August 30, 2018 / 7:15 PM / 5 months ago

Brazil's Eletrobras sells three subsidiaries at auction

Power lines connecting pylons of high-tension electricity are seen near Brasilia, Brazil August 29, 2018. Picture taken August 29, 2018. REUTERS/Ueslei Marcelino

SAO PAULO (Reuters) - Brazil’s state-controlled power company Centrais Elétricas Brasileiras SA, or Eletrobras, sold three power distribution companies at a public auction on Thursday in Sao Paulo, concluding another step in its divestiture program.

Local companies acquired the assets. Energisa SA bought power distribution firms Eletroacre and Ceron, which operate in the northern states of Acre and Rondônia, while Oliveira Energia in association with ATEM purchased Boa Vista Energia, located in Roraima, according to the exchange.

The bids comprised a combination of tariffs the acquirers are planning to charge plus a signing bonus. They will also need to comply with requirements for immediate cash injection in the distributors and for long-term investment programs.

Dyogo Oliveira, the head of Brazil’s development bank BNDES, which acted as an adviser to Eletrobras in the deal, said Energisa and Oliveira Energia will have to inject 688 million reais ($165 million) in the companies they acquired.

Investments over five years to modernize the firms are expected to reach 1.5 billion reais, Oliveira said.

Energisa said after the auction that it now owns 11 power distribution companies in Brazil.

Eletrobras has now sold five power distribution companies, mostly money-losing units. It sold earlier Celg and Cepisa. The divestitures are part of a plan the company has to sell non-core assets to reduce its debt.

Eletrobras is expected to hold another auction on Sept. 27 to sell Amazonas Energia.

Reporting by Luciano Costa; Writing by Marcelo Teixeira; Editing by Lisa Shumaker

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