TEXT-S&P affirms Centrais Eletricas Do Para 'D' credit rating
Overview -- Equatorial Energia's recent acquisition of Brazilian electricity distributor Celpa began the implementation of its recovery plan. -- We are affirming our 'D' corporate credit rating on Celpa. -- We will upgrade Celpa once it emerges from bankruptcy protection or more disclosure on the execution of its recovery plan is available. Rating Action On Dec. 20, 2012, Standard & Poor's Ratings Services affirmed its 'D' corporate credit rating on Centrais Eletricas Do Para S.A. (Celpa). Rationale The rating on Celpa reflects its judicial reorganization filing since Feb. 28, 2012. The company's recovery plan, which was approved on Sept. 1, 2012, includes the debt restructuring (debt maturity extension, reduction in interest expenses) as approved by its creditors. An additional feature of the recovery plan was the change of the controlling shareholder (Equatorial Energia acquired 65.18% of Celpa's ordinary shares on November 1) and a minimum capital contribution of R$700 million through either one or several installments over two years. Celpa received the first contribution of R$350 million in the second week of December and began paying R$79 million in labor claims, subject to judicial recovery. The future capital contributions will depend on the company's cash flow generation. Celpa has announced that an extraordinary general meeting will be held on Dec. 26, 2012, to discuss and approve an additional capital increase. If shareholders approve the proposal, Celpa's capital will increase in R$572 million which it will use for debt payment. Upon its emergence from bankruptcy or more disclosure on the execution of its recovery plan, we will likely upgrade the company depending on our view of Celpa's business and financial prospects under its new ownership and capital structure. We will closely monitor the recovery plan implementation and the resolution of the extraordinary meeting. Related Criteria And Research -- Standard & Poor's Ratings Definitions, May 23, 2012 -- Timeliness of Payments: Grace Periods, Guarantees, And Use Of 'D' And 'SD' Ratings, Dec. 23, 2010 -- Rating Implications Of Exchange Offers And Similar Restructurings, Update, May 12, 2009 Ratings List Ratings Affirmed Centrais Eletricas do Para S.A. Corporate Credit Rating D/--/-- Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.