares in the sector listed in the benchmark Bovespa stock index .BVSP fell an average 5.9 percent, led by state-owned power holding company Eletrobras (ELET6.SA), on Friday.
Energy Minister Edison Lobao told reporters that the government has no intention of breaking contracts in the electric sector.
"We are not seeking a nationalization of the sector," he said.
One trader told Reuters on the condition of anonymity that the move would add to uncertainty at a moment when the government is seeking to bring down electricity rates to improve the health of local industry that has been laboring of late.
"You don't know at this point whether this is a good or a bad precedent, given that there is little visibility for the sector," said the São Paulo-based trader.
All eyes will be on the Saturday meeting of creditors of Celpa, an insolvent unit of Rede Energia serving the northern state of Pará, who will likely decide the fate of the company by rejecting the its restructuring plan.
Celpa filed for bankruptcy protection in February citing "a worsening financial and economic situation." Aneel asked the court overseeing the Celpa proceedings to allow the government to intervene in the company, one of the sources said.
($1 = 2.01 Brazilian reais)
(Additional reporting by Guillermo Parra-Bernal in Buenos Aires and Reese Ewing in São Paulo; Editing by Leslie Gevirtz and Bob Burgdorfer)
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