As proposals presented by Aegea and Equatorial for the privatization of Copasa (Companhia de Saneamento de Minas Gerais) may have been R$2.7 billion below the value considered adequate for the company, according to a survey by Sindiágua-MG (Union of Workers in the Water Purification and Distribution Industries and Sewage Services of the State of Minas Gerais).
According to the union president, Milton Costa, This scenario is linked to the expectation of privatization with at least five proponents.
Costa told the reporter that the model chosen for privatization ended up undervaluing the 30% of the company’s shares that will be sold to the market.
By the privatization notice, The operation takes place through a secondary public offering of shares on the stock exchange (B3), in which the Government of Minas sells the shares it already holds in the company.
With the model, the state transfers controlling interest in the company to the private sector, but maintains veto power over strategic decisions. The state government’s objective is to use the resources collected to help pay Minas Gerais’ debt to the Union, estimated at R$180 billion.
According to Milton Costa, however, the chosen format resulted in inadequate pricing of the company’s assets and also linked the value of the operation to
According to him, uncertainties related to privatization and the international economic scenario increased market volatility, directly impacting the value of the company’s shares.
The union president also stated that the short term for analyzing the model and presenting proposals – which was 14 days -, combined with the requirements set out in the notice, as a bank guarantee of R$7 billion and proof of R$6.3 billion in investments made in the last five years, kept away international funds interested in the Brazilian sanitation sector.
In his assessment, the requirements reduced the competitiveness of the dispute, as only two groups presented proposals, in addition to not necessarily guaranteeing that the future controlling company will be able to fulfill the obligations set out in the contract.
Another point mentioned by Costa is the changing market perception of the sanitation sector. According to him, the segment lost part of investor appetite after initial expectations were considered excessively optimistic about the financial return on assets.
For the president, factors such as high interest rates, increased project risk and the limited debt capacity of large companies in the sector reduced the market’s interest in new sanitation assets.
Last Tuesday (26), the union filed a new lawsuit with the TCE-MG (Court of Auditors of the State of Minas Gerais) asking for the suspension of the bidding. The entity argues that, although two proposals were presented, there would only be one effective competitor, since “Sabesp, in a note, declared that it will not present a proposal, leaving the dispute with a single effective candidate at the time of pricing”.
Copasa responded to the process explaining that the operation was conducted in an accelerated manner to guarantee resources intended to pay the state’s debt to the Union, but maintaining responsibility and governance in the process.
The company also stated in the documents that the requirement for a guarantee of R$7 billion “does not impose excessive or disproportionate barriers to broad competition” and that the measure seeks to ensure the selection of “highly qualified, suitable investors with sufficient financial strength to ensure the rapid achievement of the goals of universalization of basic sanitation services, shielding the concession against operational failures or abandonment of the project”.
This Wednesday morning (27), in practice, the movement implies a new sheet of the share offering and an updated Offering schedule.
In a note to CNN, Copasa stated that “the new offering documents and the respective updated schedule will be resubmitted in due course to the Securities and Exchange Commission (CVM) and disclosed to the market.”
