* Deal aims to lift utility's finances, recover debts
* Agreement to see Eletrobras take majority stake in CEA
* Eletrobras shares down more than 20 pct this month
SAO PAULO, Nov 13 Brazilian state-led power
company Eletrobras said it would take over Companhia
de Eletricidade do Amapa in northern Brazil to help restructure
the bankrupt utility and recover debts.
Eletrobras and the Amapa state government will first have to
sign shareholder and management agreements aimed at restoring
CEA to financial health, Eletrobras said in a statement on
Amapa authorities will receive financing from Brazil's
federal government to pay off CEA's debts to Eletrobras and
The statement did not state how much Eletrobras, Latin
America's largest utility, expects to pay for a majority stake
Brazil's electrical power industry has seen a wave of
bankruptcies this year, particularly in remote and sparsely
populated regions where utilities have difficulty generating
revenue needed to cover costs and extend service.
Eletrobras Chief Executive Officer Jose da Costa Neto said
in October that it would be in his company's interest to take
over CEA and CERR, an Amazon-region utility owned by Brazil's
state of Roraima, if state governments took over the utilities'
Eletrobras used a similar model to take over utility Celg in
the central state of Goias in April.
Eletrobras preferred shares fell 4.3 percent to 13.02 reais
in morning trading on Tuesday on Sao Paulo's BM&FBovespa
The stock has lost more than a fifth of its value since Nov.
1 because of the government's decision to renew expiring hydro
dam concessions in exchange for cuts in power rates.
Besides cutting Eletrobras' revenue, the renewal plan also
involves an estimated 14 billion reais ($6.83 billion) that the
government will give the company to cover the cost of
investments it made but has been unable to fully recoup under
the terms of the concession contract.
The indemnity is less than half of what Eletrobras
originally expected to receive.
For more details on the renewal of power utility
($1 = 2.0506 Brazilian reais)
(Reporting by Vivian Pereira; Writing by Peter Murphy; Editing
by Jeb Blount and Lisa Von Ahn)