SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of January, 2022
Commission File Number 1-34129
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRÁS
(Exact name of registrant as specified in its charter)
BRAZILIAN ELECTRIC POWER COMPANY
(Translation of Registrant's name into English)
Rua da Quitanda, 196 – 24th floor,
Centro, CEP 20091-005,
Rio de Janeiro, RJ, Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F _______
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No___X____
ADDENDUM TO THE
LEGAL ASSESSMENT REPORT
AND THE
MODELING DETAILING REPORT
December 12th, 2021
CONTENT
CONTENT | 2 |
I. context | 3 |
II. Recent history | 5 |
III. ELETROBRAS | 7 |
III.1. Schedule | 7 |
III.2. Global Public Offering | 8 |
III.3. Eletrobras General Shareholders’ Meeting | 12 |
III.4. Public Hearing | 18 |
III.5. FGTS Privatization Investment Funds | 19 |
III.6. ANATEL | 20 |
IV. Eletronuclear | 20 |
IV.1. Eletronuclear value update | 20 |
IV.2. Bylaws | 32 |
IV.3. Investment Agreement | 34 |
IV.4. Bodies and Committees Composition | 36 |
IV.5. Other comercial issues | 38 |
V. Itaipu | 38 |
V.1. Value Update | 38 |
V.2. Equity Holdings Sale Agreement | 44 |
VI. Amendment of the CPPI Resolution No. 203, Dated October 19, 2021 | 45 |
2 |
I. context
On October 18th, 2021, we have sent to the Investment Partnership Program (“PPI”) Special Secretariat the Legal Assessment Report (“Legal Report”) and the Modeling Detailing Report (“Modeling Report” and, jointly with the Legal Report, the “Reports”), in which we have made an integrated analysis of the financial and legal aspects applicable to the modeling details of Eletrobras’ privatization process. Such Reports, as is well known, serve as basis for the decisions to be made by the Council for Investment Partnership Program (“CPPI”) in Centrais Elétricas Brasileiras S.A. (“Eletrobras”) privatization process, as authorized by Law No. 14,182, dated July 12, 20211.
Considering certain supervening facts that affect certain aspects of the aforementioned Reports, it is necessary to supplement them, adjusting the matters of the Reports that will be highlighted in the following items and allowing the CPPI to evaluate and make a properly informed decision.
Among the factors that led to such complementation, it is worth mentioning:
(i) The decision of the Plenary Federal Audit Court (“TCU”), issued in TCU Judgment No. 3176/2021, dated December 15, 2021, which, after the vote referred by the Rapporteur-minister Aroldo Cedraz, interrupted the consideration of the proceeding TC 008.845/2018-2 by request for inspection made by Minister Vital do Rêgo for the statutory period, but authorized the continuation of the studies, provided that the effectiveness of the signature of the concession contracts shall depend on the decision on the substance of the process in the resolution that the Plenary will render upon the return of the proceeding documentation from the required inspection (“ TCU Judgment No. 3176/2021”);
(ii) In view of the vote of the Rapporteur-ministry and the TCU Judgment No. 3176/2021, the Ministry of Mines and Energy forwarded to the Energy Policy National Council (“CNPE”) a proposal on the amounts calculated for the
1 For the implementation of the transaction, in addition to the decisions of CPPI, Eletrobras and ENBPar, within their corporate governance procedures, shall decide on, according to their approval levels policies and relevant governance bodies set forth in their bylaws (and other possibly applicable documents) on all acts required for the implementation of the privatization attributed to each company.
3 |
additional value for the new power generation contracts, for the granting bonus and the CDE payment, to be decided in a meeting to be held on December 21, 2021;
(iii) The final TCU resolution related to the amounts calculated for the additional value for the new power generation contracts, for the granting bonus and the CDE payment did not occur within the deadline which was assumed in the schedule detailed in item III.1.9 of the Modeling Report, what requires the reformulation of the project schedule, particularly the post-posing of Eletrobras’ AGE which would approve, among other matters, the corporate restructuring involving Eletronuclear and Itaipu, and, therefore, the values of such restructuring must be updated;
(iv) Some additional understandings related to certain elements of the Privatization, which took place after the delivery of the Reports, most importantly, as a result of the negotiations among Eletrobras, Eletronuclear and the federal bodies involved in monitoring Eletrobras’ privatization process; and
(v) Based on the proposal mentioned in item (ii) above and due to the negotiations mentioned in item (iv), the Executive Secretariat of the Ministry of Mines and Energy, through the Notice 565/2021/SE-MME, has requested BNDES that, to updated the studies previously sent, the following guidelines should be followed:
1. | Consider the following values, as described in the Technical Note No. 77/2021/ASSEC (SEI No. 0577917) and the Resolution Draft (SEI nº 0578952) |
Budget Line | Value |
Contracts Additional Value | R$ 67,052,502,399.86 |
CDE (NPV) | R$ 32,073,001,926.43 |
Granting Bonus | R$ 25,379,079,917.76 |
2. | Authorization for Eletrobras to provide support and advice to ENBPar, for a period of 180 days, in Itaipu’s management and power trading; |
3. | The price to be paid by ENBPar to acquire the equity interest held by Eletrobras in Itaipu shall be paid in installments as follows: the ‘Principal’ portion shall be |
4 |
made in 240 monthly installments and the ‘Compensation 2021’ portion shall be paid in 36 installments;
4. | Change in the characteristics of the public bid commission of Angra, which shall be a Angra 3 Thermonuclear Power Plant Project Monitoring Committee (“COANGRA”), which shall advice, through non-binding decisions, Eletrobras’ Board of Directors. |
Terms and expressions initiated in capital letters used and not defined in this addendum shall have the meaning attributed to them in the Modeling Report. Except as set forth in this addendum, we understand no amendment to the Reports is necessary.
II. Recent history
Relevant facts related to the privatization of Eletrobras, which took place since the issuance of the first version of the Reports, are hereinafter addressed.
On October 18, 2021, BNDES forwarded to the PPI Special Secretary the studies related to Eletrobras’ privatization process relevant to the CPPI decision-making, specifically the Legal Report, the Modeling Report, the Accounting-Property Due Diligence , the Legal Due Diligence, the Eletronuclear Assumptions Report and the Eletronuclear Economic-Financial Assessment Report. These documents were forwarded to the TCU on October 21, 2021, through Official Notice AED No. 101/2021.
On October 19, 2021, BNDES requested Eletrobras to express its opinion regarding the classification of secrecy of the modeling documents through Official Notice AED No. 100/2021. Through CTA-PR-01950/2021, of 26 of October 2021, Eletrobras request BNDES to keep the documents confidential.
On October 19, 2021, CPPI Resolution No. 203 was issued, approving the operational form and conditions for the privatization of Eletrobras, within the scope of the PND.
On October 20, 2021, CNPE Resolution nº 23 was issued, establishing the guidelines for defining the price of energy for the Angra 3 Thermonuclear Power Plant.
On November 9, 2021, the Union made a capital contribution of BRL 4 billion to ENBPar, which was already provided for in the Union budget.
5 |
On November 19, 2021, Eletrobras disclosed, through a Notice to the Market, that it approved the hiring of the bank syndicate to carry out the Offering, as indicated below, and that the respective mandate letters were signed with the lead coordinators.
· | Lead coordinators: Bank of America; BTG Pactual; Goldman Sachs; Itaú BBA; and XP Investimentos; |
· | Bookrunners: Bradesco BBI; Caixa Econômica Federal; Citi; Credit Suisse; JP Morgan; Morgan Stanley; and Safra. |
On December 1, 2021, BNDES approved the Assumptions Report and the two independent Economic-Financial Appraisals necessary for the privatization process of Eletrobras. The following day, the studies were sent for analysis by the TCU through Official Letter AED No. 124/2021.
Also on December 1, 2021, in order to allow the beginning of the analysis of this report, the Ministry of Mines and Energy submitted to BNDES two possible scenarios for the additional value by the new concessions of hydroelectric power plans of Eletrobras, as well as for the granting bonus and contributions to the CDE, to be considered in view of the TCU's technical analysis, submitted to the plenary, and which will still be subject to approval by the CNPE. Based on these numbers, BNDES and this Consortium were able to start quantitative analysis that depended on this information.
On December 7 2021, the Public Hearing of the privatization process was published in the Official Gazette, initially scheduled to take place on December 22, 2021, and later extended to January 5, 2022.
On December 15, 2021, the TCU started judgment on the TC 008.845/2018-2 process, which culminated in the delivery of TCU Judgment No. 3176/2021. It should be noted that this assessment does not yet include the analysis of the privatization modeling, which will be the subject of a new decision by the TCU.
6 |
During the entire period between the submission of the Reports and the present date, meetings and negotiations have been held between representatives of the Ministry of Economy (“ME”), Ministry of Mines and Energy (“MME”), ENBPar (appointed by the MME) and Eletrobras (“Parties”), with the participation of BNDES and eventually the Consortium, PGFN, among other. The main objective of these meetings is to agree on details of the transactions and documents that will regulate them and, as described in this Addendum, on some occasions they resulted in the need for changes in terms previously decided by the CPPI and in concepts previously dealt with in the Reports.
III. ELETROBRAS
III.1. Schedule
The fact that the final decision on the value added by the new concessions will only take place at a later date than initially planned, resulted in the need for adjustments to the original project schedule. Firstly, it became unfeasible to carry out a public offering based on financial information from the 3rd quarter of 2021, for which, as explained in the Modeling Report, pricing should take place until February 10, 2022. In addition, even with the use of data from the 4th quarter of 2021 (financial year ended December 31, 2021), there are challenges to the schedule, for the same reasons already listed in the Modeling Report. The pricing of the Offering, in this case, must occur until May 12, 2022, although it is preferable that it occurs until April 28, 2022, in order to guarantee a minimum interval in relation to the availability of the Financial Statements referring to the 1st quarter of 2022, which is expected to occur in May 15, 2022, thus avoiding a period of greater volatility in the price of the shares, which consequently could affect the pricing.
Thus, it was proposed that the Parties decide whether or not to use the automatic registration rite for Issuers with Great Market Exposure (“EGEM”), pursuant to article 6A of CVM Instruction 400. In short, the automatic registration of the Offering, available to EGEMs, provides the project with the benefit of having greater flexibility in the schedule in case of contingencies. In particular, any new TCU delays (with respect to the future analysis of the Privatization model), injunction orders or operational setbacks, such as the availability of the financial statements for the fiscal year of December 31, 2021, could be solved by such flexibility, so that the target of carrying out the offer in the aforementioned market window is maintained.
7 |
On the other hand, Eletrobras’ offering arises complexities that have not yet been tested by the CVM in this type of rite. In conversations held with the CVM itself, that body’s concern was expressed and the risk of conversion into an ordinary rite was even mentioned.
In the event that a decision of conversion into ordinary rite takes place after the request for registration of the Offer, it will not be possible to carry out the Offer with the data of the fiscal year ending on December 31, 2021, and, in this case, the Offer can only be carried out in the next market window, i.e. , with the date for the 1st quarter of 2022 (quarterly information for the period ended on March 31, 2022).
In view of the risks and benefits, the Parties decided to proceed with the automatic rite forecast for EGEM, and the tentative schedule was updated as summarized in the following table:
New Schedule | Date |
First CPPI Resolution | 19/oct |
TCU preliminary granting judgement | 15/dec |
Second CPPI Resolution | 23/dec |
TCU final granting judgement | 19/jan |
Call Notice AGE Eletrobras | 20/jan |
Eletrobras’ AGE | 21/feb |
TCU Privatization Judgement | 02/mar |
20-F and Launch / Prospectus | 23/mar |
Pricing | 13/apr |
Window closing (market) | 28/apr |
Window closing (CVM) | 12/may |
III.2. Global Public Offering
As mentioned in item I, the Ministry of Mines and Energy sent the Official Notice 565/2021/SE-MME to BNDES, informing, among other things, the changes to be submitted to the CNPE about the parameters approved in CNPE Resolution no. 23/2021. Thus, the value added by the new power generation concession contracts arising from the privatization was established at R$67,052,502,399.86; the amount to be paid by Eletrobras or its subsidiaries as a bonus for the granting of new power generation concession contracts was set at R$25,379,079,917.76, after deducting the
8 |
expenses provided for in Law 14,182; and, finally, the present value of the amount to be paid by Eletrobras or its subsidiaries to CDE was recalculated at R$32,073,001,926.43, for which the following revised payment schedule was defined, in real terms (considering the base date of January 1, 2022):
DATE | CDE CONTRIBUTION |
Up to 30 days of the execution of the concession agreements | R$5,000,000,000.00 |
2023 | R$574,628,536.39 |
2024 | R$1,149,257,072.78 |
2025 | R$1,723,885,609.17 |
2026 | R$2,298,514,145.57 |
2027 | R$2,873,142,681.96 |
From 2028 to 2047 | R$2,873,142,681.96 |
Regarding the structuring of the Offering, the relevant impact caused by the recommendations and determinations of the TCU concern the short-term cash needs of the Eletrobras (which were increased by just over R$ 2 billion, with the increase in the value of the grant) leading to a re-discussion on the sizing of the volume of the base Offering.
As discussed at length throughout the Modeling Report, and in particular in the section dealing with the context of the Offer, the most notable aspect of the Offer is precisely its quite high volume, from the perspective of any of the metrics usually applied in the capital market, which raises the issue of the market's ability to provide the desired funds and demands redoubled parsimony in defining a new level of the base Offering.
The reference adopted for the Base Offering in the primary modality, when preparing the Modeling Report, was that it would be sufficient to cover the amount of the grant referring to the new electric power generation concession contracts, then established at just over R$23.2 billion. In order to examine the effects of applying such a parameter in terms of the total volume of the Offering and the size of the secondary Offering, the Modeling Report included sensitivity matrices indicating the minimum volumes of the Offering, as well as in the secondary Offering, so that the interest percentage of 45%
9 |
intended for the Union bloc after its dilution is reached. By including a new last line into such matrices, with the updated value of the grant, this data follows:
Total Value of the Offering (Primary + Secondary) in R$ billion
Price per Share (in R$) | ||||||
Primary Value (in R$ billion) | 35 | 40 | 45 | 50 | 55 | 60 |
18.0 | 22.2 | 24.0 | 25.8 | 27.5 | 29.3 | 31.0 |
19.0 | 22.8 | 24.5 | 26.3 | 28.1 | 29.8 | 31.6 |
20.0 | 23.3 | 25.1 | 26.9 | 28.6 | 30.4 | 32.1 |
21.0 | 23.9 | 25.6 | 27.4 | 29.2 | 30.9 | 32.7 |
22.0 | 24.4 | 26.2 | 28.0 | 29.7 | 31.5 | 33.2 |
23.0 | 25.0 | 26.7 | 28.5 | 30.3 | 32.0 | 33.8 |
23.2 | 25.1 | 26.9 | 28.6 | 30.4 | 32.1 | 33.9 |
25.4 | 26.3 | 28.1 | 29.8 | 31.6 | 33.3 | 35.1 |
Total Value of the Secondary Offering in R$ billion
Price per Share (in R$) | ||||||
Primary Value (in R$ billion) | 35 | 40 | 45 | 50 | 55 | 60 |
18.0 | 4.2 | 6.0 | 7.8 | 9.5 | 11.3 | 13.0 |
19.0 | 3.8 | 5.5 | 7.3 | 9.1 | 10.8 | 12.6 |
20.0 | 3.3 | 5.1 | 6.9 | 8.6 | 10.4 | 12.1 |
21.0 | 2.9 | 4.6 | 6.4 | 8.2 | 9.9 | 11.7 |
22.0 | 2.4 | 4.2 | 6.0 | 7.7 | 9.5 | 11.2 |
23.0 | 2.0 | 3.7 | 5.5 | 7.3 | 9.0 | 10.8 |
23.2 | 1.9 | 3.7 | 5.4 | 7.2 | 8.9 | 10.7 |
25.4 | 0.9 | 2.7 | 4.4 | 6.2 | 7.9 | 9.7 |
Just to recap the logic of the tables above, the first one relates the volume of the Primary Offering (indicated in its first column) against the share price (recorded in its first line, using the base value of R$35.00 per share as a starting point), chosen as it is a rounding (up) of the value of the shares of Eletrobras at the time of issuance of this addendum, followed by increments of R$5.00 from this value), showing the total volume of the Offering as a result.
For example, considering the first column of Eletrobras share prices, the table shows a scenario where the price per share would be R$35.00. In this case, if the Primary
10 |
Offer is R$18 billion, it would be necessary, in order to dilute the Federal Government up to the safety margin of 45% of percentage interest, that the total Offer be R$22.2 billion. In a nutshell: the total value of the Offer would be R$22.2 billion at the price of R$35.00 per share, if the primary offer is R$18 billion, and so on in the other scenarios presented in the matrix.
The second table uses the same mechanics, presenting the volume of the Secondary Offering that would result from each scenario of volume of the Primary Offer in relation to each possible price of the considered share.
Using the same example given above, in the scenario with a price of R$35.00, and a Primary Offer volume of R$18 billion, a Secondary Offer of R$4.2 billion would be necessary to dilute the Union's participation until the security of the 45%, and so on, as shown in the matrix.
With the inclusion of the new grant value at the end of both tables, it is verified that the increase in the grant is not fully followed by the value of the base Offering, which grows in a proportion which is smaller than the proportion of the increase of the former. This happens because the greater the volume of the Offering in the primary modality, the smaller the secondary modality must be to reach the same level of 45% of the Federal Government interest percentage in the voting capital of Eletrobras.
Starting again from the example of a unit price of R$ 35.00, the increase of R$ 2.2 billion in the Primary Offering results in an increase of only R$ 1.2 billion in the total value of the Offering. This occurs because the size of the Secondary Offer drops from R$1.9 billion to R$ 0.9 billion when the Primary Offering is changed from R$ 23.2 billion to R$ 25.4 billion, i.e., the impact of the growth of the Primary Offering is balanced by a reduction in the Secondary Offering. As a result, the expansion of the total volume of the Offering is always below 5% in any of the stock price scenarios considered, a variation that, despite the clear concerns expressed in relation to the size of the Offering, we believe to be within the maximum limit of absorption by the market in the context of the Offer.
Furthermore, considering the possibility that, after the definitive approval by the TCU, the values of the granting bonus of the new concession contracts will be changed, it was deemed reasonable to propose, for the Second CPPI Resolution, a range of
11 |
values, within which the value of the Primary Offering will be equal to the value of the granting.
While, in the Modeling Report, the feasibility of a Primary Offering of R$ 23.3 billion was analyzed, from the point of view of the market depth analysis vis-à-vis the company's projected leverage, in this Addendum, we considered acceptable to adopt, as a parameter for the size of the Primary Offering, the value of the granting, now defined at R$25.4 billion, as explained in the previous paragraphs and explained, from a quantitative point of view, in the two tables presented in this section. Furthermore, we understand that small variations, up to 5%, upwards or downwards, in relation to these values, do not change the concept proposed herein, nor the validity of the depth and leverage analysis presented in the Modeling Report.
Thus, the range to be proposed, within which the value of the bonus for the granting is used as a parameter for the size of the Primary Offering, is R$22,057,564,316.99 (equivalent to a variation of minus 5% from the lowest value originally stipulated for the granting, amounting to R$23.2 billion) to R$ 26,648,033,913.65 (equivalent to a variation of plus 5% above the highest expected amount for the granting, of approximately R$ 25.4 billion).
In view of the above, we propose that the resolution of the CPPI to be edited for the purposes of Privatization, provides that the Primary Offer shall be carried out in an amount sufficient to support the new value defined for the granting bonus, within the range stipulated above, but, as proposed in the original version of the Modeling Report, without considering the payment of the down-payment to the CDE.
III.3. Eletrobras General Shareholders’ Meeting
For the purposes of the Privatization, pursuant to Law No. 14,182, the general shareholders’ meeting of Eletrobras shall approve certain amendments to the Articles of Association of Eletrobras, as detailed in item III.2.8 of the Modeling Report.
a) Approval Quorum
As a rule, the resolutions of the general shareholders’ meeting of companies are approved with votes of the majority of those present (article 129 of the Corporations Law), and, exceptionally, the approval of the majority of the voting capital may be
12 |
required (article 136 of the Corporations Law). Eletrobras’ general shareholders meeting to be held for the purposes of Law 14,182 will deal with matters subject to both aforementioned deliberation quora.
After the delivery of the Modeling Report, further clarification was requested on how to calculate the number of votes required to approve resolutions in the general shareholders' meeting (approval quorum), especially considering the fact that the Federal Government, which holds the majority of the voting share capital of Eletrobras, must abstain to vote on certain matters, pursuant to art. 3, §6, of Law 14,182.
It is relevant, first of all, to differentiate the resolutions quorum from the convening quorum. While the convening quorum must be verified for the meeting to be held, the approval quorum must be verified for a resolution to be passed.
