--CTEEP board recommends voting for renewal of expiring licenses
on higher reimbursements
--Board had previously recommended against renewal
--Shares plunge after decision
(Updates with share price in last paragraph, adds detail.)
By Paulo Winterstein
SAO PAULO--Brazilian electricity transmission company Cia de
Transmissao de Energia Eletrica Paulista, or CTEEP (CTPZY,
TRPL4.BR), said Monday that its board was now recommending that
shareholders vote in favor of renewing operating licenses.
CTEEP, which is convening shareholders for a meeting later
Monday to vote on the licenses, had originally recommended that
shareholders vote against renewal.
Brazil's government proposed renewing licenses in exchange for
lower power prices starting next year. Companies that agreed would
write down past investments, being reimbursed by the government for
unamortized investments. Utility companies complained the prices
and reimbursement levels were too low, and many analysts said that
CTEEP would likely operate at a loss with those prices.
The board seemingly agreed, recommending last month that
shareholders vote against renewal before the Tuesday deadline to
decide.
But Brazil's government last week sweetened the pot a bit,
raising the value of reimbursements for generation assets and
promising to increase reimbursements for transmission assets.
In a statement Monday, CTEEP cited the recent changes in
reimbursement values as the driver behind the board's decision.
Shares plunged 7% in intraday trading after the board
announcement.
-Write to Paulo Winterstein at
paulo.winterstein@dowjones.com
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