(Adds share performance in paragraph 4)
By Guillermo Parra-Bernal
SAO PAULO, Sept 29 (Reuters) - Cia Energética de Minas Gerais SA and a subsidiary plan to exit their controlling stake in Brazilian renewable power company Renova Energia SA as Brookfield Asset Management Inc considers raising a takeover bid more than initially expected, two people with direct knowledge of the matter said on Friday.
According to the people, who requested anonymity because the talks remain private, Brookfield would offer Cemig and subsidiary Light SA the equivalent of 11.75 reais ($3.72) per unit of Renova. Each Renova unit consists of one common and two preferred shares.
Reuters reported on Sept. 19 that Brookfield was considering proposing to buy each unit of Renova at 11.25 reais to persuade both shareholders into selling their combined 64.4 percent stake. One of the people said Cemig, Brazil’s No. 3 power utility, and Light wanted at least 12.25 reais per unit.
Units of Renova had their biggest jump in a week, adding as much as 8.9 percent to 8.50 reais. The stock is up 26 percent this year.
Brookfield declined to comment. Cemig and Light did not have immediate comments.
Getting the nod from both Cemig and Light would enable Canada-based Brookfield to take control of Renova more assertively and expand faster in Brazil’s renewable power industry, one source said. The people said Brookfield emissaries would make a formal proposal for Renova within days.
If the improved proposal materializes into a formal bid, Brookfield would spend about 1.05 billion reais ($332.3 million to win control of Renova, one of the people said. Brookfield could either pump an extra 800 million reais into Renova or take the company private, Reuters reported on Sept. 8.
Renova, which was founded in 2001, has struggled with a severe cash crunch over the past couple of years. Its financing conditions worsened significantly when a partnership with SunEdison Inc collapsed weeks before that company filed for bankruptcy protection in the United States.
Exiting Renova could also help Cemig to speed up the refinancing of nearly 4 billion reais of debt maturing this year. Chief Financial Officer Adezio Lima said in August that a partial or full sale of Cemig and Light’s stakes in Renova could take up to 60 days. ($1 = 3.1640 reais) (Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn and Jonathan Oatis)