The convening quorum must consider all shareholders present, regardless of any impediment or abstention from voting, provided that the Federal Government shares will be accounted for this purpose.
The calculation of the approval quorum of any matter, as a rule, must exclude the potential votes of shareholders who abstained or who cannot exercise their voting rights for any reason (due, for example, to a possible conflict of interest). However, as stated above, some of the matters to be voted on at Eletrobras’ general shareholders’ meeting are subject to the quorum of the majority of the voting capital provided for in art. 136 of the Corporations Law, and this quorum, in theory, cannot be achieved without the shares held by the Federal Government.
In such cases, however, it is necessary to acknowledge that the shares representing the majority of the capital stock will be unable to vote in compliance with the rule of art. 115 of the same Corporations Law, which establishes that shareholders must abstain from voting at meetings on matters in which their interests and those of the companies conflict.
In this case, there is no doubt as to the interest of the Federal Government (and, therefore, of the majority of the voting capital) in approving the matters, especially because the resolutions arise of the privatization process led by the Federal Government itself.
13 |
Thus, with the necessary abstention of the Federal Government, the verification of the achievement of the approval quorum necessary for the matters in question must disregard the shares held by the Federal Government - that is, the presence of the Federal Government will be ignored for the verification of the approval quorum of the majority of those present, as well as the common shares held by the Federal Government for purposes of quorum verification based on voting capital.
b) Resolutions
Voting rights restriction
The changes to be approved include the prohibition of the exercise of voting rights, by a shareholder or group of shareholders, in a volume greater than 10% of the number of shares in which the voting capital of Eletrobras is divided, as established in art. 3, item III, item “a”, of Law 14,182.
After discussions with Eletrobras and Eletronuclear, it was considered necessary to further clarify the scope of the aforementioned limitation, i.e., whether (i) it only applies to ONs issued by Eletrobras, which grant voting rights, or (ii) the PNs must be covered by such a restriction.
After all, PNs that do not grant voting rights may exceptionally grant them, due to the lack of payment of minimum dividends (article 111, §1, of the Corporations Law). Furthermore, the PNs have the right to vote in the separate election of a member and respective alternate to the board of directors (article 141, §4, item II, of the Corporations Law), as well as in special meetings of preferred shareholders (such as, for example, in the cases provided for in article 4-A, article 44, §6 and article 136, §1 of the Corporations Law).
It should be noted that art. 3, item III, sub item “a”, of Law 14,182 does not clearly state whether such prohibition applies only to common shares or also to preferred shares and, if applicable to the latter, whether the prohibition refers only to cases where preferred shareholders vote together with common shareholders or whether it would also apply to resolutions taken separately, as explained above.
14 |
In an extensive analysis, it should be understood that the limitation should apply to any manifestation of vote, whether by holders of common or preferred shares and, in the case of the latter, if this includes separate voting.
However, it is important to note that the legislator’s intention, by providing for separate voting by preferential holders, is intended to allow them to protect their interests in the face of decisions taken by ordinary holders and, by limiting their separate vote, Law 14,182 could harm such legitimate interests. That said, the same protective objective does not seem to apply to situations in which preferred shareholders vote together with common shareholders (that is, in case of acquisition of broad voting rights in the event of non-payment of minimum dividends, pursuant to article 111, § 1 of the Corporations Law).
In view of the foregoing and, in particular, given the lack of clarity of Law 14,182 on the subject, after discussions between the Ministry of Economy, Ministry of Mines and Energy, Attorney General of the National Treasury, Eletrobras, BNDES and this Consortium, an understanding was met, under which the limitation on the number of votes exercisable by shareholders holding PNs should only apply to situations where they come to hold broad voting rights, equivalent to those conferred by ONs, that is, in the event established in art. 111, §1, of the Corporations Law, and not in other situations.
We emphasize that we understand that the limitation of votes of preferred shareholders in the aforementioned contingency situation (non-payment of minimum dividends) does not represent a “change in preferences, advantages and conditions for redemption or amortization” (art. 136, item II, of Law No. 6,404 /76) of preferred shares issued by Eletrobras, which would require a special meeting of preferred shareholders pursuant to §1 of art. 136 of Law No. 6,404/76 and would also give rise to the right of withdrawal for dissenting preferred shareholders (article 137, item I). Such contingent voting right is not a preference or advantage of the preferred shares that would be withdrawn, but a mere compensation for the non-payment of minimum dividends. On the contrary: if there were no limitation of votes of preferred shareholders in this situation, such shareholders would be gaining (and not losing) a huge advantage/preference compared to common shareholders subject to the limitation of votes.
15 |
Considering the above, we propose that, in a new CPPI resolution edited for Privatization purposes, a provision that reflects this point is included.
Golden Share veto right
Subsequent to the delivery of the Reports, the scope of the right of veto granted by the Golden Share of the Eletrobras to be created in compliance with art. 3, III, item “c”, of Law 14,182, transcribed below, was discussed.
Art. 3 The privatization of Eletrobras is subject to the approval, by the general shareholders’ meeting, of the following conditions:
(...)
III – amendment of Eletrobras’ articles of association:
a) prohibit any shareholder or group of shareholders to exercise voting rights in a number superior to 10% (tem percent) of the amount of shares in which the voting capital stock of the company is divided;
b) prohibit the execution of shareholders’ agreements for the exercise of voting rights, except in blocs with voting number inferior to the threshold set forth in sub item “a” of this item; and
c) create a special class preferred share, held exclusively by the Federal Government, pursuant to § 7 of art. 17 of Law No. 6,404, dated December 15, 1976, which shall grand veto rights in resolutions related to the matters dealt with in this item;
(our highlights)
We highlight the vagueness and lack of clarity of the excerpt highlighted above, since it is not possible to determine what would be comprised by the Union's veto power when, for example, related to “the matters dealt with” the prohibition of votes greater than 10%.
In the understanding of this Consortium and the BNDES, the interpretation of the provision transcribed above is that the right of veto granted by Golden Share refers to an intended modification of the Articles of Association provisions that establish the
16 |
limitations on the exercise of voting rights and the execution of the agreement of shareholders listed in the above provision.
Rights granted by the Golden Share
As we clarified in the Reports, considering that the Golden Share will be a preferred share, we understand that it should confer one of the rights listed in the main of article 17 of the Corporations Law. Thus, it seems more appropriate that, in the present case, a priority in the reimbursement of capital, without premium, is granted – a right that would be in accordance with the aforementioned legal provision and, at the same time, would not result in a greater economic relevance of the relevant share.
However, we understand the interpretation presented by the Attorney General of the National Treasury and Eletrobras to be valid, according to which the Corporations Law does not require that a preferred share structured as a Golden Share confers such a right, since paragraph 7 of art. 17 of the Corporations Law2 can be understood as an exception to the caput3.
We emphasize that the economic relevance of the right of priority in the reimbursement of capital initially granted to Golden Share by Resolution CPPI nº 203 is immaterial, especially since it is only 1 share, so that its exclusion will not be harmful to the Federal Government.
Considering the above, we propose that the new CPPI resolution edited for the purposes of Privatization follows the understanding described above.
Amendment of the Articles of Association
During the review of the Privatization documents, it was deemed convenient to prepare the text of the Eletrobras bylaws that will be in force after its Privatization, excluding rules and provisions related to the condition of a mixed capital company.
2 “Art. 17, §7. In corporations object of privatization, a special class of preferred shares exclusively owned by the privatizing entity may be created, to which the bylaws may confer specific powers, including the power to veto resolutions of the general shareholders’ meeting in certain matters.”
3 This understanding was adopted, for example, in the creation of the special class preferred share of IRB-Brasil Resseguros S.A., which solely confers veto rights regarding certain resolutions and does not grant any economic rights described in the main section of art. 17 of the Corporations Law.
17 |
Thus, once the Offering is settled, Eletrobras' bylaws would already be adequate to its condition as a private company, avoiding any doubts about the continuity of validity of provisions of the articles of association related to the rules applicable to mixed capital companies and waiving the need for holding of new general shareholders’ meeting to amend the articles of association.
In this sense, after negotiations between the Parties, a new wording was agreed upon for the approvals related to the articles of association, in which, from the resolution in the general shareholders’ meeting of shareholders of Eletrobras, the articles of association amendments considered essential for the realization of the Offering will come into force (notably creation of authorized capital and exclusion of preemptive rights in capital increase by public subscription). In addition, a transitional articles of association provision will be included according to which, with the completion of the Offering, a new version of the Bylaws will enter into force, which will include all the other changes described in the CPPI Resolutions and also those related to the adequacy described above.
Suspensive Condition
We clarify that, in addition to the matters described in item III.2.8(g) of the Modeling Report, the Privatization shall be a condition precedent, pursuant to paragraph 2, art. 3, of Law 14,182, for the amendments to the Eletrobras’ articles of association regarding the creation of the mechanism of share dispersion and transactions with related parties to be carried out under the terms of Law 14,182 and Resolution No. 203, of October 19, 2021. It should be noted that said Resolution already sets forth the Privatization as condition precedent for such matters, but it is necessary to adjust the Modeling Report.
III.4. Public Hearing
On the subject of “Public Hearing”, the conclusion contained in the Reports was that there was no legal duty to hold a public hearing for the Privatization under analysis. However, if it were deemed convenient, there would also be no legal impediment to its realization.
That said, the matter was submitted to the participants of the discussion meetings held with representatives of the Ministry of Economy, Ministry of Mines and Energy, SEPPI,
18 |
BNDES and Eletrobras. Considering the arguments favorable and unfavorable to the public hearing, those involved decided to hold the hearing in remote format.
The proposal privileges the principle of publicity and favors the control of the process by the society. Specifically regarding the remote format, it was understood that, given the fact that Eletrobras and its subsidiaries have headquarters, offices and operations in numerous cities, this would be the most appropriate way to allow access and participation of all kinds of interested parties.
The public hearing was initially scheduled to take place on December 22, 2021. However, in view of the need to adjust the schedule, the issuance of the new CPPI Resolution was postponed and, consequently, the public hearing was rescheduled for January 5 of 2022.
III.5. FGTS Privatization Investment Funds
As described in the Reports, Law No. 8,036/1990, which sets out the rules applicable to the FGTS, allows the use of up to 50% of the existing and available balance in the workers' FGTS linked accounts for investment in quotas of the FGTS Privatization Investment Funds, which may, if created, acquire shares within the scope of the Offering.
As a result, provisions related to FMPs were included in CPPI Resolution No. 203, including a provision on the draft of standard bylaws by BNDES4.
Notwithstanding, by mistake, it was established that such standard bylaws would be authorized by the CVM. As, however, there is no legal provision for the CVM to review such standard bylaws, we recommend that such provision be removed by editing the new CPPI resolution.
Considering the above, we propose the correction of the point in the CPPI resolution.
4 Art. 8(....)
§ 5 The FMPs-FGTS can be created, with standard regulations previously drafted by BNDES and authorized by CVM, for the acquisition of common shares in the Brazilian Offering with funds available in the dedicated account of the Guarantee Fund for Employees - FGTS, called “ FMP-ELET”, or with funds transferred from investments previously existing in other FMP-FGTS, called “Transitional FMP-ELET”.
19 |
III.6. ANATEL
As clarified in the Reports, Furnas and Eletrosul are holders of authorizations to provide Multimedia Communication Service - SCM issued by ANATEL under the terms of the RGO. For this reason, the prior submission of the transaction to ANATEL was recommended, in order to avoid the risk of sanctions by ANATEL, pursuant to Law No. 9,472/97 and ANATEL Resolution No. 589/2012.
In a meeting held on November 26, 2021, with members of Eletrobras, ANATEL, the Ministry of Mines and Energy, the Ministry of Economy and BNDES, it was identified that there are other authorizations for the provision of telecommunications services, in addition to those informed in the Legal Audit Report. At the meeting, it was recommended that Eletrobras survey all the authorizations of the companies of the Eletrobras group for the formalization of the referred consultation to ANATEL, with the objective of guaranteeing the speed of the analysis by the Agency, and such consultation was sent by Eletrobras to ANATEL in December 9, 2021, still pending response by the agency.
IV. Eletronuclear
IV.1. Eletronuclear value update
To the extent that the Eletronuclear corporate reorganization operation, originally scheduled to take place in January 2022, should take place later, due to the update of the schedule, the series of elements of such transaction must be reviewed, including the updated value of the company to be considered, the value of dividends due to its shareholders holding preferred shares, as well as the unit value of the shares and other factors arising therefrom.
a) Notes on Eletronuclear’s Value
The result of the independent appraisal report prepared by BR Partners under the terms of OCS Agreement No. 138/2021/SRM Agreement No. 4400004677, calculated at R$ 3,468,000,000.00 on the base date of March 31, 2021, was used as a reference for the fair value of Eletronuclear.
Considering that the corporate restructuring of Eletronuclear is subject to the condition precedent of the liquidation of the public offering of the Privatization shares, scheduled
20 |
to take place in April 2022, and that the conclusion of the corporate acts and payment of capital contributions, as well as dividends, will have that date as a reference, the company's fair value used as a parameter for the transaction has been updated for that month. For this purpose, the cost of equity capital for the Eletronuclear calculated by BR Partners at 11.23% per year, in nominal terms, was used as a reference for updating the fair value, which applied to the value on the base date of March 2021, results in R$ 3,891,820,972.81 as the company's fair value in April 2022.
The Modeling Report originally provided for updating the value of Eletronuclear to January 2022, the date initially estimated for the transaction. However, it is understood that it would be more appropriate for the update to occur until the date scheduled for the payment of subscriptions for the shares to be issued by Eletronuclear, which will occur on the date of settlement of the public offering.
b) Due and unpaid minimum priority dividends of the shareholders who hold PNs
Since 2010, Eletronuclear has not distributed any dividends to its shareholders. However, as highlighted in the Legal Report, the company’s bylaws provide for a minimum cumulative priority dividend to shareholders holding preferred shares. If such dividends are not paid regularly, holders of preferred shares are entitled to vote, as also detailed in the Legal Report, which would affect the achievement of the objective of Law 14,182 of transferring the shareholding control of Eletronuclear to ENBPar , given that Eletrobras will remain the holder not only of the majority of the total capital of Eletronuclear, but also of the majority of the shares with voting rights. The payment of such dividends, therefore, becomes a relevant aspect of the Privatization process.
The bylaws establish that the minimum cumulative priority dividend attributed to shareholders holding preferred shares is 10% per year, without specifying the calculation basis. However, Eletrobras and Eletronuclear understand that such calculation basis would be the portion of the company's share capital attributed to the PNs. In the absence of a clear parameter for this calculation, we believe it is more appropriate to follow the understanding of the companies involved.
Considering that the total capital stock of Eletronuclear at this moment is R$ 8,493,035,701.18, we conclude that the current interest of the PNs in the total capital
21 |
is R$ 1,857,908,323.77. The table below shows the participation of ONs and PNs in the company's shareholding structure:
Type | Number of Shares | Percentage | Capital Stock |
ON | 37,658,166,491 | 78.12% | R$6,635,127,377.41 |
PN | 10,544,698,994 | 21.88% | R$1,857,908,323.77 |
Total | 48,202,865,485 | 100.00% | R$8,493,035,701.18 |
In order to determine the amount of such unpaid dividends due to the shareholders holding the PNs, the overdue amounts must be updated by the SELIC rate incurred from the expected date of each payment until April 2022, pursuant to paragraph 4 of article 1 of the Decree No. 2,673, of July 16, 1998.
The chart below shows the evolution of the annualized SELIC rate since 2011:
As the values of the SELIC rate between December 2021 and April 2022 were not yet available at the time of conclusion of this addendum to the Modeling Report, the average of expectations on December 3, 2021, calculated by the Central Bank of Brazil. The red band on the chart highlights this period.
In addition to the amount due for priority dividends for the fiscal years between 2010 and 2020, the analysis of dividends for the year 2021 was carried out. As addressed in the Legal Report, we suggest that the provision for payment of cumulative minimum dividends is removed, in order to prevent preferred shares from acquiring voting rights again in the event of non-payment of these dividends in the future. However, in view of the fact that the general shareholders’ meeting of shareholders of Eletrobras that
22 |
will approve such change, as well as the general shareholders’ meeting of shareholders of Eletronuclear that will effectively implement the relevant bylaws change, are scheduled to take place in February 2022 (despite the fact that the effects of such change are suspended until Privatization), there will not be enough time to adjust this obligation before the end of the year, and, therefore, the obligation will still be in force at the end of 2021, so that the contribution to be made to pay the accrued dividends, described in greater detail in the following item, must include the expected values for the year 2021.
Considering the amounts of unpaid dividends due to shareholders of preferred shares accumulated between 2010 and 2020 adjusted by the SELIC rate, as well as the amount for 2021, all of which will be paid in April 2022, Eletronuclear will owe a total amount of R$2,703,020,820.70 of dividends payable.
The following table shows the amounts of minimum accrued dividends due to holders of preferred shares in question, for the years between 2010 and 2020, as well as the expected dividends for 2021:
Year | Original dividend (historical value) | Accumulated SELIC until April 2022 | Value adjusted by SELIC |
2010 | R$72,320,262.84 | 158.29% | R$ 186,792,553.62 |
2011 | R$144,664,705.19 | 131.41% | R$ 334,762,721.44 |
2012 | R$144,664,705.23 | 113.31% | R$ 308,587,499.88 |
2013 | R$144,664,705.27 | 97.13% | R$ 285,170,385.18 |
2014 | R$144,664,705.30 | 77.74% | R$ 257,121,684.75 |
2015 | R$144,664,705.34 | 56.89% | R$ 226,969,622.28 |
2016 | R$144,664,705.37 | 37.59% | R$ 199,050,086.53 |
2017 | R$144,664,705.41 | 25.14% | R$ 181,029,306.44 |
2018 | R$144,664,705.45 | 17.59% | R$ 170,104,421.82 |
2019 | R$144,664,705.48 | 10.99% | R$ 160,556,684.77 |
2020 | R$185,790,832.38 | 8.01% | R$ 200,672,278.95 |
2021 | R$185,790,832.38 | 3.45% | R$ 192,203,575.04 |
Total | R$1,745,884,275.63 | - | R$ 2,703,020,820.70 |
c) Capital Contributions of Eletrobras and ENBPar, and Eletrobras AFACs conversion
In view of the previous item, Eletronuclear will make a distribution to settle the unpaid dividends due to the holders of preferred shares. In order for such amounts to be
23 |
settled, Eletrobras will contribute the amount of R$ 2,703,020,820.70, which will be fully allocated to the payment of dividends, to be paid with the capital reserve account of shareholders’ equity. It is worth noting that this contribution will be made, by Eletrobras, mostly through the conversion of the credits that this company has in relation to these same dividends against Eletronuclear.
As informed by Eletronuclear, the company has a balance of advances for future capital increase (“AFACs”) already contributed pending conversion in the amount of R$ 2,111,844,601.02 on September 30, 2021, of which R$ 1,920,063,433.83 are reported in ITR 2Q2021, BRL 11,781,167.19 correspond to monetary adjustment from June 30, 2021 to September 30, 2021 and R$ 180,000,000.00 were contributed on September 13, 2021. Additionally, on September 30, 2021, AFACs in the amount of R$ 1,417,464,016.00 remain to be carried out by Eletrobras (out of the total expected for 2021 within the scope of the Critical Line Acceleration Plan of the Angra 3 project), to be contributed necessarily until the date of the transaction with ENBPar. We assume that monetary adjustments on unconverted AFACs from October 2021 on will be paid to Eletrobras, not converted into equity5.
In the modeling, we assumed that the issuance of new shares for the distribution of dividends, the conversion into capital of the total AFACs and the subscription by ENBPar for the acquisition of control of Eletronuclear, the latter in the amount of R$ 3,500,000,000.00, will occur concurrently, in February 2022, at the general shareholders’ meeting of shareholders of Eletronuclear, subsequent to the general shareholders’ meeting of shareholders of Eletrobras that will approve the transaction, but the effect of the respective issuances and subscriptions by Eletrobras and ENBPar suspended until the date of settlement of the Offering, when the respective payments (contributions) will also occur.
Finally, in addition to the amounts set out above to be subscribed by Eletrobras and ENBPar, the value of the capital increase of Eletronuclear should be slightly increased so that the sum of the amounts to be subscribed takes into account the possibility of subscription by the current minority shareholders through the exercise of the
5 The AFACs made by Eletrobras to Eletronuclear in 2021 arise from Eletrobras’ cash needs and are not related to the Privatization or the Restructuring. Therefore, it is not required that such matter is approved by the general shareholders’ meeting of Eletrobras pursuant to Law No. 14,182, nor pursuant to the Corporations Law or the bylaws of Eletrobras.
