Datum: 14.08.2003 22:14:26
Brazil's Cesp to Extend Debt Payments After Losses (Update1)
Aug. 14 (Bloomberg) -- Cia. Energetica de Sao Paulo, the state-owned power generator for Brazil's biggest city, won approval to extend payments on about $500 million of debt to ease a cash crunch caused by a slide in the currency.
Holders of about 80 percent, or $400 million, of the debt agreed to swap bonds due next year for securities due in 2008 and 2011, the company known as Cesp said in a statement sent to investors.
The agreement completes efforts to reschedule almost $700 million of debt after Cesp's losses quadrupled last year because of soaring finance costs. The plan follows a default by AES Corp.'s Brazilian unit on debt to the government. Brazilian power distributors lost about $4 billion last year after a 35 percent slide in the currency pushed up debt costs faster than revenue.
Cesp plans to exchange $300 million of 10.5 percent bonds and 200 million euros ($178 million) of 9.75 percent bonds, both due in February, for higher yielding bonds due in 2008 and 2011.
Cesp extended the deadline for accepting the swap to Sept. 5, from today, to give holders who didn't vote to approve the plan more time to participate, the company said.
Cesp's loses mounted as finance costs exceeded revenue more than two-fold last year. In March, Cesp threatened to default on debt payments if investors didn't give the company more time to pay.
Investors in April agreed to extend payments on $150 million of bonds, the first step of a restructuring.
President Luiz Inacio Lula da Silva's government has tried to help power distributors by allowing rate increases for consumers of almost 30 percent and is considering setting minimum prices to help generators such as Cesp that are losing money.
Utilities such as Arlington, Virginia-based AES were lured to Brazil in the 1990s by forecasts of a prolonged economic expansion that would push power demand up twice as fast as in the U.S. They invested $30 billion in the industry.
J.P. Morgan Chase & Co. advised Cesp on the plan.
Last Updated: August 14, 2003 12:13 EDT