Creditors for Grupo Rede Energia SA, a Brazilian power distributor currently seeking to exit a backruptcy protection, approved for a takeover plan initiated by rival company Energisa SA. The take over plan will reduce the losses on investments by Grupo Rede Energia SA.
Rede Energia has been struggling financially since energy regulator Aneel seized eight of its functioning units late year. The effort was to prevent Rede Energia from halting electricity distribution service in six states. The power distribution units located in different parts of Brazil were all experiencing operational and financial problems. The decision to seize the units was spurred when Rede's chairman and largest shareholder, Jorge Queiroz Jr., failed to sell his 54% stake in the company.
Energisa offered to pay Rede Energia creditors 1.95 billion reais or an estimated US$862 million as compensation. Energisa is also planning on putting in an addition 1.1 billion reais into Rede as form of fresh investment.
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