24 |
preemptive right. If the minority shareholders do not subscribe the capital increase, the respective remaining shares will be canceled later. As the participation of minority shareholders is not material and the exercise of preemptive rights is uncertain, the analysis presented in this item for purposes of illustration assumes that such exercise (and consequent subscription of shares by minority shareholders) will not occur. However, in view of the immateriality, the eventual exercise does not affect the success of the transaction under the terms set forth herein, nor does it alter the calculations and values presented herein in an adverse or material way.
The table below shows the corporate structure of Eletronuclear in September 2021, before the capital increase was carried out:
SHAREHOLDERS | ON | PN | TOTAL SHARES | % ON | % Total |
Eletrobras | 37,651,029,535 | 10,528,730,390 | 48,179,759,925 | 99.98% | 99.95% |
DAEE | 5,960,026 | 7,405,548 | 13,365,574 | 0.02% | 0.03% |
Light | 0 | 5,058,993 | 5,058,993 | 0.00% | 0.01% |
Other | 1,176,930 | 3,504,063 | 4,680,993 | 0.00% | 0.01% |
TOTAL | 37,658,166,491 | 10,544,698,994 | 48,202,865,485 | 100% | 100% |
The issuance of new shares will be carried out based on the value of Eletronuclear updated for April 2022, in the amount of R$ 3,891,820,972.81, and will maintain the original proportion of ONs and PNs of Eletronuclear, and ENBPar will subscribe exclusively to ONs and Eletrobras will subscribe the remaining shares.
As the new preferred shares will no longer be entitled to minimum dividends, the unit price (“PU”) of the new shares was calculated at R$0.024662437, according to the following formula:
Where:
corresponds to Eletronuclear’s fair value in April 2021 R$ 3,891,820,972.81.
corresponds to the balance of the accrued dividends, to be paid to the preferred shareholders, in the total amount of R$ 2,703,020,820.70.
corresponds to the total amount of shares issued by Eletronuclear prior to the capital raise related to the transaction, in the amount of 48,202,865,485.
The table below shows the number of new shares to be subscribed by each shareholder and the value of each class of shares, assuming that the minority shareholders of Eletronuclear will not subscribe the capital increase.
TYPE | VALUE | ON SHARES | PN SHARES | VALUE PER SHARE |
ENBPar Subscription | R$ 3,500,000,000.00 | 141,916,224,437 | 0 | 0.024662 |
Eletrobras Subscription | R$ 6,232,329,437.72 | 166,379,229,311 | 86,326,103,046 | 0.024662 |
TOTAL | R$ 9,732,329,437.72 | 308,295,453,748 | 86,326,103,046 | 0.024662 |
* unconverted AFACs, made until September 30.
The diagram below demonstrates how the shares will look after the issuance of new shares and the conversion of AFACs of Eletronuclear:
SECOND STEP: ELETROBRAS AND ENBPAR CONTRIBUTIONS AND AFACS CONVERSIONS
25 |
After the issuance of these new preferred and common shares, the shareholding structure and holdings of each shareholder will be as follows 6:
SHAREHOLDERS | ON | PN | TOTAL SHARES | % ON | % Total |
Eletrobras | 204,030,258,846 | 96,854,833,436 | 300,885,092,282 | 58.98% | 67.95% |
DAEE | 5,960,026 | 7,405,548 | 13,365,574 | 0.00% | 0.00% |
Light | 0 | 5,058,993 | 5,058,993 | 0.00% | 0.00% |
ENBPar | 141,916,224,437 | 0 | 141,916,224,437 | 41.02% | 32.05% |
Other | 1,176,930 | 3,504,063 | 4,680,993 | 0.00% | 0.00% |
TOTAL | 345,953,620,239 | 96,870,802,040 | 442,824,422,279 | 100% | 100% |
It is important to mention that the table above reflects a theoretical shareholding structure, which would occur if the next step (conversion of ONs into PNs) was not implemented. Considering that the corporate acts will take place concurrently, this composition above is virtual and shown for didactic purposes only.
d) Conversion ONs in PNs
In order to allow to comply with the provisions of Law 14,182 setting forth the transfer of the shareholding control of Eletronuclear to ENBPar, a conversion of ON shares held by Eletrobras into PNs will be carried out with the conversion proportion of 1:1, in order to dilute the Eletrobras’ share in the voting capital of Eletronuclear.
As the issuance of new shares mentioned in the previous item will consider the current proportion of 78.12% for common shares and 21.88% for preferred shares and the Corporations Law limits the maximum amount of preferred shares of a company without voting rights or restriction on their exercise in 50% of the total shares, so that the ON shares represent 50% of the total shares, allowing ENBPar to hold the majority of the voting capital, it will be necessary to convert 124.541.409.099 common shares into preferred shares of the Eletrobras. Thus, the final corporate structure of Eletronuclear will be as follows:
SHAREHOLDERS | ON | PN | TOTAL SHARES | % ON | % Total |
Eletrobras | 79,488,849,747 | 221,396,242,535 | 300,885,092,282 | 35.90% | 67.95% |
DAEE | 5,960,026 | 7,405,548 | 13,365,574 | 0.00% | 0.00% |
6 Values indicated consider the assumption that the minority shareholders will not subscribe Eletronuclear’s capital raise; therefore, numbers might vary due to such exercise.
26 |
Light | 0 | 5,058,993 | 5,058,993 | 0.00% | 0.00% |
ENBPar | 141,916,224,437 | 0 | 141,916,224,437 | 64.10% | 32.05% |
Other | 1,176,930 | 3,504,063 | 4,680,993 | 0.00% | 0.00% |
TOTAL | 221,412,211,140 | 221,412,211,139 | 442,824,422,279 | 100% | 100% |
As a result of this conversion, ENBPar will hold the majority of the voting capital, and therefore, the corporate control of Eletronuclear. The diagram below summarizes how the shares will be distributed after the conversion of preferred shares held by Eletrobras into common shares:
THIRD STEP: CONVERSION OF ON SHARES IN PNS
The following table presents the construction of the post-money value of Eletronuclear as a result of the corporate acts, reaching R$10,921,129,589.83 at the end of the transaction, when considering that the current minority shareholders of Eletronuclear will not subscribe the capital increase. The table also shows the evolution of the number of shares as a result of each act.
Acts | Equity ETN (R$MM) | Amount ONs | Amount PNs |
Pre-money value (apr/2022) | 3,891.82 | 37.7 bi | 10.5 bi |
Eletrobras: subscription with dividend credits | 2,698.93 | + 72.1 bi | + 37.4 bi |
Eletrobras: subscription with cash payment | 4.09 | + 0.1 bi | + 0.1 bi |
Eletronuclear: payment of accrued dividends | - 2,703.02 | ||
Eletrobras: new contributions | 1,417.46 | + 37.8 bi | + 19.6 bi |
Eletrobras: conversion of AFACS made | 2,111.84 | + 56.4 bi | + 29.3 bi |
ENBPar: new contribution | 3,500.00 | + 141.9 bi |
27 |
Eletrobras: conversion of ONs in PNs | - 124.5 bi | + 124.5 bi | |
Final | 10,921.13 | 221.4 bi | 221.4 bi |
In the event of full subscription by minority shareholders, the post-money value would reach 10,925,796,921.55.
e) Structure recommendations
The acquisition of control of Eletronuclear by ENBPar will be implemented through a capital increase by Eletronuclear with the issuance of new ONs, where Eletrobras would assign all of its preemptive right in the subscription of such ONs to ENBPar, diluting Eletrobras in the capital of Eletronuclear and, thus, becoming the controlling company with the ownership of more than half of the voting capital stock of Eletronuclear, without providing for price adjustments. The other shareholders of Eletronuclear would have preemptive rights in the subscription of these ONs, but, due to the immateriality of the interest of these minority shareholders in the company, we do not expect any negative impacts resulting therefrom.
Additionally, due to the fact that the PNs issued by Eletronuclear currently confer voting rights (see item IV.1.7(c) of the Legal Report) and the maximum amount to be contributed by ENBPar in the Eletrobras (see item IV.1.7(c) of the Legal Report), some adjustments to the bylaws of Eletronuclear will be necessary in order to ensure that ENBPar acquires control of Eletronuclear through the capital increase, in addition to ensuring that the necessary funds for the completion of the construction of Angra 3 and its structuring for the start of commercial operation are contributed to the Eletronuclear.
To this end, Eletrobras and ENBPar must perform the following acts and approve the following resolutions, in an extraordinary general meeting of shareholders of Eletronuclear, to be held after holding of the general shareholders’ meeting of shareholders of Eletrobras that will approve the respective transactions (estimated to take place in February of 2022) and under a condition precedent of the settlement of the Offering:
(a) issuance of new shares of Eletronuclear, among which 308,443,302,951 shall be common shares, in the total amount of
28 |
R$7,606,963,647.84, and 86,367,502,441 shall be preferred shares, in the amount of total of R$2,130,033,121.60 (therefore maintaining the current proportion between ONs and PNs of the company):
(a.1) the value of such issuance will be up to R$ 9,736,996,769.44, equivalent to the sum of the following amounts: (i) R$ 3.500.000.000,00, equivalent to part of the funds allocated to the Budget Law Project (LOA) of 2021, (ii) R$ 3,529,308,617.02, equivalent to the balance of outstanding AFACs between Eletrobras and Eletronuclear up to this date and the new ones to be contributed up to the transaction date, (iii) R$ 2,703,020,820.70, equivalent to the cumulative minimum dividends not paid to holders of PNs until the exercise of 2021 and (iv) R$ 4.667.331,72 referring to the preemptive right of minority shareholders (0.05%), so that the total amount of items (i) to (iii) is contributed by ENBPar and Eletrobras, as described in item a.3 below;
(a.2) the approval of the deadline for payment of the shares subscribed within the scope of the issuance indicated above will be until the settlement of the Offering (inclusive);
(a.3) ENBPar will subscribe the portion of the capital increase indicated in item (a.1.i) above, consisting exclusively of ONs, and such subscription will be conditioned to the settlement of the Offering (condition precedent), pursuant to article 125 of Law No. 10,406/2002 (“Civil Code”)7. Thus, in the absence of the Offering, ENBPar will not have any obligation to make the respective contribution (payment of ONs);
(a.4) Eletrobras will subscribe the portion of shares equivalent to 166,379,229,311 common shares and 86,326,103,046 preferred shares, in the total amount of R$6,232,329,437.73 (i.e., equivalent to the sum of items a.1.ii and a.1.iii above), which will be paid in
7 “Art. 125. In case the effects of a legal transaction is subject to a condition precedent, the related right shall not be deemed acquired while such condition is not fulfilled.”
29 |
through the capitalization of the afore-mentioned AFACs, the capitalization of credits from dividends to be received and the contribution in cash;
(a.5) the other 147,849,203 ONs and 41,399,395 PNs will be made available for subscription by the other shareholders of Eletronuclear who exercise their preemptive rights, and must be paid in cash, and, if there are unsubscribed shares, the value of the increase capital and the number of shares issued will be reduced to the amount actually subscribed;
(a.6) up to R$7,032,679,661.46 of the issuance price will be allocated to the company’s capital account and up to R$2,704,317,107.98 will be allocated to the capital reserve account; and
(a.7) for the purposes of the aforementioned amounts, an issuance price of R$0.0246624373914023 was determined for each ON and the same issuance price for each PN.
(b) distribute dividends to preferred shareholders, in the amount of the amount of cumulative minimum dividends not paid up to the fiscal year 2021, in the amount of R$2,703,020,820.70, to be paid with the capital reserve account, provided that the amount to be paid to Eletrobras will be offset against the amount due by Eletrobras to Eletronuclear under the terms of item (a.4) above; the only effective payment in cash to be made by Eletrobras shall be the portion of such dividends that will be paid to the minority shareholders of Eletronuclear, in the amount of R$4,093,380.87;
(c) modify the rights of preferred shares issued by Eletronuclear, which will only give priority in capital reimbursement, with the extinction of the right to cumulative minimum dividends;
(d) approval of the program for the optional conversion of part of the ONs of the Eletronuclear into PNs, at a ratio of 1:1, up to the limit provided for in para-graph 2 of article 14 of the Corporations Law, in order to ensure that the ONs subscribed by ENBPar are, at least, equivalent to more than 50% of the ONs issued by Eletronuclear, given that the calculation for
30 |
reaching said limit will take into account all the shares issued under the terms of the previous items; and
(e) mentioning in the records Eletrobras' adhesion to the optional conversion of ONs into PNs referred to above, in the maximum amount allowed by the aforementioned paragraph, and, if there is also the adhesion of other ordinary holders, the amount of ONs to be converted will be allocated among the interested parties in proportion to their interest in the ONs of Eletronuclear, disregarding the interests of other ON holders.
After this general shareholders’ meeting of Eletronuclear and, subject to the settlement of the Offering, the capital stock of Eletronuclear will be distributed as follows8:
SHAREHOLDERS | ON | PN | TOTAL SHARES | % ON | % Total |
Eletrobras | 79,488,849,747 | 221,396,242,535 | 300,885,092,282 | 35,90% | 67.95% |
DAEE | 5,960,026 | 7,405,548 | 13,365,574 | 0,00% | 0.00% |
Light | 0 | 5,058,993 | 5,058,993 | 0,00% | 0.00% |
ENBPar | 141,916,224,437 | 0 | 141,916,224,437 | 64,10% | 32.05% |
Outros | 1,176,930 | 3,504,063 | 4,680,993 | 0,00% | 0.00% |
TOTAL | 221,412,211,140 | 221,412,211,139 | 442,824,422,279 | 100% | 100% |
50.000% | 50.000% |
In view of the above, we propose that, in a new CPPI resolution issued for Privatization purposes, the information related to this transaction is updated as described above.
IV.2. Bylaws
Eletronuclear's bylaws shall also be modified due to Privatization, as detailed in item III.4 of the Modeling Report.
After the issuance of the Modeling Report and according to further discussions with the Eletrobras, Ministry of Economy, Ministry of Mines and Energy and BNDES, it was deemed recommendable, in addition to the proposed changes, the suppression of the voting right granted by the PNs issued by the Eletronuclear in the resolutions regarding
8 Values indicated consider the assumption that the minority shareholders will not subscribe Eletronuclear’s capital raise; therefore, numbers might vary in case such assumption is not implemented.
31 |
the amendment of the Eletronuclear's bylaws. Thus, it is guaranteed that ENBPar holds the majority of votes related to such resolutions.
Similarly, in order to maintain materially equivalent economic rights between ON and PN shares, allowing the determination of equal unit prices between share classes, it was deemed convenient to suppress the right to priority dividends granted to ONs.
In addition, during the negotiations of the Shareholders’ Agreement, after PGFN's refusal to include a veto right for Eletrobras in the approval of certain matters (most of the proposed matters give rise to a right of withdrawal under the Corporations Law), representatives of the Eletrobras and the Federal Government agreed to include, in the bylaws of Eletronuclear, provisions on establishing the amount of reimbursement eventually paid to the shareholders of Eletronuclear, pursuant to art. 45 of the Corporations Law, and such value must be equivalent to the greater of (i) the book value of the shares or (ii) the economic value of the shares, according to the appraisal report to be prepared by an independent third party, using the discounted cash flow method, when exercising the right of withdrawal.
Also, in order to ensure that this rule is not modified, it was decided to include a provision in the bylaws under which the modification of the rule for calculating the refund amount also confers the right of withdrawal, for the amount previously set forth.
We understand that the modifications described above do not have any obstacle from a legal point of view.
Since the modification of other characteristics of the PNs was proposed, the Modeling Report already deals with the procedures applicable, from a corporate law point of view, to such a new proposal, and there are no legal obstacles to its approval.
Finally, differently from what was described in the Modeling Report, no longer will it be necessary to amend the bylaws of Eletronuclear to provide for the possibility of distributing interim dividends, since the modeling provides for the distribution of dividends with respect to fiscal years (i.e., referring to the base period ended December 31, 2021).
Considering the above, the appropriate amendment to the CPPI resolution should be made.
32 |
IV.3. Investment Agreement
ENBPar and Eletrobras will enter into an investment agreement, in order to set forth the conditions of ENBPar’s investment in Eletronuclear. Among other provisions of such agreement, it will be provided that the parties shall participate in the raising of new financing for Angra 3, through the granting of personal guarantees, as well as through the transfer of financing in the form of loans to Eletronuclear.
Resolution CPPI 203/2021 set forth that such obligations would be undertaken in proportion to their interest in the capital stock, subject to the existing guarantees. For the avoidance of doubt, it is recommended that the text of the Resolution is amended in order to clarify that not only guarantees, but also any loans and support contracts provided by the Federal Government and Eletrobras to Eletronuclear prior to the execution of the Investment Agreement, must be maintained.
With regard specifically to the equity support agreement already entered into by Eletrobras in favor of Eletronuclear, related to the financing provided by Caixa Econômica Federal, it should be noted that Eletrobras shall provide the funds as established in such agreement, and the issuances of shares must be carried out in an equal number of ONs and PNs, provided that ENBPar shall continue to hold the majority of the voting capital stock of Eletronuclear. If such limits are reached, any other contributions must be made through advances for future capital increases, loans or other structures that allow the settlement of the financing without the issuance of additional shares.
Finally, unlike what was recommended in the Modeling Report, it has been decided that the Federal Government will not be an intervening party in the Investment Agreement and, therefore, will not undertake the obligation to provide sovereign guarantee to the financing for the conclusion of Angra 3. This is due to the fact that, as informed to the BNDES, the Federal Government could not express itself hypothetically regarding the granting of guarantees in future financing proposals, but only in each specific case, when such proposals are made.
Hence, it was determined that the obligation of ENBPar to request the guarantee of the Federal Government in the new financing to Angra 3 and to perform all the
33 |
necessary acts to obtain such guarantee must be included in the Investment Agreement.
Within the scope of the ongoing studies for the feasibility of said plant, the sovereign guarantee was identified as an item likely to be essential for obtaining the financing. It should be noted, therefore, that the eventual absence of guarantees provided by the Federal Government in the new financing within the scope of the Angra 3 project may cause an increase in the risk called “Eletronuclear not being able to complete the contracting of the EPC provider and the raising of the necessary financing for the Completion of the Plant” indicated in the Risk Matrix contained in item III.4.5.”d” of the Modeling Report.
In addition, due to the possibility that the studies produced by the BNDES for the feasibility of Angra 3 conclude that new equity contributions are required, it was pro-posed, in working meetings, an additional obligation in the Investment Agreement is provided for, regarding capital contributions to the Eletronuclear to be made by the parties, for the purpose of concluding Angra 3, in the amounts of new equity contributions proposed by the studies produced by BNDES within the scope of the structuring agreement signed with Eletronuclear, provided the obligations of Eletrobras and ENBPar are limited to these amounts and also proportional their respective interest in the total capital stock.
In view of the limitations presented by the Federal Government, the Parties negotiated that, if new capital contributions to Eletronuclear, for conclusion of Angra 3, are provided for in the studies produced by the BNDES, under the structuring contract executed with Eletronuclear, ENBPar, in proportion to its interest in the capital stock, will be obliged to request such funds from the Federal Government and, if it manages to obtain them, contribute such funds to Eletronuclear, as established in the aforementioned studies.
As long as ENBPar is effectively able to make the necessary contributions under the terms of item ‘ii’ above, Eletrobras must also make its respective contributions, and Eletrobras’ obligations are also limited to the amounts established in the studies. Under no circumstances will one of the parties be obliged to make capital contributions if the other party does not make them as well.
34 |
From a legal perspective, we understand that there are no obstacles to the negotiated conditions and we see no obstacle to their inclusion in the investment agreement.
In view of the above, we propose that, in a new CPPI resolution, the topic be updated as described above.
IV.4. Bodies and Committees Composition
As detailed in item III.4 of the Modeling Report, Eletrobras and ENBPar must also enter into a shareholders' agreement to regulate their relationship as shareholders of Eletronuclear.
In the context of the aforementioned negotiations for the agreements to be concluded between Eletrobras and ENBPar, it was decided that the special public bidding committee, which we addressed in the Modeling Report, will be replaced by the advisory committee to the Board of Directors of Eletronuclear on matters related to the planning and execution of Angra 3 (COANGRA), an advisory committee, which will be provided for in the Bylaws of the Eletronuclear, regarding which the parties will be obliged, under the shareholders’ agreement, to take the necessary measures to maintain its operation until the beginning of the plant’s commercial operations Thermo-nuclear Power Plant Angra 3. The COANGRA shall carry out analyzes and issue a prior opinion on the contracting of goods, services, construction works, financing and guarantees linked to Angra 3 that are within the approval level of the Board of Directors, among other activities related to the Angra 3 undertaking.
