Brazilian power firm Eletrobras eyes $2.4 billion share offer

FILE PHOTO: A person walks past in front of the headquarters of Brazil's power company Eletrobras in Rio de Janeiro, Brazil January 3, 2019. REUTERS/Pilar Olivares/File Photo

RIO DE JANEIRO (Reuters) - The board of Brazilian state-run power firm Eletrobras has approved an extraordinary shareholders meeting to decide upon a capital increase of 9.99 billion reais ($2.42 billion) via a follow-on share offering, the firm said on Monday.

In a securities filing, Centrais Eletricas Brasileiras SA ELET6.SA, as the firm is formally known, said new preferential shares would be issued at 35.70 reais and new ordinary shares would be issued at 35.72 reais.

The federal government would subscribe to a minimum of 4.054 billion reais of the new shares, the firm said. The proceeds from the follow-on would be used to reduce debt and execute the company’s five-year strategic plan, the company added.

It said the government’s participation in the offering would be done through so-called AFACs, a mechanism which allows loans by the federal government to turn into equity capital, reducing the firm’s debt load.

Reporting by Gram Slattery; Editing by Muralikumar Anantharaman