Structuring project for CEB-D's corporate divestiture - October 8, 2020 - BNDES Projects Hub
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Structuring project for CEB-D’s corporate divestiture October 8, 2020
Structuring Project
Overall context
1 The company
2 Project overview
3 Studies
4 Schedule
2
1 The Company // Company Profile // Economic Group // Corporate Structure
- It is a publicly-traded holding company - CEB Distribuição is a private business
- Owns shares (ON, PNA and PNB) traded in corporation
the traditional segment of B3 (without liquidity) - Wholly-owned subsidiary of CEB
- Controlled by G-DF (93% ON, 67% PN and - Serves an estimated population of 3 million
80,2% CT) inhabitants
- Concession until July 2045
3
1 The Company // Market Position
CEB-D 2019 NUMBERS
# Employees: 886
# Consumer units: 1,085,002
Distributed energy: 5,562,767 MWh
Concession area: 5,801.9 km2
2019 Net Operating Revenue: R$ 2,6 billion
2019 EBITDA: R$ 167,350 million
Regulatory asset base: R$ 1,050,730,752
41 The Company // Main Results
HISTORY OF THE MAIN RESULTS
Amount (R$ thousand)
2015 2016 2017 2018 Diff
2019
Revisited Revisited Revisited Revisited 2019-2018
Net Operating Revenue 2,348,022 2,052,795 2,651,663 2,463,379 2,615,566 152,187
Operating Cost/Expense 2,139,135 1,973,418 2,563,627 2,422,366 2,498,149 75,783
EBITDA 256,053 125,599 145,365 89,545 167,261 77,716
Year Profit/Loss 36,446 50,270 29,522 (33,678) 41,892 75,570
Investments 82,157 72,309 85,278 82,756 40,181 (42,395)
Net Equity 308,875 359,180 320,459 414,801 587,874 173,073
CEB-D 2019 Management Report
52 Project Overview // Diagnosis
Investments neglected in recent years
directly affecting the efficiency of the operation Status
! Impact on performance indicators
Noncompliance with minimum economic and financial In 2020 there is still a strong
sustainability conditions in 2018 and operating limits in trend of noncompliance with
2019 regulatory covenants
No reversal creates a lapse risk
Need to implement a turn around with significant Capex
62 Project Overview // Project Structuring
PROJECT STRUCTURING CONTRACT Signed on 8.13.2019
• Object: Corporate divestiture of CEB Distribuição S.A.
• Contracting institution: CEB Holding and the Federal District
• BNDES – Execute and Coordinate: Production of technical studies for diagnosis and privatization modeling
• Hire: Technical services needed to execute the project
SERVICE A SERVICE B
Consortium BR/LMDM Power Consortium Nova CEB
Independent audit
Economic and financial evaluation and
legal, accounting, technical-operational and
Economic and financial evaluation
other specialized professional services
Technical advisory
All contracts were carried out by bidding process 73 Studies // Results from the Economic and Financial Assessment
Amount (R$ million)
WACC = 9,10% WACC = 8,86%
Result SERVICE A SERVICE B
Operation VPL 1,773 1,934
Terminal Value VPL 386 388
Working Capital VPL 90 72
Enterprise Value 2,249 2,394 6,06%
Indebtedness and Contingencies (875) (865)
Capital Reduction (28) (28)
Equity Value 1,346 1,501 10,33%
Simple average
Minimum Reference Price 1,424
Considers operation by new controller able to make the necessary investments to improve
commercial and operational indicators, improve capital structure and perform an efficient
management of nontechnical losses
83 Studies // Net Indebtedness
Debt maturity (Obs, ICMS not included in this table)
LOANS 2020 2021 2022 2023+ TOTAL
Eletrobras 141 43 16 200 DEBT
Banco do Brasil S,A, (FCO II a IV) 3,866 2,829 - - 6,695
R$ 912 MM TOTAL DEBT
Banco do Brasil S,A, (FINAME) - - - - -
(including banking / debentures / ICMS)
Caixa Econômica Federal 17,271 - - - 17,271
Caixa Econômica Federal/BNDES 3,836 5,152 4,678 8,753 22,419 R$ 349 mm CASH (Dec/19)
Caixa Econômica Federal/BNDES 3,870 - - - 3,870
Caixa Econômica Federal/BNDES 5,852 - - - 5,852 R$ 128 mm ICMS ANTICIPATED DISCHARGE
ABC 7,639 4,603 - - 12,242
BCV - - - -
R$ 456 mm PROVISIONS AND OTHER ADJUSTMENTS
ORIGINAL 5,043 - - 5,043
R$ 893 MM NET DEBT
FIBRA 27,499 21,944 - - 49,443
SOFISA 6,111 3,961 - - 10,072
DAYCOVAL 18,685 22,037 - 40,722
Total 99,813 60,569 4,694 8,753 173,829
Transaction Cost (1,096)
Net Total 99,813 60,569 4,694 8,753 172,733
DEBENTURES MAIN FLOW 2020 2021 2022 2023+ TOTAL
26,815 66,667 66,667 53,662 213,811
Diluted, much of it originated in the short-term Market. There is no room for a
quick, concentrated and effective negotiation with suppliers.
93 Studies // Proposed Recommendations and Adjustments: Waiver of Covenants
Waiver of covenants
Noncompliance with minimum economic and financial sustainability conditions in 2018
Status (Negative flow of -R$ 22.5 million, calculated by EBITDA – QRR) and operating limits in
Concession lapse risk
2019 (DEC of 8.85 and FEC of 7.25, against the limit of 8.45 and 6.43)
Postponement by 3 (three) years of the obligations in Annexes
Request II and III of the Fourth Amendment to the Concession Agreement Deadline for publishing
Effective from the
the notice:
publication of the notice
Dec, 8, 2020
§ 5 of art. 11 of Law No 12.783/2013
“(,,,) in case of transfer of control, by bidding process, of legal entity originally under direct or
Reasoning indirect control of the Union, State, Federal District or Municipality, the granting power may
establish in the advertisement for bids the signing of an amendment to temporarily shift the
obligations in the concession contract, so that they are compatible with the date of assumption of the
legal entity by the new controller.”
103 Studies // Proposed Recommendations and Adjustments: Division + Assignment of Employees
Spin-off + Assignment of Employees
Market sounding participants positioned
Creation of CEB Serviços themselves regarding the Spin-off
strategy, Most showed a strong
preference for the withdrawal of noncore
CEB Holding assets and activities from the company,
CEB • No controller exchange
Others
Distribuição • Land version of Noroeste, Asa Norte and Taguatinga
• Social capital composition
• Not part of BRR
• Negligible capital reduction
CEB Holding • Transfer of employees with consequent P cost reduction
(majority already subsidized)
CEB
CEB Serviços Others
Distribuição
114 Schedule
NEXT STEPS
Approval
CEB Governance Auction session
10.13.2020 11.27.2020
BNDES approval
Notice publication
Public hearing
11.6.2020
10.14.2020
Completion of studies
Opening DR Phase 1 – DDs: 8.11.2020
Opening DR Phase 2 – Modeling: 9.28.2020
Sending TC-DF documents: 10.6.2020
12BNDES Portal
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