In addition, understandings between the Eletrobras, the Ministry of Economy and the Ministry of Mines and Energy after the delivery of the Modeling Report resulted in the negotiation of rules for the composition of other bodies and committees of the Eletronuclear, as follows:
· the organization of attributions of the Officers of Eletronuclear will be changed, in order to (i) separate the functions of the Chief Administrative and Financial Officer between Chief Administrative Officer and a Chief Financial Officer; and (ii) create the position of Chief Angra 3 Officer, who will have the attribution of coordinating and implementing the activities of conclusion of the services procured with BNDES and of procuring engineering, financing and project
35 |
management services necessary for the conclusion of the Angra 3 Power Plant;
· among the chief officers of Eletronuclear, the Chief Financial Officer will be appointed by Eletrobras;
· the board of directors of Eletronuclear will be composed of 7 members, and ENBPar will appoint the majority of its members, including the president, while the minority shareholders will appoint 1 member, unless, under the terms of the Corporations Law, a greater number is achievable with the adoption of the procedure multiple votes in the election of members, and the employees of Eletronuclear will appoint 1 member;
· the audit and risk committee will be divided into two distinct committees (an audit committee and a risk committee), each composed of 5 members, all chosen and elected by the board of directors of Eletronuclear, among which 2 members shall be elected among Eletronuclear’s board of directors, and 3 members will be external and independent;
· the COANGRA will be composed of 5 members, provided ENBPar and the Eletrobras shall be equally represented: up to 2 members shall be appointed by the Board members elected by the ENBPar, up to 2 members shall be appointed by the Board members elected by the Eletrobras and 1 independent external member shall be appointed by agreement by the Eletrobras and the ENBPar; and
· the people, eligibility, succession and compensation committee will be composed of 3 to 5 members, all of which shall be members of the board of directors, without additional compensation, provided up to two additional external members shall be allowed, with compensation determined by the General Shareholders’ Meeting.
We see no obstacle to the negotiation and adoption of the above-described rules by the Eletronuclear.
36 |
In view of the foregoing, we propose that the negotiations are reflected in the new CPPI resolution to be issued for the purposes of Privatization.
IV.5. Other comercial issues
During the negotiations between Eletrobras and the bodies involved in the review and negotiation of the documents, the period during which the shareholders’ agreement should remain in force was discussed, considering the period necessary for the fulfillment of the obligations established therein. It was established that the Eletronuclear Shareholders’ Agreement will remain in force for 50 (fifty) years, considering the Angra 3 granting term as a reference.
Furthermore, it was agreed that Eletronuclear Shareholders’ Agreement should provide for the preemptive right of ENBPar in the transfer of shares held by Eletrobras in the Eletronuclear, so that ENBPar can match the offer that may be presented to Eletrobras by a third party for the acquisition of the said shares.
In view of the foregoing, the matter should be addressed in the new resolution to be issued by the CPPI.
V. Itaipu
V.1. Value Update
As in the case of Eletronuclear, in which it was necessary to update the amounts involved in the corporate reorganization due to adjustments in the intended schedule for the transaction, such update must also be carried out regarding Itaipu. In this sense, an update of the amounts referring to the corporate reorganization of Itaipu is presented below, with flexible conditions, adopting the base date of December 2020 as a reference and establishing formulas (detailed below) that allow adjustments according to the effective date of completion of the transaction. We highlight that this change keeps the calculated price at an economically identical level to the previous one, since the mathematical change only reflects the proposed base date change, in order to, as stated above, make the update mechanics up to transaction date more flexible, instead of “freezing”, as of the current date, the market projections for the monetary correction in the months between the calculation date and the transaction date.
37 |
As explained in the Modeling Report, the reference for pricing the transfer of Eletrobras shares in Itaipu is the fair value of the asset, which must take into account the original investment updated by an adjustment factor that reflects the corresponding monetary variation since the investment of Eletrobras in Itaipu until the agreed upon base date, December 31, 2020 (“Principal”), plus the amount necessary for the payment of earnings of 12% on the interest in the paid-in capital, in accordance with paragraph 1 of article III of the Treaty and with article VI of Annex A (Itaipu’s bylaws), relating to the 2021 period (“2021 Compensation”).
Illustratively, the calculation can be shown as follows:
Where:
1) | According to Annex A, article 6 of the Treaty: “The capital of Itaipu will be equivalent to US$100,000,000.00, and will be held by ELETROBRAS and ANDE in equal and non-transferable parts”. |
2) | The Adjustment Factor in December 2020, of 4.16524, was extracted from the financial statements of Itaipu on December 31, 2020, and was calculated, according to the aforementioned document, based on the average annual inflation index verified in the United States of America, using the Industrial Goods and Consumer Prices indexes, published in the International Financial Statistics Magazine, updated since 1975. |
3) | In accordance with paragraph 1 of article III of the Treaty and with article VI of Annex A (Itaipu’s bylaws), the amount necessary for the payment corresponds to compensation of 12% per year on the interest of Eletrobras in the paid-in capital of Itaipu. Applying this compensation rate on the updated value of the investment for December 2020, the following results are verified: |
38 |
Given the above calculation, we conclude that the fair value of Eletrobras’ interest in Itaipu to be transferred from Eletrobras to ENBPar, at December 2020 prices, is US$233,253,440.00, equivalent to R$1,212,148,151.65, considering the US dollar sale exchange rate published by the Central Bank of Brazil (“PTAX”) for the base date of December 31, 2020 (“Conversion Base-Date”), of 5.1967.
a) Price Adjustment
The fair value of Eletrobras’ interest in Itaipu to be transferred from Eletrobras to ENBPar must be monetarily adjusted until the date of completion of the transfer. For this purpose, the amount of the Principal must be updated according to the calculation below:
i) | multiplication by the ratio between the Adjustment Factor of 2021 and the Adjustment Factor of 2020; |
ii) | correction of the result of item i above by the average of the variation of the American Industrial Goods and Consumer Price Index inflation indexes, as of December 31, 2021, until the closing of the month immediately preceding the date of completion of the transfer (including); |
iii) | multiplication of the result of item ii above by the PTAX variation from December 31, 2020, to the business day immediately preceding the date of completion of the transfer (including); and |
iv) | on the result of item iii above, the compensation rate of 12% per year pro rata die shall be applied, for the period since January 1, 2022 (including) until the closing of the month prior to the date of completion of the transfer (including). |
The amount of the 2021 Compensation must be updated according to the calculation below:
i) | multiplication by the ratio between the Adjustment Factor of 2021 and the Adjustment Factor of 2020; and |
39 |
ii) | multiplication of the result of item i above by the PTAX variation from December 31, 2020 until the business day immediately preceding the date of completion of the transfer (including). |
b) Form of payment for the holdings
With regard to the payment of the fair value of Eletrobras’ share in Itaipu, calculated as outlined in the preceding item, taking into account the price adjustment, considering the budgetary restrictions of ENBPar reported during the discussions by the Ministry of Mines and Energy (considering, essentially, that an increase in the amount destined for the project would not comply the provisions of the Annual Budget Law (LOA) for the year 2021, that is, Law No. 14,144, of April 22, 2021), it had initially been proposed it was made in monthly and successive installments, under the constant payment method (price table method), which will be updated according to the exchange variation detailed below, provided, however, ENBPar, at its sole and exclusive discretion, would have the right to paying off the outstanding balance in advance, also as outlined below.
The number of monthly installments originally proposed in the Modeling Report was 360. However, afterwards, Eletrobras informed that this number could not be approved in its internal governance, given that, in its opinion, it could violate the principles related to the fairness of the operation. For that reason, new discussions with the Ministry of Mines and Energy were carried out, to define an installment term that complies with these principles and, at the same time, respects the budget restriction initially defined for ENBPar. In this sense, Official Letter 565/2021/SE-MME specified that the “Principal” portion will be paid in 240 monthly installments and the “2021 Compensation” portion will be paid in 36 monthly installments.
In order to define the appropriate interest rate for the relevant installments, the required compensation, at market values (yield), of the securities issued by the National Treasury, valued in US dollars (also known as Global Bonds), with maturity set for January 20, 2034 are adopted as reference. Such securities, on December 17, 2021, were traded at a yield of 4.763% per year. The selection of this bond as a reference stems from the fact that it has the closest duration, among all the Global Bonds issued by the National Treasury, to the installments to be paid by ENBPar to the Eletrobras: the former have a duration of 8.3 years, the latter, 8.5.
40 |
Based on such parameters, the amount of the installments to be paid by ENBPar to Eletrobras will be calculated according to the following equation:
where:
is the installment, in reais, to be paid in a certain month;
is the portion of the Installment referring to the payment of the Principal, as stablished in the beginning of this section IV.1. This portion will be paid in 240 months;
is the portion of the installment referring to the payment of the Compensation 2021, as stablished in the beginning of section IV.1. This portion will be paid in 36 months and, afterwards, will be zero;
is the number of the applicable installment, varying from 1 to 240;
is the portion of the Price referring to the Principal, adjusted in accordance with item a above;
is the portion of the Price referring to the Compensation 2021, adjusted in accordance with item a above;
is the monthly interest rate of 0.3885473% (equivalent to 4.763% per year), according to the yield explained above;
is the variation of the PTAX between the business day immediately preceding the date on which the transfer is concluded and the business day immediately preceding the date of payment of the applicable month.
For illustrative purposes only, considering the projection of North American inflation up to the expected date of the transaction, the updated value of the share price in Itaipu would be US$ 262,799,044.63, which, under the above conditions, results in a monthly installment amount of US$ 2,310,447.10 in the first 36 months, and US$ 1,514,535.52 in the subsequent 204 months.
The payment of the first installment will be made by ENBPar to Eletrobras 30 days after the transfer of the equity interest takes place and all conditions precedent to the closing of the transaction are satisfied (essentially, the settlement of the Offering). Subsequent installments will be due on the same day of payment of the first installment, in subsequent months.
In case of default, ENBPar will pay, on the defaulted amount, (i) during the first 15 days of default, interest equivalent to 0.5% per month pro rata die and (ii) from the 16th day of default on, interest equivalent to 1% per month pro rata die.
ENBPar will be entitled, at its sole and exclusive discretion, to settle in advance the outstanding balance due to Eletrobras for the interest in Itaipu. In this case, ENBPar shall notify Eletrobras, with a minimum advance notice of 30 calendar days, of its intention to carry out said early settlement. The outstanding balance to be paid will be calculated using the following formula:
where:
is the outstanding of the due and unpaid fair value, in Reais, in a certain month, after payment of the;
The other variables were previously defined.
41 |
Payment for early settlement must be made in Brazilian currency (Reais), provided the conversion from the currency in which of the remaining balance is set (US dollars) shall be based on the PTAX of the last business day immediately prior to payment.
Finally, it is worth noting that the link of the installments to the exchange rate variation of the US dollar is related with the flow of revenues of ENBPar after the acquisition of controlling interest of Itaipu. Since ENBPar will be entitled to receive two types of payment, one relating to the yield of 12% per year on the interest in the paid-in capital of Itaipu (as indicated in the fourth variable of the acquisition price of the equity interest, detailed in the corresponding section of the Modeling Report), and one as reimbursement of administration and supervision charges. Such payments exceed the amounts of the installments to be paid, what results in a positive ENBPar cash flow in US dollars and, therefore, a positive foreign exchange exposure, so that the company has an increased gain in Reais in the event of the Real depreciates and decreased gain otherwise. If the payment were set in Reais, ENBPar would have an even higher positive foreign exchange exposure; therefore, the indexation of the payment to the exchange rate variation contributes to reducing the company’s foreign exchange risk.
In view of the foregoing, we propose that, in a new CPPI resolution issued for the Privatization, the aforementioned matter is addressed.
V.2. Equity Holdings Sale Agreement
According to understandings between Eletrobras and the Ministry of Mines and Energy after the Modeling Report, in addition to the conditions already suggested in the Modeling Report, it was agreed that the contract for the purchase and sale of Itaipu's equity holdings, to be entered into between ENBPar and Eletrobras, governs the terms and conditions under which Eletrobras shall continue to provide, temporarily, support and advisory services to ENBPar in the management and trade of power generated by Itaipu. Hence, it is ensured that the services are not interrupted while ENBPar does not have the necessary structure and personnel to undertake such services.
According to Official Letter 565/2021/SE-MME, the indicated transition period, to be approved in a new resolution to be issued by the CPPI, is 180 days.
42 |
We emphasize, however, that art. 2, sole paragraph, of Decree no. 10,791/2021, which created the ENBPar, does not subject the services of trading of energy generated by Itaipu to a transition period.
Considering the above, we understand that a new decree should be issued, modifying Decree No. 10,791/2021, in order to provide for the transition to such services. Furthermore, we propose that, in a new CPPI resolution issued for the Privatization, a provision with the aforementioned rule is included.
VI. Amendment of the CPPI Resolution No. 203, Dated October 19, 2021
In order to reflect the above considerations, it will be necessary to issue a new resolution that, among other provisions, partially amends Resolution No. 203/2021. After negotiations with the Parties, the draft contained in the ANNEX of this document was agreed upon. We recommend that such resolution has the same wording of this draft or a similar one.
***
43 |
SIGNATURE PAGE OF THE
LEGAL ASSESSMENT REPORT
AND THE
MODELING DETAILING REPORT – ELETROBRAS
(dated December 22, 2021)
______________________________________________________________
BANCO GENIAL S.A.
By: Ricardo Augusto Justo Jacobucci / Mikael Martins Silva / Rafael Augusto Tapetti
______________________________________________________________
TAUIL & CHEQUER ADVOGADOS ASSOCIADO A MAYER BROWN LLP
By: Bruno Dario Werneck / Débora Hiromi Yanasse / Bruno Rieger Salzano
44 |
ANNEX I – DRAFT OF THE SECOND CPPI RESOLUTION
CPPI RESOLUTION No. [=], OF DECEMBER [=], 2021
Amends Resolution 203, of October 19, 2021.
THE PRESIDENT OF THE COUNCIL OF THE INVESTMENT PARTNERSHIPS PROGRAM and the MINISTER OF STATE OF MINAS AND ENERGY, in the use of the powers conferred on him by art. 4 of Decree No. 10,245, of February 18, 2020, and in view of the provisions of Law No. 14,182, of July 12, 2021, in art. 6, item II, of Law No. 9,491 of September 9, 1997, in art. 10, item II, of Decree No. 2,594, of May 15, 1998, Decree No. 10,670, of April 8, 2021, Resolution No. 176, of April 27, 2021, and Resolution No. 203, of April 19, October 2021, resolve, ad referendum of the Council of the Investment Partnership Program:
Art. 1 Arts. 4, 8 and 11 of Resolution No. 203, of October 19, 2021 shall henceforth be in force with the following wording:
Art. 4 The Primary Offering shall be composed of ordinary shares in the smallest integer which represents the amount to be paid by ELETROBRAS or its subsidiaries in the concession bonus of the new electric power generation concession contracts, pursuant to art. 4, main section, item II, of Law 14,182/2021, provided such value is superior to R$ 22,057,564,316.99 and superior to R$ 26,648.033,913.65.
...........................................................
§ 3 If the value of the concession bonus of the new concession contracts is not within the limits provided for in the main section of this article, the completion of the Primary Offering will be subject to a new resolution of the Council of the Investment Partnership Program.”(NR)
“Art. 8th ........................................................
...........................................................
§ 5 The FMPs-FGTS can be created, with standard regulations previously drafted by BNDES, for the acquisition of common shares in the Brazilian Offering with funds available in the dedicated account of the Guarantee Fund for Employees - FGTS, called “ FMP-ELET”, or with funds transferred from investments previously existing in other FMP-FGTS, called “Transitional FMP-ELET”.
...........................................................”(NR)
“Art. 11 ........................................................
...........................................................
I - ........................................................
45 |
c) create 1 (one) special class preferred share, held exclusively by the Federal Government, pursuant to paragraph 7, art. 17 of Law No. 6,404, dated December 15, 1976, which will grant the power of veto in corporate resolutions in which aim to amend the Articles of Association of ELETROBRAS to modify the restriction to the voting rights exercise and the execution of shareholders’ agreement described in sub items “a” and “b” of item I of the main section of this article;
.......................................................
f) establish authorized capital, pursuant to art. 168 of Law No. 6.404, of 1976, allowing the capital stock of ELETROBRAS to be increased in an amount, at least, sufficient to make up the amount necessary to carry out the Primary Offering, also considering the possibility of distributing the Over-allotment Shares and the Additional Shares;
g) provide for the absence of preemptive rights of shareholders for the subscription of the securities within the limits of the authorized capital, in case such securities are offered in a sale in the stock exchange or via public subscription, pursuant to the provisions of art. 172, main section of this article and item I, of Law nº 6.404, of 1976; and
h) to approve other adjustments to ELETROBRAS' bylaws, to remove provisions related to its condition as a partially government-owned company and adapt it to the company's operations after liquidation of the Offering;
II - execution of a transfer agreement of the entire equity interest held by ELETROBRAS in Itaipu Binacional to Empresa Brasileira de Participações em Energia Nuclear e Binacional S.A. (“ENBPar”), in consideration for payment a payment of R$ 1,212,148,151.65 (one billion, two hundred and twelve million, one hundred and forty-eight thousand, one hundred and fifty-one reais and sixty-five cents) equivalent to US$ 233,253,440.00 (two hundred and thirty-three million, two hundred and fifty-three thousand, four hundred and forty US dollars), on the reference date of December 31, 2020, subject to the following conditions:
a) updating of amounts owed by the variation of the US dollar, in addition to the monetary correction and remuneration mechanisms provided for in the Itaipu Treaty and subsequent reverse notes;
b) if the return on the capital of Itaipu for fiscal year 2021 has already been paid to ELETROBRAS by the date of full compliance with the conditions of effectiveness of the contract, said portion shall be deducted from the Price; otherwise, it will be paid in 36 (thirty-six) monthly installments;
c) the remainder of the Price will be paid in 240 (two hundred and forty) monthly installments; and
d) the installments set forth in sub items “b” and “c” will be calculated based on the Price Amortization System, at the interest rate of 4.763% per year, and updated by the exchange rate variation of the dollar of the United States of America, provided that ENBPar may pre-pay, at any time, of the remaining balance of the installments;
46 |
...........................................................
IV - issuance, by Eletronuclear, of 308,443,302,951 new common shares, in the total amount of R$ 7,606,963,647.84, and 86,367,502,441 preferred shares, in the total amount of R$ 2,130,033,121.60, provided that a part of the total issuance price, in the amount of 2,704,317,107.98 will be allocated to the formation of the capital reserve to be used for the payment of the total accumulated priority dividends of the preferred shares issued by Eletronuclear, pursuant to the provisions of item VIII of the main section of this article, while the remaining amount will be allocated to the share capital account;
V - subscription, by ELETROBRAS, of 166,379,229,311 common shares and 86,326,103,046 preferred shares among those referred to in item IV of the main section of this article, in the total amount of R$ 6,232,329,437.73, and the respective payment must take place on the settlement date of the Global Public Offering, as follows:
a) BRL 2,698,927,439.83, using primarily the credits related to priority dividends accrued against Eletronuclear, pursuant to item VIII of the main section of this article;
...........................................................
VI - assignment, by ELETROBRAS to ENBPar, free of charge, of the preemptive right to subscribe for part of the shares issued pursuant to item IV of the main section of this article, in a volume equivalent to BRL 3,500,000,000.00 (three billion and five hundred million reais), corresponding to 141,916,224,437 common shares;
...........................................................
IX - amendment to Eletronuclear's Bylaws, to:
a) modify the rights of preferred shares issued by Eletronuclear, extinguishing the right to cumulative minimum dividends and the voting right in resolutions related to the amendment of the Bylaws of Eletronuclear, which shall grant priority to capital reimbursement;
b) include authorization for the payment of dividends to preferred shareholders entitled to cumulative dividends using funds of the capital reserve account referred to in item VIII, pursuant to article 17, paragraph 6, of Law No. 6.404, of December 15, 1976;
c) create a committee for matters related to the planning and execution of the Angra 3 Thermonuclear Power Plant (“Monitoring Committee for the Angra 3 Thermonuclear Power Plant Project - COANGRA”), which will function until the beginning of commercial operation of the Angra 3 Thermonuclear Power Plant, with the purpose of advising the Board of Directors of Eletronuclear, including performing analysis and issuing a prior opinion on the contracting of goods, services, construction works, financing and collaterals linked to the project, having a composition of five members, provided ENBPar and ELETROBRAS shall be equally represented, with up to two members appointed by the Directors elected by ENBPar, up to two members appointed by the Directors elected by Eletrobras and 1 (one) independent external
47 |
member appointed by mutual agreement between ELETROBRAS and ENBPar, all duly compensated;
d) change the composition and organization of powers of the Board of Officers of Eletronuclear, to:
1. segregate the functions of the Chief Administrative and Financial Officer between a Chief Administrative Officer and a Chief Financial Officer as long as the shareholders' agreement referred to in item XIII is in force; and
2. provide for the existence, until the beginning of the commercial operation of the Angra 3 Thermonuclear Power Plant, of the position of Chief Angra 3 Officer, who will be responsible for coordinating the activities to support the completion of the services procured with BNDES and the procurement of the services of engineering, procurement of financing and project management necessary for the completion of the Angra 3 Thermonuclear Plant;
e) set the reimbursement amount in cases of exercise of withdrawal rights to establish that such amount will be the higher between the book equity value and the economic value of the respective equity interest, determined in an independent assessment;
........................................................... ......
