BNDES disburses Eletropaulo's US$168mn CVA financing

Brazil's national development bank BNDES paid power distributor AES Eletropaulo 521 mn reais (US$168mn) on Thursday (June 3) as part of the CVA financing program, Eletropaulo announced Friday. The company now expects to obtain 240mn reais financing, also from BNDES, that is part of another emergency financing program that the bank made available, in 30 days, Eletropaulo CFO Andrea Ruschmann told reporters during a conference call. This would conclude outstanding financing that has already been arranged with the bank, Eletropaulo will use 312mn reais of the financing to pay down outstanding sector obligations and the remainder to pay creditors under the March 12 debt renegotiation agreement, the statement said. The financing disbursed this week is part of a BNDES program instituted by the federal government in November 2003 to anticipate the uncontrollable costs (CVA) element of the power rate adjustment, which was withheld for 12 months from April 2003 as an anti-inflation measure. The CVA includes, among other costs, foreign exchange rate variations. To tap BNDES's CVA financing program, companies had to restructure their debts. The electricity regulator Aneel withheld a 7.4% power rates increase in July 2003. Eletropaulo is controlled by US power company AES. It concluded a 2.3bn-real debt restructuring agreement with private creditors in March and last year signed a US$1.1bn-dollar debt-for-equity agreement with BNDES. Eletropaulo will pay back the financing to BNDES in 24 months with extra revenue seen from July onwards after Aneel grants this year's rates increase, which is expected to include half of the 7.4% that was withheld from the 2003 rates increase, Ruschmann said. The other half of the withheld adjustment is expected to be granted in July 2005, she said. "We are confident Aneel will grant us the CVA parcel because it has already done so in the rate revisions for other companies," she said. The cost of BNDES's financing is of one percentage point over the interbank lending rate, currently at 16%, a company spokesperson said.