Renewable Energy

Brookfield close to buying stake in Brazil's Renova, source says

Reuters
02/03/2017 14:14
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Brookfield Asset Management Inc is nearing an accord to buy a 30 percent stake in Renova Energia SA, which would include 800 million reais ($258 million) in fresh capital for the Brazilian renewable energy company, a person directly involved in the transaction said on Wednesday.

Under terms of the deal, which could be announced in coming weeks, Canada's Brookfield would purchase the 15.7 percent stake that Light Energia SA has in Renova and then pump fresh cash into the company, said the person. Currently, Light forms part of a controlling bloc that owns about 64 percent of Renova.

Last year, Renova struggled with a severe cash crunch. By injecting capital, Brookfield is giving Light a chance to exit the company while diluting the other two members of Renova's controlling bloc, Cia Energetica de Minas Gerais SA and RR Participacoes SA. 

The Brookfield stake purchase will be formalized once Renova completes the sale of the Alto Sertao II wind farm project to a local unit of AES Corp, scheduled to take place next week, the person said.

The transaction should help put Renova Energia, which was founded in 2001, "back in the game," the person said. Financing conditions for Renova worsened when a partnership with SunEdison Inc collapsed weeks before SunEdison filed for Chapter 11 bankruptcy protection in the United States.

Often seen as resilient during downturns, Brazil's renewable electricity industry has wrestled with the impact of declining electricity consumption stemming from the country's harshest recession ever and high borrowing costs.

Renova did not have an immediate comment on whether Brookfield would buy a stake. Light, Cemig and RR Participacoes also had no immediate comment. Brookfield declined to comment.

Reuters reported in April and September last year that Renova was looking for a partner and fresh capital.

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