XII - execution, between ELETROBRAS and ENBPar, of an investment agreement providing for, at least, the obligations of the parties to:
a) the obligations of the parties to take part in the raising of new financing for Angra 3, by granting personal collaterals, as well as onlendings through loans to Eletronuclear, in a total amount required for the conclusion of the Angra 3 Thermonuclear Power Plant, according to the assessments led by BNDES pursuant to Decree No. 9,915, dated July 16, 2019, and in Law No. 14,120, dated March 1st 2021, and in proportion to their interest in the capital stock of Eletronuclear, provided that the calculation of such proportions shall consider the collaterals, loans and equity support obligations in force among the Federal Government, Eletrobras and Eletronuclear, which shall not be terminated ; and
b) perform all the acts, within their attributions, for the purpose of subscribing to new issuances of shares of Eletronuclear, in the form to be determined by the assessments procured by it with BNDES, in proportion to their interest in the capital stock of Eletronuclear;
XIII - execution, between ELETROBRAS and ENBPar, of an Eletronuclear shareholders' agreement to regulate the governance of this company, providing for, at least:
a) continuation of the operation of the committee provided for in sub item “c” of item IX of the main section of this article until the beginning of commercial operations of the Angra 3 Thermonuclear Power Plant;
b) ENBPar's preemptive right on the sale of shares issued by Eletronuclear held by
48 |
Eletrobras; and
c) Eletrobras’ right to appoint the Chief Financial Officer of Eletronuclear;
...........................................................
XVIII – ELETROBRAS shall provide support and advisory service necessary for ENBPar's activity in the trading of energy produced by Itaipu, the payment for which shall be agreed upon between the parties, for a period of up to 180 (one hundred and eighty) days from the date of settlement of the Global Public Offering.
§ 1 The statutory changes provided for in sub items “a”, “b”, “c”, “d”, “e” and “h” of item I of the main section of this article shall comply with the provisions of § 6 of art. 3 of Law No. 14,182, of 2021, and will enter into force only after the settlement of the Global Public Offering, pursuant to the provisions of § 2 of art. 3 of the aforementioned Law.
...........................................................
§ 4 The provisions of sub items “d” and “e” of item I of the main section of this article shall not apply to the effective, direct or indirect, interest of the Federal Government in the voting capital stock of ELETROBRAS on the date of settlement of the Global Public Offer, but it will be applicable if, in the future, its interest is modified and, after being below the thresholds of fifty percent or thirty percent of the voting capital stock of ELETROBRAS, respectively, exceeds them once more.
...........................................................
§ 5 The adjustments and conditions described in items II, IV to VI and VIII to XIII of the main section of this article, as well as in § 13 below, will be approved by the general shareholders’ meeting of ELETROBRAS, based on item I of art. 3 of Law No. 14,182, of 2021, regarding which the Federal Government shall abstain from voting; and the effects of such resolutions shall be suspended and subject to the settlement of the Global Public Offering, pursuant to art. 125 of Law No. 10,406, of January 10, 2002, and § 2 of art. 3 of Law No. 14.182, of 2021..
...........................................................
§ 7 The adjustments and conditions provided for in items XIV to XVIII of the main section of this article shall be approved at the general shareholders’ meeting of ELETROBRAS, in compliance with the provisions of § 2 and § 6 of art. 3 of Law No. 14.182, of 2021.
...........................................................
§ 13. ELETROBRAS’ Articles of Association shall provide that the prohibition referred to in sub item “a” of item I shall also apply to preferred shareholders who acquire voting rights, pursuant to art. 111, § 1, of Law No. 6.404, of December 15, 1976.
§ 14. The adjustments determined in item I and in § 13 shall be decided upon and approved at the general shareholders’ meeting of ELETROBRAS jointly, in a single
49 |
bloc.
§ 15. The value of the capital stock of Itaipu described in art. 6 of its Bylaws, contained in Annex A of the Treaty of Itaipu, shall remain unchanged.” (NR)
Art. 2 Paragraph 9 of art. 11 of Resolution No. 203, of 2021, is hereby revoked.
Art. 3 The public hearing for the privatization process of ELETROBRAS is hereby confirmed and shall be held by BNDES, with the participation of Eletrobras and the Ministry of Mines and Energy, on a single day, in virtual form, through a virtual platform for meetings.
Art. 4 This Resolution enters into force on the date of its publication.
50 |
SECOND ADDENDUM TO
THE LEGAL REPORT
AND
THE MODELING DETAILING REPORT
December 27th, 2021
Classificação: Confidencial |
CONTENT
CONTENT CONTENT | 2 |
I. CONTEXT | 3 |
II. investment agreement of Eletronuclear | 3 |
III. Creation of the golden share | 6 |
IV. amendment of the CPPI Resolution No. 203, dated October 19, 2021 | 6 |
Classificação: Confidencial |
2 |
I. CONTEXT
On October 18th, 2021, we have sent to the Investment Partnership Program (“PPI”) Special Secretariat the Legal Mapping Report (“Mapping Report”) and the Modeling Detailing Report (“Modeling Report” and, jointly with the Mapping Report, the “Reports”), in which we have made an integrated analysis of the financial and legal aspects applicable to the modeling details of Eletrobras’ privatization process. Such Reports, as is well known, serve as basis for the decisions to be made by the Council for Investment Partnership Program (“CPPI”) in Centrais Elétricas Brasileiras S.A. (“Eletrobras”) privatization process, as authorized by Law No. 14,182, dated July 12, 2021[1].
Due to certain supervening facts that affect certain aspects of the aforementioned Reports, it was necessary to supplement them, according to the report issued on December 22nd, 2021 (“First Addendum”).
After the First Addendum, due to the negotiations between Eletrobras and the Ministry of Economy, BNDES and the Consortium were asked to, through the Official Letter No. 579/2021/SE-MME, dated December 27, 2021 (“Official Letter”), address the modification of some terms and conditions previously defined by the CPPI and tackled in the Reports and the First Addendum.
Terms and expressions initiated in capital letters used and not defined in this addendum shall have the meaning attributed to them in the Modeling Report and the First Addendum. Except as set forth in this addendum, we understand no amendment to the Reports or the First Addendum is necessary.
II. investment agreement of Eletronuclear
ENBPar and Eletrobras will execute an investments agreement, aiming to regulate the conditions under which ENBPar will invest in Eletronuclear. Among the provisions of such contract, there are obligations of the said parties to participate in raising new financings to Angra 3, by granting personal guarantees and/or transferring financings to Eletrobras as onlendings.
1 For the implementation of the transaction, in addition to the decisions of CPPI, Eletrobras and ENBPar, within their corporate governance procedures, shall decide on, according to their approval levels policies and relevant governance bodies set forth in their bylaws (and other possibly applicable documents) on all acts required for the implementation of the privatization attributed to each company.
Classificação: Confidencial |
3 |
The CPPI Resolution 203/2021 set forth that such obligations would be undertaken in the proportion of their interest in the total share capital of Eletronuclear and that the currently existing guarantees should be taken into consideration.
It is important to note that, regarding the guarantees and/or the transfers portion related to ENBPar, it will have the obligation to take measures, within its powers, to enable that such financing portion is structured with a guarantee granted by the Federal Government, if such is required in the financing proposals sent by potential lenders.
Moreover, ENBPar shall commit to request funding to the Federal Government if the studies to be produced by BNDES for the feasibility of Angra 3 indicate the need of new capital contributions and, if it manages to obtain such funding, contributes it to Eletronuclear, as determined in such studies.
Such terms were not mentioned in the CPPI Resolution 203/2021, but were addressed in the First Addendum. It was originally negotiated that such obligations would be undertaken by ENBPar and Eletrobras proportionately to their equity interest in the total capital stock.
After the delivery of the First Addendum, however, during negotiations between the Ministry of Economy and Eletrobras, it was agreed that such guarantee, onlending and capital contribution obligations will be undertaken by ENBPar and Eletrobras proportionately to their interest in the voting capital stock each of them hold in Eletronuclear.
In addition to that, as opposed to what is stated in the Reports, the First Addendum and the CPPI Resolution 203/2021, the loans and guarantees granted (by Eletrobras and the Federal Government) prior to the execution of the Investment Agreement should not be taken into account in the calculation of the proportion of the new guarantee and financing obligations of ENBPar and Eletrobras. However, it would provide for the obligation of the parties of the Agreement to maintain the guarantees and support obligations (ESA) executed prior to the Agreement.
Classificação: Confidencial |
4 |
Such understandings were informed to BNDES and the Consortium through the Official Letter No. 579/2021/SE-MME.
We understand the modifications described above are allowed, from a legal standpoint.
From a financial perspective, regarding the Federal Government, the understanding of the parties and informed to BNDES through the Official Letter mentioned above, despite increasing the amount of capital contributions and financing to be guaranteed by ENBPar and, therefore, indirectly by the Federal Government, is supported by the following points:]
- In preliminary interactions with potential lenders of the Angra 3 project, the unanimous concern was that a strong financial exposure of the Federal Government to the risks of the project is essential, both from a financial security point of view and for the indication of interest alignment for enabling the project;
- Thus, considering the hypothesis that the Federal Government will provide a guarantee to the portion for which ENBPar is responsible[2], a lower participation of ENBPar in guaranteeing the financing (which would occur in case the participation was not based in the voting capital, but rather in any other reference which resulted in a lower participation, such as the total capital stock), increases, up to a certain point, the risk to the feasibility of the funding of Angra 3. If such risk were materialized, would result in the abandonment of the construction, currently valued at R$ 14 billion[3]. Most of this value is not guaranteed or object of an obligation to support by Eletrobras, and, therefore, the Federal Government would indirectly be responsible for it;
[2] The Federal Government will not commit to grant guarantees from the beginning, since such decision by the Federal Government can only occur in a case-by-case basis, after analyzing each financing contract itself. However, the strategic nature of this project to the country, as well as the relevant estimated cost of abandonment of the construction works are matters which will have to be considered by the Federal Government when deciding on granting the guarantees.
[3] This estimation was provided by Eletronuclear and is under review by BNDES’ advisors in the context of the Angra 3 Project, which includes early termination of debt, supplier fines, regulatory fines and demobilization operational costs.
Classificação: Confidencial |
5 |
- Additionally, a more relevant participation of Eletrobras in the guarantees of the new financings increases the risk perception of investors in the public offering of Eletrobras’ privatization, reducing the potential pricing value, what may, (i) in a smaller scale, reduce the financial value of the transaction to the Federal Government, and, (ii) in a larger scale, if the pricing value is lower than the minimum price approved by TCU, render the privatization unfeasible.
In view of the foregoing, the adjustment of the CPPI Resolution 203/2021, in order to reinforce the guarantees to enable Angra 3 is a justifiable measure from the financial perspective.
Considering the understanding of the parties, the directive provided by the Ministry of Mines and Energy and the analysis above, we propose the negotiations are reflected on the new CPPI resolution to be issued for the Privatization.
III. Creation of the golden share
The special class preferred share (golden share) to be held by the Federal Government shall be created by converting 1 (one) existing share held by the Federal Government – ideally, a preferred share, which would a share of the same type as the intended new share – and such created share is subscribed by (i.e., delivered) to the Federal Government, pursuant to Law 14,182 and in compliance with Art. 10, item II, sub item “d” of Decree No. 2.594, dated May 15,1998.
IV. amendment of the CPPI Resolution No. 203, dated October 19, 2021
To reflect the afore-mentioned issues, and the conclusions of the First Addendum, it is necessary to issue a new resolution which, among other provisions, partially modifies Resolution No. 203/2021.
After the understandings of the Parties, the draft contained in the ANNEX of this document was agreed upon, which shall replace the draft in the sole annex of the First Addendum. The modified parts are underlined. We recommend that such resolution is identical or similar to the draft.
***
Classificação: Confidencial |
6 |
SIGNATURE PAGE OF THE ADDENDUM TO THE
THE LEGAL REPORT
AND
THE MODELING DETAILING REPORTS – ELETROBRAS
(dated December 27, 2021)
______________________________________________________________
BANCO GENIAL S.A.
By: Ricardo Augusto Justo Jacobucci / Mikael Martins Silva / Rafael Augusto Tapetti
______________________________________________________________
TAUIL & CHEQUER ADVOGADOS ASSOCIADO A MAYER BROWN LLP
By: Bruno Dario Werneck / Débora Hiromi Yanasse / Bruno Rieger Salzano
Classificação: Confidencial |
7 |
ANNEX I – DRAFT OF THE 2ND CPPI RESOLUTION
CPPI RESOLUTION No. [=], OF DECEMBER [=], 2021
Amends Resolution 203, of October 19, 2021, which approves the operational form, adjustments and conditions for the privatization of Centrais Elétricas Brasileiras S.A. – ELETROBRAS, as part of the National Privatization Program - PNB.
THE PRESIDENT OF THE COUNCIL OF THE INVESTMENT PARTNERSHIPS PROGRAM and the MINISTER OF STATE OF MINAS AND ENERGY, in the use of the powers conferred on them by art. 4 of Decree No. 10,245, of February 18, 2020, and in view of the provisions of Law No. 14,182, of July 12, 2021, in art. 6, item II, of Law No. 9,491 of September 9, 1997, in art. 10, item II, of Decree No. 2,594, of May 15, 1998, Decree No. 10,670, of April 8, 2021, Resolution No. 176, of April 27, 2021, and Resolution No. 203, of April 19, October 2021, resolve, at an ad referendum basis of the Council of the Investment Partnership Program:
Art. 1 Arts. 4, 8 and 11 of Resolution No. 203, of October 19, 2021 shall henceforth be in force with the following wording:
Art. 4 The Primary Offering shall be composed of ordinary shares in the smallest integer which represents the amount to be paid by ELETROBRAS or its subsidiaries in the concession bonus of the new electric power generation concession contracts, pursuant to art. 4, main section, item II, of Law 14,182/2021, provided such value is superior to R$ 22,057,564,316.99 (twenty-two billion, fifty-seven million, five hundred and sixty-four thousand, three hundred and sixteen reais and ninety-nine cents) and superior to R$ 26,648.033,913.65 (twenty-six billion, six hundred and forty-eight million, thirty-three thousand, nine hundred and thirteen reais and sixty-five cents).
...........................................................
§ 3 If the value of the concession bonus of the new concession contracts is not within the limits provided for in the main section of this article, the completion of the Primary Offering will be subject to a new resolution of the Council of the Investment Partnership Program.”(NR)
“Art. 8th ........................................................
...........................................................
§ 5 The FMPs-FGTS can be created, with standard regulations previously drafted by BNDES, for the acquisition of common shares in the Brazilian Offering with funds available in the dedicated account of the Guarantee Fund for Employees - FGTS, called “ FMP-ELET”, or with funds transferred from investments previously existing in other FMP-FGTS, called “Transitional FMP-ELET”.
Classificação: Confidencial |
8 |
...........................................................”(NR)
“Art. 11 ........................................................
...........................................................
I - ........................................................
c) conversion of 1 (one) class B preferred share issued by ELETROBRAS and held by the Federal Government create 1 (one) special class preferred share, to be subscribed by and held exclusively by the Federal Government, pursuant to art. 3, item III, sub item “c” of Law No. 14,182, dated July 12, 2021, which will grant the power of veto in corporate resolutions in which aim to amend the Articles of Association of ELETROBRAS to modify the restriction to the voting rights exercise and the execution of shareholders’ agreement described in sub items “a” and “b” of item I of the main section of this article;
.......................................................
f) establish authorized capital, pursuant to art. 168 of Law No. 6.404, of 1976, allowing the capital stock of ELETROBRAS to be increased in an amount, at least, sufficient to make up the amount necessary to carry out the Primary Offering, also considering the possibility of distributing the Over-allotment Shares and the Additional Shares;
g) provide for the absence of preemptive rights of shareholders for the subscription of the securities within the limits of the authorized capital, in case such securities are offered in a sale in the stock exchange or via public subscription, pursuant to the provisions of art. 172, main section of this article and item I, of Law nº 6.404, of 1976; and
h) to approve other adjustments to ELETROBRAS' bylaws, to remove provisions related to its condition as a partially government-owned company and adapt it to the company's operations after liquidation of the Offering;
II - execution of a transfer agreement of the entire equity interest held by ELETROBRAS in Itaipu Binacional to Empresa Brasileira de Participações em Energia Nuclear e Binacional S.A. (“ENBPar”), in consideration for payment a payment of R$ 1,212,148,151.65 (one billion, two hundred and twelve million, one hundred and forty-eight thousand, one hundred and fifty-one reais and sixty-five cents) equivalent to US$ 233,253,440.00 (two hundred and thirty-three million, two hundred and fifty-three thousand, four hundred and forty US dollars), on the reference date of December 31, 2020, subject to the following conditions:
a) updating of amounts owed by the variation of the US dollar, in addition to the monetary correction and remuneration mechanisms provided for in the Itaipu Treaty and subsequent reverse notes;
b) if the return on the capital of Itaipu for fiscal year 2021 has already been paid to ELETROBRAS by the date of full compliance with the conditions of effectiveness of the contract, said portion shall be deducted from the Price; otherwise, it will be paid in 36 (thirty-six) monthly installments;
Classificação: Confidencial |
9 |
c) the remainder of the Price will be paid in 240 (two hundred and forty) monthly installments; and
d) the installments set forth in sub items “b” and “c” will be calculated based on the Price Amortization System, at the interest rate of 4.763% per year, and updated by the exchange rate variation of the dollar of the United States of America, provided that ENBPar may pre-pay, at any time, of the remaining balance of the installments;
...........................................................
IV - issuance, by Eletronuclear, of 308,443,302,951 (three hundred and eight billion, four hundred and forty-three million, three hundred and two thousand nine hundred and fifty-one) new common shares, in the total amount of R$ 7,606,963,647.84 (seven billion, six hundred and six million, nine hundred and sixty-three thousand, six hundred and forty-seven reais and eighty-four cents), and 86,367,502,441 (eighty-six billion, three hundred and sixty-seven million, five hundred and two thousand, four hundred and forty-one) preferred shares, in the total amount of R$ 2,130,033,121.60 (two billion, one hundred and thirty million, thirty-three thousand, one hundred and twenty-one reais and sixty cents), provided that a part of the total issuance price, in the amount of 2,704,317,107.98 (two billion, seven hundred and four million, three hundred and seventeen thousand, one hundred and seven reais and ninety-eight cents) will be allocated to the formation of the capital reserve to be used for the payment of the total accumulated priority dividends of the preferred shares issued by Eletronuclear, pursuant to the provisions of item VIII of the main section of this article, while the remaining amount will be allocated to the share capital account;
V - subscription, by ELETROBRAS, of 166,379,229,311 (one hundred and sixty-six billion, three hundred and seventy-nine million, two hundred and twenty-nine thousand three hundred and eleven) common shares and 86,326,103,046 (eighty-six billion, three hundred and twenty-six million, one hundred and three thousand and forty-six) preferred shares among those referred to in item IV of the main section of this article, in the total amount of R$ 6,232,329,437.73 (six billion, two hundred and thirty-two million, three hundred and twenty-nine thousand four hundred and thirty-seven reais and seventy-three cents), and the respective payment must take place on the settlement date of the Global Public Offering, as follows:
a) R$ 2,698,927,439.83 (two billion, six hundred and ninety-eight million, nine hundred and twenty-seven thousand, four hundred and thirty-nine reais and eighty-three cents), using primarily the credits related to priority dividends accrued against Eletronuclear, pursuant to item VIII of the main section of this article;
...........................................................
VI - assignment, by ELETROBRAS to ENBPar, free of charge, of the preemptive right to subscribe for part of the shares issued pursuant to item IV of the main section of this article, in a volume equivalent to BRL 3,500,000,000.00 (three billion and five hundred million reais), corresponding to 141,916,224,437 (one hundred and forty-one billion, nine hundred and sixteen million, two hundred and twenty-four thousand four hundred and thirty-seven) common shares;
Classificação: Confidencial |
10 |
...........................................................
IX - amendment to Eletronuclear's Bylaws, to:
a) modify the rights of preferred shares issued by Eletronuclear, extinguishing the right to cumulative minimum dividends and the voting right in resolutions related to the amendment of the Bylaws of Eletronuclear, which shall grant priority to capital reimbursement;
b) include authorization for the payment of dividends to preferred shareholders entitled to cumulative dividends using funds of the capital reserve account referred to in item VIII, pursuant to article 17, paragraph 6, of Law No. 6.404, of December 15, 1976;
c) create a committee for matters related to the planning and execution of the Angra 3 Thermonuclear Power Plant (“Monitoring Committee for the Angra 3 Thermonuclear Power Plant Project - COANGRA”), which will function until the beginning of commercial operation of the Angra 3 Thermonuclear Power Plant, with the purpose of advising the Board of Directors of Eletronuclear, including performing analysis and issuing a prior opinion on the contracting of goods, services, construction works, financing and collaterals linked to the project, having a composition of five members, provided ENBPar and ELETROBRAS shall be equally represented, with up to two members appointed by the Directors elected by ENBPar, up to two members appointed by the Directors elected by Eletrobras and 1 (one) independent external member appointed by mutual agreement between ELETROBRAS and ENBPar, all duly compensated;
d) change the composition and organization of powers of the Board of Officers of Eletronuclear, to:
1. segregate the functions of the Chief Administrative and Financial Officer between a Chief Administrative Officer and a Chief Financial Officer as long as the shareholders' agreement referred to in item XIII is in force; and
2. provide for the existence, until the beginning of the commercial operation of the Angra 3 Thermonuclear Power Plant, of the position of Chief Angra 3 Officer, who will be responsible for coordinating the activities to support the completion of the services procured with BNDES and the procurement of the services of engineering, procurement of financing and project management necessary for the completion of the Angra 3 Thermonuclear Plant;
e) set the reimbursement amount in cases of exercise of withdrawal rights to establish that such amount will be the higher between the book equity value and the economic value of the respective equity interest, determined in an independent assessment;
........................................................... ......
Classificação: Confidencial |
11 |
XII - execution, between ELETROBRAS and ENBPar, of an investment agreement providing for, at least, the obligations of the parties to:
a) the obligations of the parties to take part in the raising of new financing for Angra 3, by granting personal collaterals, as well as onlendings through loans to Eletronuclear, in a total amount required for the conclusion of the Angra 3 Thermonuclear Power Plant, according to the assessments led by BNDES pursuant to Decree No. 9,915, dated July 16, 2019, and in Law No. 14,120, dated March 1st 2021, and in proportion to their interest in the voting capital stock of Eletronuclear, provided that the calculation of such proportions shall not consider the collaterals, loans and equity support obligations in force among the Federal Government, Eletrobras and Eletronuclear, which shall be maintained; and
b) perform all the acts, within their attributions, for the purpose of subscribing to new issuances of shares of Eletronuclear, in the form to be determined by the assessments procured by it with BNDES, in proportion to their interest in the voting capital stock of Eletronuclear;
XIII - execution, between ELETROBRAS and ENBPar, of an Eletronuclear shareholders' agreement to regulate the governance of this company, providing for, at least:
a) continuation of the operation of the committee provided for in sub item “c” of item IX of the main section of this article until the beginning of commercial operations of the Angra 3 Thermonuclear Power Plant;
b) ENBPar's preemptive right on the sale of shares issued by Eletronuclear held by Eletrobras; and
c) Eletrobras’ right to appoint the Chief Financial Officer of Eletronuclear;
...........................................................
XVII - compliance, by ELETROBRAS, of the conditions set forth in the CNPE resolutions which regulate the provisions of arts. 1, 2, 4 and 5 of Law No. 14,182, of 2021; e
XVIII – ELETROBRAS shall provide support and advisory service necessary for ENBPar's activity in the trading of energy produced by Itaipu, the payment for which shall be agreed upon between the parties, for a period of up to 180 (one hundred and eighty) days from the date of settlement of the Global Public Offering.
§ 1 The statutory changes provided for in sub items “a”, “b”, “c”, “d”, “e” and “h” of item I of the main section of this article shall comply with the provisions of § 6 of art. 3 of Law No. 14,182, of 2021, and will enter into force only after the settlement of the Global Public Offering, pursuant to the provisions of § 2 of art. 3 of the aforementioned Law.
...........................................................
§ 4 The provisions of sub items “d” and “e” of item I of the main section of this article shall not apply to the effective, direct or indirect, interest of the Federal Government in the voting capital stock of ELETROBRAS on the date of settlement of the Global Public Offer, but it will be applicable if, in the future, its interest is modified and, after being below the thresholds of fifty percent or thirty percent of the voting capital stock of ELETROBRAS, respectively, exceeds them once more.
Classificação: Confidencial |
12 |
...........................................................
§ 5 The adjustments and conditions described in items II, IV to VI and VIII to XIII of the main section of this article, as well as in § 13 below, will be approved by the general shareholders’ meeting of ELETROBRAS, based on item I of art. 3 of Law No. 14,182, of 2021, regarding which the Federal Government shall abstain from voting; and the effects of such resolutions shall be suspended and subject to the settlement of the Global Public Offering, pursuant to art. 125 of Law No. 10,406, of January 10, 2002, and § 2 of art. 3 of Law No. 14.182, of 2021..
...........................................................
§ 7 The adjustments and conditions provided for in items XIV to XVIII of the main section of this article shall be approved at the general shareholders’ meeting of ELETROBRAS, in compliance with the provisions of § 2 and § 6 of art. 3 of Law No. 14.182, of 2021.
...........................................................
§ 13. ELETROBRAS’ Articles of Association shall provide that the prohibition referred to in sub item “a” of item I shall also apply to preferred shareholders who acquire voting rights, pursuant to art. 111, § 1, of Law No. 6.404, of December 15, 1976.
§ 14. The adjustments determined in item I of the main section of this article and in § 13 shall be decided upon and approved at the general shareholders’ meeting of ELETROBRAS jointly, in a single bloc.
§ 15. The value of the capital stock of Itaipu described in art. 6 of its Bylaws, contained in Annex A of the Treaty of Itaipu, shall remain unchanged.” (NR)
Art. 2 The public hearing for the privatization process of ELETROBRAS shall be held by BNDES, with the participation of Eletrobras and the Ministry of Mines and Energy, on a single day, in virtual form, through a virtual platform for meetings.
Art. 3 Paragraph 9 of art. 11 of Resolution No. 203, of 2021, is hereby revoked.
Art. 4 This Resolution enters into force on the date of its publication.
PAULO GUEDES
President of the Council of Investment Partnership Program
BENTO ALBUQUERQUE
State Minister of Mines and Energy
Classificação: Confidencial |
13 |
Annex 4
Economic bases and calculation chart for the amount to be paid by ENBpar for the equity interest of Itaipu
Calculation Chart
· | The reference for the pricing of the transfer of Eletrobras’ shares in Itaipu is the fair value of the asset, which takes into account the original amount invested by Eletrobras, adjusted for an adjustment factor that reflects the corresponding inflation since the investment in Itaipu until the base date, which was December 31, 2020 (such amount referred to as “Principal” for purposes of this document), added to the amount necessary for the payment of a yield of 12% on the interest in the paid-up capital, pursuant to paragraph 1 of Article III of the Treaty and Article VI of Annex A (Itaipu’s Bylaws) for 2021 (such amount, the “2021 Remuneration” for the purposes of this Annex). |
As an example, the calculation may be thus demonstrated:
Legend:
Original capital
Adjustment factor (Dec 2020)
Adjusted investment amount (Dec 2020)
Yield without capital (2021)
Fair Value (Dec 2020)
Where:
1) | According to Annex A, Article 6 of the Treaty: “ITAIPU’s capital shall be equivalent to USD100,000,000.00, held by Eletrobras and Administración Nacional de Eletricidad – ANDE in equal and non-transferable parts.” |
2) | The Adjustment Factor of 4.16524 in December 2020 was extracted from Itaipu’s financial statements as of December 31, 2020, and calculated according to such document, based on the US average annual inflation index, using the Industrial Goods (IG) and Consumer Prices (CPI) indexes, published in the International Financial Statistics Yearbook, updated since 1975. |
3) | According to paragraph 1 of Article III of the Treaty and Article VI of Annex A (Itaipu’s Bylaws), the amount required for the payment corresponds to a yield of 12% per annum on the Eletrobras’ interest in Itaipu’s paid-up capital. Applying this yield on the adjusted investment amount for December 2020, we have: |
12.0% * 208.262 = USD24.991 MM
208.262 + 24.991 = USD233.253 MM
Given the calculation presented above, we note that the fair value of Eletrobras’ interest in Itaipu to be transferred from Eletrobras to ENBpar, at prices for December 2020, is USD233,253,440.00, equivalent to BRL1,212,148,151.65, considering the US Dollar selling exchange rate of 5.1967, as published by the Central Bank of Brazil (“PTAX”), on the base date of December 31, 2020.
14 |
Adjustment Parameters
The fair value of the Eletrobras’ interest in Itaipu to be transferred from Eletrobras to ENBpar shall be adjusted for inflation until the transfer completion date. For this, the Principal amount shall be adjusted according to the calculation below:
i) multiplication by the ratio between the 2021 Adjustment Factor and the 2020 Adjustment Factor;
ii) | adjustment of the result of item i above for the average variation of the US inflation indexes Industrial Goods and Consumer Price Index, from December 31, 2021 until the end of the month prior to the transfer completion date (including); |
iii) | multiplication of the result of item ii above by the PTAX variation from December 31, 2020 until the business day immediately before the transfer completion date (including); and |
iv) | the rate of yield of 12% per annum shall apply pro-rata die to the result of item iii above for the period from December 31, 2020 (including) until the end of the month prior to the transfer completion date (including). |
The 2021 Remuneration amount shall be adjusted according to the calculation below:
i) | multiplication by the ratio between the 2021 Adjustment Factor and the 2020 Adjustment Factor; and |
ii) | multiplication of the result of item i above by the PTAX variation from December 31, 2020 until the business day immediately before the transfer completion date (including). |
Payment Method
Regarding the payment of the fair value of Eletrobras’ interest in Itaipu, ascertained as outlined in the preceding item taking into account the adjustment of the price, it was settled that the Principal amount shall be paid in 240 installments and the amount of the 2021 Remuneration shall be paid in 36 installments, in both cases in payments made in consecutive monthly installments, on a constant payment basis (Amortization Schedule), which shall be adjusted as detailed below.
The interest rate suitable for the installments at stake was defined adopting as a benchmark the yield required, at market values, from the bonds issued by the National Treasury, denominated in U.S. Dollars (also known as Global Bonds), due on January 20, 2034, and that on December 17, 2021, were traded at a yield of 4.763% per annum. The selection of this bond as a benchmark resulted from the fact that it has the closest duration, among all Global Bonds issued by the National Treasury, to the installments to be paid by ENBpar to Eletrobras: 8.3 years for the former, against 8.5 for the latter.
Based on such metrics, the amount of the installments to be paid by ENBpar to Eletrobras shall be calculated according to the following equation:
With:
is the installment, in Reais, to be paid on a certain month;
15 |
is the installment part for the payment of the Principal amount, as defined at the beginning of this Section IV.1. This installment shall be paid for 240 months;
is the installment part for the payment of the 2021 Remuneration, as defined at the beginning of this Section IV.1. This installment shall be paid for 36 months. After that, it shall be null;
is the installment number, varying from 1 to 240;
is the installment of the price corresponding to the Principal amount, adjusted pursuant to the item described above;
is the installment of the price corresponding to the 2021 Remuneration, adjusted pursuant to the item described above;
is the monthly interest rate of 0.3885473% (equivalent to 4.763% per annum) – according to the yield explained above;
is the PTAX variation between the business day immediately before the transfer completion date and the business day immediately before the payment date of such month.
The first installment shall be paid by ENBpar to Eletrobras 30 days after the interest is effectively transferred and all conditions precedent to the closing of the transaction are satisfied (essentially, the settlement of the Offering). The subsequent installments shall be due on the same day of payment of the first installment, in the subsequent months.
In case of late payment, ENBpar shall pay, on the defaulted amount, (i) during the first 15 days of late payment, interest equivalent to 0.5% per month pro-rata die and (ii) after the 16th day of late payment, interest equivalent to 1% per month pro-rata die.
ENBpar, at its sole and exclusive discretion, may settle the remaining balance payable to Eletrobras for the interest in Itaipu early. In that case, ENBpar shall provide a minimum 30-calendar-day notice to Eletrobras of its early settlement intention. The outstanding balance to be paid shall be calculated based on the following formula:
With:
is the fair value balance still not paid, in Reais, in a certain month, after the payment of the;
The other terms were previously defined.
The payment of the early settlement shall be made in the Brazilian currency (Reais), converted from the currency in which the remaining balance is denominated (U.S. Dollars) based on the PTAX for the last business day immediately before the payment.
14/01/2022
TIR DFP-003/22 |
Technical Information Report - TIR
Classification: Confidential
Title | Analysis of the Segregation of Itaipu Binacional according to Law 14,182/2021 and the BNDES Modeling Report. |
Subject | Capitalization; Modeling; Segregation; Itaipu. |
Authors | Rodrigo Ruiz - DFP Marcos Barreto de Faria Pinho – DFPA; Flávia Xavier Cirilo de Sá – DFPA; Vinícius Brito da Fonseca – DFPA. |
Company | Eletrobras. |
Category | Technical Information Report - TIR. |
Keywords | Capitalization, Modeling, Segregation, Itaipu, Treaty of Itaipu, Law No. 14,182/2021, Eletrobras, BNDES.
|
Page 1 |
14/01/2022
TIR DFP-003/22 |
Table of Contents
1. Purpose | 3 |
2. Disclaimer | 3 |
3. Laws and Regulations | 4 |
4. Treaty of Itaipu | 7 |
5. Modeling the segregation of Itaipu | 8 |
5.1 Calculation of the fair value of the Eletrobras’ share | 8 |
5.1.1 Price adjustment | 9 |
5.2 Eletrobras’ interest payment conditions | 10 |
5.3 Transfer of Eletrobras’ equity | 14 |
5.4 Other measures | 14 |
6. Characterization of Itaipu corporate restructuring | 15 |
7. Considerations | 15 |
7.1 Calculation of the fair value of Eletrobras’ interest in Itaipu | 15 |
7.3 Eletrobras’ Related-Party Transaction Policy | 19 |
8. Final Considerations | 20 |
Page 2 |
14/01/2022
TIR DFP-003/22 |
1. PURPOSE
This Technical Information Report aims at analyzing the segregation of Itaipu Binacional under Law No. 14,182 of July 12, 2021, which provides for the privatization of Eletrobras, and under the Modeling Report by the Brazilian National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Econômico e Social – BNDES), intending to support the decision of the Management of Eletrobras regarding the privatization process.
2. Disclaimer
This analysis is based on the following documents:
- CPPI Resolution No. 203/2021;
- CPPI Resolution No. 221/2021;
- Detailed Report on the Model of October 18, 2021;
- Addendum to the legal mapping report and detailed report on the model, of December 22, 2021;
- Second addendum to the legal mapping report and detailed report on the model, of December 27, 2021; and
- Equity Transfer Agreement and Other Covenants, final version received on January 11, 2022.
3. LAWS AND REGULATIONS
Provisional Measure No. 1,031/2021, which provided for the privatization of Eletrobras and other measures, was enacted on February 23, 2021. Such Provisional Measure, as amended, after passing the House of Representatives and the Federal Senate, was converted into Law No. 14,182 of July 12, 2021.
The Board of the Investment Partnership Program – CPPI enacted CPPI Resolution No. 167 on March 16, 2021, recommending to the President of the Republic the eligibility of Eletrobras for the Investment Partnerships Program (PPI) and its inclusion in the National Privatization Program (PND) to begin the studies required to organize the capitalization process of this company, pursuant to the guidelines established in Provisional Measure No. 1,031/2021.
Page 3 |
14/01/2022
TIR DFP-003/22 |
CPPI Resolution No. 176/2021 was enacted on April 27, 2021 and defined: (i) Eletrobras’ duties in the Company privatization process; (ii) BNDES as the authority responsible for the execution and monitoring of the Eletrobras capitalization process until its closure; and (ii) that the capitalization process shall adopt the capital market rules and practices, especially to define the issue and stock sale prices and to disclose information to the market and the public.
Law No. 14,182/2021 established that the privatization of Eletrobras is conditioned to the approval of the corporate restructuring, among others, by the General Shareholders’ Meeting in order to maintain companies, facilities, and interests held or managed by Eletrobras under the direct or indirect control of the Federal Government, specifically Eletronuclear and Itaipu Binacional.
Law No. 14,182/2021 also authorized the Federal Government to create a public-private company or governmental entity, in case the companies are not under its direct control, in order to maintain the ownership of the capital stock and the acquisition of electricity services provided by Itaipu Binacional by a federal public agency or entity, to comply with the provisions in the Treaty of Itaipu, among other purposes.
Law No. 14,182/2021 also amended Law No. 5,899 of July 5, 1973 to authorize the Federal Government to designate a federal public agency or entity for the acquisition of all electricity services of Itaipu Binacional, from the Incentive Program for Alternative Energy Sources (Proinfa) and its extension. The agency or entity designated by the Federal Government will be the agent trading Itaipu’s electricity and will be in charge of selling all electricity services, according to the regulations of the Brazilian Electricity Regulatory Agency – ANEEL.
On September 10, 2021, the Federal Government issued Decree No. 10,791, which creates the Empresa Brasileira de Participações em Energia Nuclear e Binacional S.A. – ENBpar, a governmental entity linked to the Ministry of Mines and Energy – MME, organized as a joint-stock company. The corporate purpose of ENBpar, as provided for in art. 9 of Law No. 14,182/2021, is, among others, to maintain the ownership of the capital stock and the acquisition of the electricity services provided by Itaipu Binacional by a federal public agency or entity in order to comply with the provisions in the Treaty of Itaipu.
Page 4 |
14/01/2022
TIR DFP-003/22 |
CPPI Resolution No. 203 of October 19, 2021 approved the operational method, the adjustments, and conditions for the privatization of Eletrobras under the PND.
Among the adjustments and conditions for the privatization of Eletrobras approved in the CPPI operational model is the execution of an agreement for the transfer of all Eletrobras’ shares in the capital stock of Itaipu Binacional to ENBpar through the payment of a consideration yet to be defined, with a clause conditioning its effectiveness to the settlement of the Global Public Offering.
In addition, the aforementioned agreement will provide that the payment by ENBpar for the interest in Itaipu Binacional may be made in monthly installments, adjusted for the US Dollar exchange rate variation, considering the interest rate of 4.763% p.a., for a period to be defined between ENBpar and Eletrobras, pursuant to the payment capacity of ENBpar, which may pay the remaining balance of the installments early, at any time.
On December 30, 2021, CPPI published Resolution No. XX/2021, which amended CPPI Resolution No. 203/2021.
Among the amendments promoted by CPPI Resolution No. xx/2021, attention is called to those concerning the segregation of Itaipu Binacional, that is, the execution of an agreement for the transfer of all shares held by ELETROBRAS in Itaipu Binacional to ENBpar for the consideration of BRL1,212,148,151.65 (“Price”), equivalent to USD233,253,440.00, on the base date of December 31, 2020, subject to the following guidelines:
· | adjustment of the amounts payable to Eletrobras for the variation of the US Dollar exchange rate using the inflation adjustment factor, between the base date and the transaction date, as detailed in the agreement, subject to the provisions of the Treaty of Itaipu, as well as the subsequent Reversal Notes; |
· | application of a rate of return of twelve percent (12%) per year, calculated pro rata die for the period from December 31, 2021 until the closing of the month prior to the transaction closing date; |
Page 5 |
14/01/2022
TIR DFP-003/22 |
· | the return on Itaipu’s capital for the fiscal year of 2021 shall be paid in up to thirty-six (36) monthly installments, with the first due on the thirtieth calendar day after the date of settlement of the Global Public Offering, whose amounts shall be calculated according to the method known as Amortization Schedule, considering the interest rate of 4.763% per year, and shall be adjusted for the variation of the PTAX exchange rate between the business day immediately before the transaction closing date and the business day immediately before the date payment of the installment at stake. If it has already been paid to Eletrobras by the date of execution of the agreement, such installment shall be deducted from the Price amount; |
· | the Price shall be paid in up to two hundred and forty (240) monthly installments, with the first due on the thirtieth calendar day after the date of settlement of the Global Public Offering, whose amounts shall be calculated according to the method known as Amortization Schedule, considering the interest rate of 4.763% per year, and shall be adjusted for the variation of the PTAX exchange rate between the business day immediately before the transaction closing date and the business day immediately before the date payment of the installment at stake. |
· | ENBpar shall have the prerogative of early payment, at any time, of the remaining balance of the installments related to the consideration and the 2021 yield; and |
· | in order to guarantee the payments above, ENBpar shall open a blocked account to be credited with the annual yield due to ENBpar for Itaipu, as provided for in the Treaty. |
4. TREATY OF ITAIPU
The Treaty between the Federative Republic of Brazil and the Republic of Paraguay, for the use of the water resources of the Paraná River for hydroelectric purposes, resources which are held in Condominium by both Countries, from and including the Salto Grande de Sete Quedas or Salto de Guaíra to the Mouth of the Iguaçu River (Treaty of Itaipu), as well as the six Notes exchanged between the Ministers of Foreign Affairs of both countries, was enacted through Decree No. 72,707 of August 28, 1973.
Page 6 |
14/01/2022
TIR DFP-003/22 |
Article II of the abovementioned Treaty defines the parties involved, among them “ELETROBRAS, Centrais Elétricas Brasileiras S.A. – ELETROBRAS –, from Brazil, or the legal entity that succeeds it”.
Article III of the Treaty defines that Itaipu shall be formed by Eletrobras and by the Administración Nacional de Eletricidad – ANDE, a Paraguayan company, with equal equity interests, and shall be governed by the rules established in this Treaty, in the Bylaws attached thereto as Annex A, and in the other Annexes.
Article XII establishes that no taxes and fees shall be levied on the profit of Itaipu, among other items.
Annex A (Itaipu’s Bylaws)
Article VIII of the bylaws defines that Itaipu’s capital shall be equivalent to one hundred million US Dollars (USD100,000,000.00), belonging to Eletrobras and ANDE in equal and non-transferable parts, and that it shall be kept at a constant value according to the provisions in Paragraph 4 of article XV of the Treaty.
Annex C
Annex C of the Treaty of Itaipu establishes the financial bases and for the provision of electricity services by Itaipu.
Pursuant to section III of Annex C, the cost of the electricity service shall be composed of the following annual parts, among others:
a. | The amount required for the payment, to the parties that constitute Itaipu (Eletrobras and ANDE), of the yield of 12% p.a. on their interest in the paid-up capital, according to paragraph 1 of article III of the Treaty and article 6 of the Bylaws (Annex A); |
b. | The amount required for the payment, to Eletrobras and ANDE, in equal parts, as reimbursement for management and supervision expenses related to Itaipu, calculated based on the equivalent to USD50/GWh generated and measured at the power plant. |
Page 7 |
14/01/2022
TIR DFP-003/22 |
Section VI of Annex C establishes that the provisions of this Annex shall be reviewed after a period of fifty (50) years of the entry into force of the Treaty (August 13, 1973), taking into account, among other aspects, the degree of repayment of the debts incurred by Itaipu for construction of the plant and the ratio between the power contracted by the entities of both countries. In other words, the Annex C conditions shall be reviewed from August 13, 2023 on.
5. ITAIPU segregation modeling
5.1 | calculation of the fair VaLUE of THE ELETROBRAS’ SHARE |
The BNDES Modeling Report calculated the value of Itaipu based on the company’s capital stock, under the Treaty of Itaipu, as detailed below.
BNDES took into account the fair value of the interest in Itaipu calculated according to the same method used to calculate the fair value of fixed income securities, that is: if the discount rate used is, in real terms, equal to the coupon rate paid by the inflation-indexed security, the fair value shall be equal to the par value at issuance, adjusted for inflation. If the discount rate is lower than the coupon rate of the bond, the fair value shall be higher and vice-versa.
Accordingly, from a financial point of view, BNDES calculated the fair value considering the original investment (which, for Itaipu, matches the capital stock of USD100 million) updated by an adjustment factor that reflects the inflation since the payment of Eletrobras’ interest in Itaipu in full until December 2020, plus: (i) the additional inflation for the period since January 2021, including, until the asset is effectively and completely transferred from Eletrobras to ENBpar; and (ii) the amount necessary for the payment of the 12% yield on the share in the paid-up capital, according to paragraph 1 of article III of the Treaty and section VI of Annex A (Itaipu Bylaws), for 2021, and the proportional payment of yield for January 2022, when the asset is expected to be transferred from Eletrobras to ENBpar.
The figure below illustrates the calculation made by BNDES.
Page 8 |
14/01/2022
TIR DFP-003/22 |
Legend:
Original capital
Adjustment factor
Investment amount updated
Yield on the capital
Fair Value
dez = December
The adjustment factor of 4.16524 in December 2020 was extracted from Itaipu’s financial statements as of December 31, 2020 and calculated according to such document, based on the US average annual inflation index, using the Industrial Goods (IG) index and the Consumer Prices Index (CPI), published in the International Financial Statistics Yearbook, updated since 1975.
That said, BNDES considered, in its model for segregation of Itaipu, that the fair value of Eletrobras’ interest in this company is USD233,253,440.00, equivalent to BRL1,212,148,151.65 on the base date of December 21, 2020, considering the foreign exchange rate of BRL5.1967, as published by the Central Bank of Brazil (PTAX) on December 31, 2020.
5.1.1 | PRICE adjustment |
According to the BNDES model, the fair value of Eletrobras’ interest in Itaipu to be transferred from Eletrobras to ENBpar shall be adjusted for inflation until the transfer completion date. For this, the Principal amount shall be updated according to the calculation below:
i. | multiplication by the ratio between the 2021 Adjustment Factor and the 2020 Adjustment Factor; |
ii. | adjustment of the result of item i above for the average variation of the US inflation indexes Industrial Goods and Consumer Price Index, from December 31, 2020 until the end of the month prior to the transfer completion date (including); |
Page 9 |
14/01/2022
TIR DFP-003/22 |
iii. | multiplication of the result of item ii above by the PTAX variation from December 31, 2020 until the business day immediately before the transfer completion date (including); and |
iv. | the rate of return of 12% per annum shall apply pro rata die to the result of item iii above for the period from December 31, 2020 (including) until the end of the month prior to the transfer completion date (including). |
The 2021 Remuneration amount shall be adjusted according to the calculation below:
i. | multiplication by the ratio between the 2021 Adjustment Factor and the 2020 Adjustment Factor; and |
ii. | multiplication of the result of item i above by the PTAX variation from December 31, 2020 until the business day immediately before the transfer completion date. |
5.2 | ELETROBRAS’ INTEREST PAYMENT CONDITIONS |
As already mentioned, the operational model for the privatization of Eletrobras, approved by CPPI Resolution No. 203/2021, as amended by CPPI Resolution No. XX/2021, establishes that an agreement for the transfer of all Eletrobras’ shares in the capital stock of Itaipu Binacional to ENBpar shall be signed and that the agreement shall provide for the payment by ENBpar for the interest in Itaipu Binacional may be made in consecutive monthly installments, adjusted for the US Dollar exchange rate variation, considering the interest rate of 4.763% p.a., pursuant to the payment capacity of ENBpar, which may pay the remaining balance of the installments early, at any time.
With respect to the payment for Eletrobras’ equity, the BNDES model proposes that the principal is paid in two hundred and forty (240) consecutive monthly installments, on a constant payment basis (Amortization Schedule), which shall be adjusted for the foreign exchange variation, and the capital income as of 2021 is paid in thirty-six (36) consecutive monthly installments, under the same conditions as the principal.
The abovementioned interest rate was defined with reference to the yield required, at market values, from the bonds issued by the National Treasury, denominated in U.S. Dollars (also known as Global Bonds), due on January 20, 2034, and that, on December 17, 2021, were traded at a yield of 4.763% per annum. The selection of this bond as a benchmark results from the fact that it has the closest duration, among all Global Bonds issued by the National Treasury, to the installments to be paid by ENBpar to Eletrobras: 8.3 years for the former, against 8.5 for the latter.
Page 10 |
14/01/2022
TIR DFP-003/22 |
Based on such metrics, the amount of the installments to be paid by ENBpar to Eletrobras shall be calculated according to the following equation:
Where:
is the installment, in Reais, to be paid at a certain month;
is the installment part related to the payment of the Principal, in Reais, in 240 months;
is the installment part related to the payment of the 2021 Remuneration, in Reais, in 36 months;
is the fair value adjusted pursuant to item 5.1.1 of this Technical Information Report;
is the price corresponding to the 2021 Remuneration under item 5.1.1 of this Technical Information Report;
j is the installment number, varying from 1 to 240;
Page 11 |
14/01/2022
TIR DFP-003/22 |
rate is the monthly interest rate of 0.3885473%, according to the yield described above;
is the PTAX variation between the business day immediately before the transfer completion date and the business day immediately before the payment date of such month.
For illustrative purposes only, given the U.S. inflation forecast until the expected date of the transaction, the adjusted price of the interest in Itaipu would be USD262,799,044.63, which, under the conditions above, entails a monthly installment in the amount of USD 1,514,535.52 in the subsequent 204 months.
The first installment shall be paid by ENBpar to Eletrobras 30 calendar days after the interest is effectively transferred and all conditions precedent to the closing of the transaction are satisfied (essentially, settlement of the Offering). The subsequent installments shall be due on the same day of payment of the first installment, in the subsequent months.
In case of late payment, ENBpar shall pay, on the defaulted amount, (i) during the first 15 days, interest equivalent to 0.5% per month pro rata die; and (ii) after the sixteenth day, interest equivalent to 1% per month pro rata die.
ENBpar, at its sole and exclusive discretion, may settle the remaining balance payable to Eletrobras for the interest in Itaipu early. In that case, ENBpar shall provide a minimum 30-calendar-day notice to Eletrobras of its early settlement intention. The outstanding balance to be paid shall be calculated based on the following formula:
Page 12 |
14/01/2022
TIR DFP-003/22 |
Where:
is the fair value balance still not paid, in Reais, in a certain month, after the payment of the .
The other terms were previously defined.
The payment for early settlement shall be made in the Brazilian currency (Reais), converted from the currency in which the remaining balance is denominated (U.S. Dollars) based on the PTAX for the last business day immediately before the payment.
Finally, according to BNDES, the linking of the installments to the variation of the U.S. Dollar exchange rate is aligned with the flow of receipts itself, for which ENBpar shall be responsible after taking the controlling interest of Itaipu. This is because ENBpar shall be entitled to two payment flows: the first related to the yield of 12% per year on its share in Itaipu’s paid-up capital and the second as a refund of management and supervision expenses. Such flows exceed the amounts of the installments to be paid, with a positive cash flow to ENBpar in U.S. Dollars, which implies a positive foreign exchange exposure, so that the company incurs in gains in Reais, which is increased in the event of currency depreciation and, otherwise, is reduced. If the payment were stipulated in Reais, ENBpar would have an even higher positive foreign exchange exposure, so that indexing the payment to the FX variation contributes to reducing the company’s foreign exchange risk.
It is important to note that, with the review of Annex C of the Treaty of Itaipu, which shall occur in 2023, the ENBpar’s flows of receipts considered above may change.
5.3 | transfer of Eletrobras’ EQUITY |
Eletrobras’ equity shall be transferred to ENBpar upon the execution of an Equity Transfer Agreement and Other Covenants, according to CPPI Resolution No. 203/2021, as amended by CPPI Resolution No. XX/2021.
BNDES understands that, given such transfer of equity, there is no need to amend Itaipu’s bylaws, let alone the Treaty, for replacement of Eletrobras with ENBpar as the holder of the Brazilian interest in Itaipu, as such documents refer to the term “Eletrobras” as being Eletrobras itself or the company that succeeds it. BNDES model, as requested by MME, provides that the Equity Transfer Agreement and Other Covenants shall regulate the terms and conditions for Eletrobras to continue providing, on a temporary basis, for one hundred and eighty (180) days, services related to the Brazilian management of Itaipu and the acquisition of electricity services from Itaipu. This ensures that the services are not interrupted while ENBpar still does not have the structure and personnel required to undertake such services.
Page 13 |
14/01/2022
TIR DFP-003/22 |
It is important to note that such transfer is subject to the prior consent of ANEEL, under ANEEL Normative Resolution No. 484/2012. According to this resolution, ANEEL has sixty (60) days of the receipt of all documents supporting the request for transfer of control to complete the analysis of the request.
5.4 | other measures |
In addition to the actions described above, the segregation of Itaipu will entail: (i) the need to amend Decree No. 4,550 of August 30, 2012, which defines Eletrobras as the agent trading Itaipu’s electricity, aiming at replacing Eletrobras with ENBpar; (ii) execution of private instruments between Eletrobras and Itaipu to provide for mutual indemnifications in case Eletrobras is required to assume the obligations under Itaipu’s Fibra Benefit Plan, the private retirement plan provided to the company’s employees and former employees, after the privatization of Eletrobras. Accordingly, an indemnification clause in favor of Eletrobras may be included in the Equity Transfer Agreement and Other Covenants, in case Eletrobras is held liable for such obligations; and (iii) amendments to Decree No. 10,791/2021 as to provide for the transition period mentioned in the preceding item of this Technical Information Report.
6. | characterization of Itaipu corporate restructuring |
According to article 3, item I, of Law No. 14,182/2021, the privatization of Eletrobras is conditioned to the approval of the corporate restructuring by the General Shareholders’ Meeting in order to maintain companies, facilities, and interests held or managed by Eletrobras under the direct or indirect control of the Federal Government, namely Eletronuclear and Itaipu Binacional.
Law No. 14,182/2021 does not specify the model to be used for purposes of implementing the corporate restructuring, and the CPPI operational model defined that the restructuring shall take place through the disposal of the ownership interest representing the corporate control of Itaipu Binacional to ENBpar, through the execution of an Equity Transfer Agreement and Other Covenants.
Page 14 |
14/01/2022
TIR DFP-003/22 |
Pursuant to article 245 of Law No. 6,404 of December 15, 1976, which provides for Joint-Stock Companies, affiliates, parents, or subsidiaries are deemed to be related parties.
Eletrobras has an ownership interest equivalent to 50% of the capital stock of Itaipu Binacional. As the Federal Government is the controlling shareholder of Eletrobras, both the transaction for the disposal of the ownership interest held by Eletrobras in the capital stock of Itaipu to ENBpar and the corporate reorganization transaction (consolidation, merger, or spin-off) to segregate Itaipu from Eletrobras’ assets and properties and transferring it to ENBpar, which is owned by the Federal Government, falls under the concept of related-party transaction.
7. CONSIDERATIONS
The main points of the Itaipu segregation model proposed by BNDES and approved by CPPI, under the Eletrobras capitalization process, shall be analyzed below.
7.1 | CALCULATION OF THE FAIR VALUE Of Eletrobras’ interest in Itaipu |
First, it is important to note that the transfer of the shares held by Eletrobras in the capital stock of Itaipu to ENBpar shall be made at fair value, in order to provide legal certainty to the transaction and that, from the public law point of view, there is no clear rule about the pricing method for state-owned companies in case of corporate restructuring, but only in case of privatization, which is not the case.
The main point to be analyzed for calculating the fair value of Eletrobras’ interest in Itaipu is up to when Eletrobras is entitled to the receivables flow from Itaipu, in this case, the remuneration of 12% per year on the restated capital stock, to which it is currently entitled.
In case Eletrobras has this right after 2023, the Discounted Cash Flow method or the Discounted Dividend Model could be used, which are methodologies widespread in the market and used worldwide. If Eletrobras does not have this right, an alternative valuation would be the restitution to Eletrobras of its share in the Capital Stock of Itaipu, updated to the date of the effective transfer.
Page 15 |
14/01/2022
TIR DFP-003/22 |
In this regard, Eletrobras hired Dr. Carmen Tibúrcio to clarify if after 2023 Eletrobras has the right to the receivables, and what would be the best way to measure the fair value of the transaction:
1. | Considering the legal nature of Itaipu, what is the composition of the price due to Eletrobras in a possible sale of its participation in the binational company, in the context of the privatization regulated by Law No. 14,182/2021, such as |
a. | value of the interest in the capital stock and the monetary updating of the same as provided for in the Treaty, Annexes, and Reversal Notes; |
b. | Rights emerging from energy exploration until and/or after 2023; |
c. | Contributions paid to the capital stock of Itaipu with resources from the compulsory loan; |
d. | Other amounts are included in the future cash flow of the binational company. |
2. | Given Itaipu’s governing legislation, should the capital stock of the binational company, provided for in Annex A of the Treaty, be monetarily restated? |
In her report, Dr. Carmen Tibúrcio clarifies that, in light of the economics of the Treaty of Itaipu, the fair value for the transaction in question is the capital stock of Itaipu updated as provided for in the Treaty, Annexes, and Reversal Notes. This is so because this is the criterion established by the High Parties for updating the capital stock in the specific context of the distribution of revenues to Eletrobras and ANDE, and therefore constitutes an objective parameter capable of conferring the necessary commutativity to the transaction.
In addition, the aforementioned opinion states that, as established in the Treaty, the financial bases of the project shall be reviewed in 2023, and it is impossible to anticipate which legal regime or economic model shall be honored by the High Parties. Thus, Eletrobras is not entitled to any remuneration for the operation of Itaipu Binacional after 2023, which depends on future, uncertain, and unpredictable events.
Thus, the modeling proposed by BNDES is in line with the contracted opinion, being, therefore, a fair value for the operation. The updating method used by BNDES is also pursuant to the rules established in the Treaty, Annexes, and Reverse Notes, and the updating rule should be observed until the transfer date to define the final value.
Page 16 |
14/01/2022
TIR DFP-003/22 |
Therefore, the value calculated by BNDES for Eletrobras’ interest in Itaipu is adequate as it updates the capital invested by Eletrobras in the company.
A point of attention to be noted in the value proposed by BNDES is regarding the capital income of 12% per year from 2021, which Eletrobras is entitled to. CPPI Resolution No. 203/2021, as amended by CPPI Resolution No. 221/2021, defined that the remuneration for 2021 shall be paid to Eletrobras by ENBpar in thirty-six (36) installments, starting on the thirtieth calendar day after the closing of the Global Public Offering. At this point, it is important to highlight that the remuneration is the right of the shareholders of Eletrobras and that it should be paid in cash by ENBpar to Eletrobras. Payment in installments is harmful to Eletrobras’ cash flow and could be seen as Eletrobras financing ENBpar, which does not seem to be motivated.
7.2 | CONDITIONS OF THE TRANSFER AGREEMENT |
The final draft of the Equity Transfer Agreement and Other Covenants made available by BNDES on January 11, 2022 includes, among other aspects, the conditions, payment terms, guarantees, etc.
Regarding the term of payment, the contract foresees two hundred and forty (240) monthly installments, a condition that is not verified in the purchase and sale contracts that Eletrobras has already made, nor in financing contracts, and may raise questions, mainly because it is a Related–Party Transaction – TPR.
Something that shall be observed is ENBpar’s ability to honor such payments, as ENBpar’s only revenue shall be the remuneration of the capital stock of Itaipu, which in 2021, as an example, shall be approximately BRL130 million. It is important to note that this remuneration shall be reviewed in 2023 when the term of Annex C of the Treaty of Itaipu expires, and new conditions shall be defined between the Governments of Paraguay and Brazil. Therefore, ENBpar’s receipt flow is uncertain after 2023.
It should also be noted that ENBpar shall also be the controlling shareholder of Eletronuclear, which today is a loss-making company and may require future funding, both for its working capital and for the conclusion of Angra 3 project. Therefore, part of ENBpar’s receivables may be compromised.
Page 17 |
14/01/2022
TIR DFP-003/22 |
That said, an analysis of the ENBpar customer shall be required by the accounting department, and given the facts, ENBpar may be classified as a customer with solvency difficulties, and it may be necessary to set up a Provision for Doubtful Debt Collection – PCLD, which shall result in an economic loss to Eletrobras.
Aiming at mitigating such risk, the agreement sets forth the creation of a Blocked Account, to which all amounts payable by Itaipu to ENBpar as remuneration on the paid-up capital shall be deposited, and the payment amounts payable by ENBpar to Eletrobras shall be withheld and passed on to Eletrobras according to the installments’ due dates. It is important to note that there is still a minor risk to Eletrobras, depending on the conditions in the review of Annex C, as already mentioned.
Also regarding the discount rate of 4.763% p.a. used by BNDES in its modeling is that, as already mentioned, it was defined as a benchmark to the required remuneration, at market values (the so-called “yield”), of the securities issued by the National Treasury, denominated in U.S. Dollars (also known as Global Bonds), due on January 20, 2034. This bond was selected because it has the closest duration, among all the Global Bonds issued by the National Treasury, to that of the installments to be paid by ENBpar to Eletrobras: 8.3 years for the former, against 8.5 years for the latter.
It is also worth to point out that this type of bond is considered to be risk-free and would not be applicable to the installment payment granted to ENBpar, since this company, when incorporated, shall present a high-risk rate, since it shall not have a firm cash flow given the uncertainties regarding the revision of Annex C of the Treaty of Itaipu, especially regarding the rate of return, currently 12% p.a. Thus, a spread over the proposed risk-free rate should be considered, considering ENBpar’s specific risk.
7.3 | ELETROBRAS’ RELATED-PARTY TRANSACTION POLICY |
Eletrobras’ policy for transactions with related parties establishes in item 4.1.7 that the Federal Government, controlled companies, associated companies, and entities related to it are characterized as parties related to Eletrobras, and in item 4.1.8 that when the Federal Government has significant influence over the decision-making of a certain company, the transaction with this company shall be considered a transaction with a related party of Eletrobras.
Page 18 |
14/01/2022
TIR DFP-003/22 |
Eletrobras’ internal policy further defines that transactions with related parties shall be carried out on a commutative basis, mutually beneficial, and negotiated under market conditions, or, furthermore, shall offer adequate compensation. Furthermore, they shall be reasonable, justified, and balanced, that is, contracted on a fair basis and under market conditions, without exclusively benefiting any of the parties. The negotiation and decision-making processes concerning related-party transactions shall be effective, independent, and capable of providing adequate compensation payment. It is possible to verify these conditions through the performance of tests for (i) comparison of the deal with similar ones already carried out in the market (“Fairness Test”); or (ii) comparison with another, hypothetical deal, if it were concluded with an independent third party, that is, verifying the transaction would be carried out under the same terms with a third party other than the related party (“Arms-length Bargain Comparison”).
Thus, related-party transactions shall be analyzed in an informed, thoughtful, and disinterested manner compared to the market alternatives, and the decision shall be made in the company’s interests.
Item 4.2.12 of the aforementioned policy defines that, in case of doubts in performing the aforementioned tests or in the case of complex operations such as corporate restructuring, the analysis shall be performed by a specialized independent institution that is not linked to the companies involved in the related-party transaction.
Eletrobras’ policy for transactions with related parties establishes that such transactions shall not result from the influence of the related party in the formation of the shall of the corporate body. They shall result from the effective negotiation between independent parties and the reasoned and reflected deliberation of the collegiate body, in the best interest of the company.
For the structuring and approval of the matter, the mentioned policy defines in item 4.3.20 in addition to the usual instruction documents of the matter, the following information shall be included in the referred documents to be approved: (i) amount involved in the transaction with related parties; (ii) existing balances; (iii)) terms and conditions; (iv) nature of the remuneration to be paid; (v) information on guarantees given or received; (vi) provision for doubtful debt collection and expenses with losses recognized in the period; (vii) remuneration of key management personnel; (viii) participation of the parent company and the subsidiary in a defined benefit plan with shared risks between company entities, if applicable; (ix) information regarding the performance of fairness tests or arms-length bargain comparison tests, their description and result, or, as the case may be, description of the appropriate compensatory payment; and (x) information required by CVM Instruction and applicable legislation, for disclosure to the market.
Page 19 |
14/01/2022
TIR DFP-003/22 |
In addition, the matter shall be submitted for review and approval to the Audit and Statutory Risks Committee – CAE and the Eletrobras Board of Directors – CA.
In the case of the transfer of Itaipu to ENBpar, due to its nature of being a binational treaty, the operation cannot be comparable with market practices. In addition, it is inserted in a broader context, which is the capitalization of Eletrobras, i.e., the transfer of Itaipu to ENBpar shall not occur in isolation, but only if Eletrobras was capitalized.
Thus, the commutativity analysis shall be seen from the global point of view of the operation, and not only from the individual point of view of this transfer, and shall be subject to appreciation in a specific Technical Note on the subject.
8. FINAL CONSIDERATIONS
The present Technical Information Report sought to analyze Itaipu segregation model under two aspects: i) transaction value and ii) transfer agreement conditions.
From the economic and financial assessment point of view, the valuation methodology presented by BNDES is consistent with the external legal opinion hired by Eletrobras, and the results presented are consistent with the proposed methodology.
Regarding the conditions of the transfer agreement, it is important to highlight the points of attention brought up throughout this document, especially item 7.2, where we point out the risks that we observed in the modeling proposed by BNDES.
Finally, this Technical Information Report is not intended to make an exhaustive analysis of all segregation points of Itaipu, and it is necessary that the decision-makers read it together with other analyses, such as legal, risk, governance, accounting, as well as other competent areas of Eletrobras.
Page 20 |
14/01/2022
TIR DFP-003/22 |
________________________________ Marcos Barreto de Faria Pinho | ________________________________ Flávia Xavier Cirilo de Sá
|
________________________________ Vinícius Brito da Fonseca |
I agree:
_____________________________
Rodrigo Vilella Ruiz
Page 21 |
ANNEX 07
Description of the “Corporate Interest Transfer Agreement and Other Covenants” referring to the transfer of Itaipu's interest (Article 8 of CVM Instruction 481)
ANNEX 08
Agreement for the transfer of equity holding and other matters
AGREEMENT FOR THE TRANSFER OF EQUITY HOLDING AND OTHER MATTERS
This Agreement for the Transfer of Equity Holding and Other Matters (“Agreement”) is entered into by and between, on one side:
(i) EMPRESA BRASILEIRA DE PARTICIPAÇÕES EM ENERGIA NUCLEAR E BINACIONAL S.A. – ENBPAR, a state-owned company, duly incorporated and existing in accordance with the laws of the Federative Republic of Brazil, enrolled with the National Taxpayers’ Registry of the Ministry of Economy (“CNPJ/ME”) under No. 43.913.162/0001-23, with its head office in the city of Brasília, Federal District, at Esplanada dos Ministérios, block U, ground floor, Zip Code 70065-900, hereby duly represented pursuant to its bylaws (“ENBPar”);
And, on the other side:
(ii) CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS, a company of mixed capital (sociedade de economia mista), duly incorporated and existing in accordance with the laws of the Federative Republic of Brazil, enrolled with the CNPJ/ME under No. 00.001.180/0001-26, with its head office in the city of Brasília, Federal District, at SCN square 06, tower “A”, block “A”, 6th floor, Shopping ID, Zip Code 70716-900, hereby duly represented pursuant to its bylaws (“Eletrobras” and, jointly with ENBPar, hereinafter referred to as “Parties” and, individually, as “Party”);
WHEREAS, ITAIPU BINACIONAL (“Itaipu”) is a bi-national entity, created by the treaty signed on April 26, 1973 (as approved by the Legislative Decree No. 23/1973 and issued by the Decree No. 72,707, dated August 28, 1973), between the Federative Republic of Brazil and the Republic of Paraguay (“Treaty”);
WHEREAS, on July 12, 2021, it was issued the Brazilian Law No. 14,182 (“Law 14,182”), which set forth the main terms and conditions for the privatization of Eletrobras (“Privatization”);
WHEREAS, Law 14,182 provided that the Privatization will be performed by means of a capital increase of Eletrobras, under a public offering of new common (voting) shares of Eletrobras, with the waiver of preemptive rights by the Federal Government, provided that such offering may occur jointly with the sale of shares issued by Eletrobras and held directly or indirectly by the Federal Government, by means of a secondary public offering of shares (“Offer”);
WHEREAS, in accordance with the duties granted by the Brazilian Law No. 13,334, dated September 13, 2016, the Board of the Investment Partnerships Program (Conselho do Programa de Parcerias de Investimentos) issued the Resolution No. 203, dated October 19, 2021, and Resolution No. 221, dated December 29, 2021, providing the details of the operating model, adjustments and conditions for the Privatization (“CPPI Resolutions”);
THEREFORE, the Parties agree to enter into this Agreement, in accordance with the following terms and conditions:
1 | CHAPTER I – DEFINIÇÕES E REGRAS DE INTERPRETAÇÃO |
1.1 Defined terms. The following terms, when used in capital letters in this Agreement, will have the following meanings:
“Adjustment Factor 2020” means 4.16524;
“Adjustment Factor 2021” means the arithmetical average of the accumulated variation of the Industrial Goods Index and Consumer Price Index since the payment of the capital of Itaipu until December 31, 2021, in accordance with the Reversal Note (Nota Reversal) DTM/T/N.R. No. 3, dated January 28, 1986;
“Advanced Payment” will have the meaning attributed to it in Section 2.4.4;
“Agent” will have the meaning attributed to it in Section 2.5;
“Agreement” will have the meaning attributed to it in the Preamble;
“Arbitration Law” will have the meaning attributed to it in Section 6.2;
“Chamber” will have the meaning attributed to it in Section 6.2;
“Civil Code” means the Brazilian Law No. 10,406, dated January 10, 2002;
“CNPJ/ME” will have the meaning attributed to it in the Preamble;
“Code of Civil Procedure” means the Brazilian Law No. 13,105, dated March 16, 2015;
“Compensation 2021” will have the meaning attributed to it in Section 2.2;
“Consumer Price Index” means the United States inflation index calculated according to the same calculation rules set forth in the Reversal Note (Nota Reversal) DTM/T/N.R. No. 3, dated January 28, 1986, provided that, in the event that this index is not available for the month(s) preceding the Transaction, it shall be considered the index that replaces it and, in the event that there is no replacing index, the figures referring to the last available month will be repeated for the following months, as applicable;
“CPPI Resolutions” will have the meaning attributed to it in the Whereas;
“Deadline for the Completion of the Transition” will have the meaning attributed to it in Section 5.2.1;
“Eletrobras” will have the meaning attributed to it in the Preamble;
“ENBPar” will have the meaning attributed to it in the Preamble;
“Equity Holding” will have the meaning attributed to it in Section 2.1;
“Escrow Account” will have the meaning attributed to it in Section 2.5;
“Escrow Agreement” will have the meaning attributed to it in Section 2.5.1;
“Industrial Goods Index” means the United States inflation index calculated according to the same calculation rules set forth in the Reversal Note (Nota Reversal) DTM/T/N.R. No. 3, dated January 28, 1986, provided that, in the event that this index is not available for the month(s) preceding the Transaction, it shall be considered the index that replaces it and, in the event that there is no replacing index, the figures referring to the last available month will be repeated for the following months, as applicable;
“Installments” will have the meaning attributed to it in Section 2.4;
“Itaipu” will have the meaning attributed to it in the Whereas;
“Itaipu Compensation” will have the meaning attributed to it in Section 2.55.2;
“Law 14,182” will have the meaning attributed to it in the Whereas;
“Management of Itaipu” will have the meaning attributed to it in Section 5.1;
“Offer” will have the meaning attributed to it in the Whereas;
“Party” ou “Parties” will have the meaning attributed to it in the Preamble;
“Price” will have the meaning attributed to it in Section 2.2;
“Principal” will have the meaning attributed to it in Section 2.2;
“Privatization” will have the meaning attributed to it in the Whereas;
“PTAX” means the exchange rate for the sale of US dollars as published by the Brazilian Central Bank, with the transaction code PTAX 800, option 5 (or any other exchange rate calculated by the Brazilian Central Bank in replacement of PTAX 800, option 5);
“Retained Amount” will have the meaning attributed to it in Section 2.5.2;
“Regulation” will have the meaning attributed to it in Section 6.2;
“Suspensive Condition” will have the meaning attributed to it in Section 3.1;
“Transaction” will have the meaning attributed to it in Section 2.1; e
“Transition Services” will have the meaning attributed to it in Section 5.2;
“Treaty” will have the meaning attributed to it in the Whereas.
1.2 Interpretation rules. For all purposes of this Agreement, except as may otherwise be provided herein:
(i) | references to Chapters, Sections or items must be interpreted as references to (a) the respective Chapters, Sections or items of this Agreement; and (b) to the entire applicable Chapter, Section or item, and not only to a certain piece of the foregoing; |
(ii) | references to this Agreement, laws or any other document must be interpreted as references to those instruments as they may have been amended, modified, renewed, complemented or replaced from time to time; |
(iii) | titles to Sections, items or similar are merely for convenience of the reader, and shall not affect the interpretation of its content; |
(iv) | the Whereas are part of this Agreement, and any reference to this Agreement shall include any of those Whereas; |
(v) | references in singular shall also include plural and vice-versa; and |
(vi) | words such as “include” or “including” shall be interpreted as referring to an example or for highlighting a certain language, and shall not be interpreted as any limit to the generality of any of those references. |
1.3 Counting of terms. All terms provided in this Agreement shall be counted in calendar days, except as expressly provided that the term shall be counted in business days, and shall be calculated in accordance with article 132 of the Civil Code. Any term that ends on a day that is not a business day shall be automatically extended to the next business day.
2 | CHAPTER II – TRANSFER OF ENTIRE EQUITY HOLDING |
2.1 Transfer of Equity Holding. To the extent that the Suspensive Condition is satisfied, Eletrobras shall transfer its entire equity holding in the capital stock of Itaipu (“Equity Holding”) to ENBPar (“Transaction”).
2.1.1 To the extent that the Suspensive Condition is satisfied, the Equity Holding shall be considered as automatically transferred by Eletrobras to ENBPar, and Eletrobras, jointly with the Federal Government, shall send a notice to Administración Nacional de Eletricidad - ANDE and to the Government of Paraguay informing the performance of such transfer.
2.2 Purchase Price of the Equity Holding. The Parties agree that the fair compensation for the purchase of the Equity Holding, to be paid by ENBPar to Eletrobras, is one billion, two hundred and twelve million, one hundred and forty eight thousand, one hundred and fifty one Reais and sixty five cents (R$1,212,148,151.65) (“Price”), which is equivalent to two hundred and thirty three million, two hundred and fifty three thousand, four hundred and forty US dollars (US$233,253,440.00), on the base date of December 31, 2020, and the Price will be divided as follows:
a) | one billion, eighty two million, two hundred and seventy five thousand, one hundred and thirty five Reais and forty cents (R$1,082,275,135.40), equivalent to two hundred and eight million, two hundred and sixty two thousand US dollars (US$208,262,000.00), considering the PTAX of R$5.1967 on the base date of December 31, 2020 (“Principal”); and |
b) | one hundred and twenty nine million, eight hundred and seventy three thousand and sixteen Reais and twenty five cents (R$129,873,016.25), equivalent to twenty four million, nine hundred and ninety nine thousand, four hundred and forty US dollars (US$24,991,440.00), considering the PTAX of R$5.1967 on the base date of December 31, 2020 (“Compensation 2021”). |
2.2.1 In the event that the compensation over the capital of Itaipu referring to the fiscal year of 2021 has already been paid to Eletrobras before the date of the Transaction, then the Compensation 2021 will no longer be a part of the Price.
2.2.2 Neither the Transaction set forth in this Agreement nor the indication or payment of the Price shall in any manner amend the amount of capital stock of Itaipu, which will remain the same as indicated in the Treaty and its Schedules, neither shall it amend any portion of that capital stock that was originally attributed to Eletrobras and which will be transferred to ENBPar pursuant to this Agreement.
2.3 Price Adjustment. The Price shall be adjusted according to the following Sections.
2.3.1 Adjustment of Principal. The amount of Principal, as set forth in Section 2.2a) above, shall be adjusted in accordance with the following:
a) | multiplication by the ratio between (i) the Adjustment Factor of 2021 and (ii) the Adjustment Factor of 2020; |
b) | adjustment of the result of item “a” above by the average of the variation of the US inflation indexes Industrial Goods Index and Consumer Price Index, as from December 31, 2021 until the closing of the month immediately preceding the date of the Transaction (including); |
c) | multiplication of the result of item “b” above by the variation of PTAX since December 31, 2020 until the business day immediately preceding the date of the Transaction; and |
d) | over the result of item “c” above, it shall be applied a compensation of twelve percent (12%) per year pro rata die, for the period between January 1st, 2022 (including) until the closing of the month immediately preceding the date of the Transaction (including). |
2.3.2 Adjustment of Compensation 2021. The amount of Compensation 2021, as set forth in Section 2.2(b) above, will be adjusted in accordance with the following:
a) | multiplication by the ration between (i) the Adjustment Factor of 2021 and (ii) the Adjustment Factor of 2020; and |
b) | multiplication by the result of item “a” above by the variation of PTAX since December 31, 2020 until the business day immediately preceding the date of the Transaction (including). |
2.4 Payment. The payment of the Principal installment of the Price shall be made in two hundred and forty (240) monthly installments, while the payment of the Compensation 2021 shall be made in thirty six (36) monthly installments (notwithstanding the provisions of Section 2.2.1), all of them paid in Reais (“Installments”), duly adjusted by the variation of the US dollar, the amount of which will result from the following calculation:
Where:
is the Installment, in Reais, to be paid in a certain month;
is the portion of the Installment referring to the payment of the Principal;
is the portion of the Installment referring to the payment of the Compensation 2021, notwithstanding the provisions of Section 2.2.1. Starting on the 37th (thirty-seventh) month of payment, this component shall be zero;
is the number of the applicable installment, varying from 1 to 240;
is the portion of the Price referring to the Principal, adjusted in accordance with Section 2.3.1;
is the portion of the Price referring to the Compensation 2021, adjusted in accordance with Section 2.3.2, notwithstanding the provisions of Section 2.2.1;
is the index of monthly interest of 0.3885473%;
is the variation of the PTAX between the business day immediately preceding the date of the Transaction and the business day immediately preceding the date of payment of the applicable month.
2.4.1 The first Installment shall be paid until thirty (30) days after the date of satisfaction of the Suspensive Condition, while the following Installments shall be paid on the same date of month of that first payment, in the following months.
2.4.2 The Installments shall be paid in Brazilian local currency and deposited in the bank account to be indicated by Eletrobras.
2.4.3 Upon payment default, ENBPar shall pay, over the defaulted amount, (i) during the first fifteen (15) days of default, interest equivalent to half percent (0.5%) per month pro rata die and (ii) as from the sixteenth (16th) day of default, interest equivalent to one percent (1%) per month pro rata die.
2.4.4 ENBPar may decide at its own discretion to pay in advance the remaining Installments (“Advanced Payment”), by means of a thirty (30)-day prior notice to Eletrobras informing its intention to perform an Advanced Payment, provided that the outstanding amount to be paid shall be calculated as follows:
Where:
is the outstanding amount of the Price that is still unpaid, in Reais, in a certain month, after payment of the;
The remaining variables shall have the meaning attributed to them in Section 2.4.
2.4.5 | Except as provided in Chapter II, there shall not be any adjustment to the amount of the Installments or any indemnification due by Eletrobras to ENBPar, including as a result of liabilities, debts or other contingencies of Itaipu. |
2.4.6 | The bank slip of the payment of the amounts pursuant to this Chapter II shall be considered as the due instrument of release with respect to the payment of the applicable amount for all purposes of article 319 of the Civil Code. |
2.5 Escrow Account. As guarantee for the payment of the Price, all payments that are due by Itaipu to ENBPar with respect to the compensation over the capital stock of Itaipu (pursuant to Schedule C of the Treaty) (“Itaipu Compensation”) will be deposited, on behalf of ENBPar, in an escrow account (“Escrow Account”) to be managed by a bank engaged by Eletrobras in market conditions (“Agent”), provided that ENBPar may veto such engagement with grounds within fifteen (15) days from the notice to that extent by Eletrobras. All funds deposited in the Escrow Account will be invested and release in accordance with this Section 2.5.
2.5.1 | Escrow Agreement. On the date of satisfaction of the Suspensive Condition, Itaipu and Eletrobras shall enter into an agreement with the Agent (“Escrow Agreement”), which shall provide the following: |
(i) | the annual compensation to be paid to the Agent for the services of maintenance of the Escrow Account will be paid with the amounts deposited in the Escrow Account, notwithstanding the provisions of Section 2.5.2 below; |
(ii) | the Escrow Account will be held in the name of ENBPar; |
(iii) | in the event of conflict between the Escrow Agreement and this Agreement, the provisions of this Agreement shall prevail; |
(iv) | the amounts deposited in the Escrow Account will be released and invested in accordance with Section 2.5.2 below; and |
(v) | the Escrow Account will be automatically closed and the Escrow Agreement will be automatically terminated upon payment of the full Price, except if otherwise agreed between the Parties. |
2.5.2 | Retention and Release. The retention and release of the funds deposited in the Escrow Account will occur as follows: |
(i) | once the deposit of the Itaipu Compensation is made in the Escrow Account, the Agent shall retain a portion of those funds, equivalent to the full amount of the Installments to be paid in the next twelve (12) months following the deposit, added by the amount of annual compensation due to the Agent (“Retained Amount”); |
(ii) | within five (5) business days from the deposit of the Itaipu Compensation, (a) transfer a portion of those funds, equivalent to the annual compensation due to the Agent, to the bank account of the Agent, as payment of its compensation, and (b) release the outstanding funds of the Itaipu Compensation to ENBPar; |
(iii) | transfer every month to Eletrobras, to the bank account to be indicated pursuant to Section 2.4.2, a portion of those funds, equivalent to the amount of each Installment that becomes due under the terms of this Agreement; |
(iv) | the Retained Amount shall be invested in investment fund(s) that invest in assets linked to exchange rate variation of the US dollar against the Real, provided that such investment fund(s) shall allow the withdrawal of investments by means of a prior request of no more than ten (10) days; |
(v) | the Retained Amount and its yield will be used for the payment by the Agent, on behalf of ENBPar, of the Installments, to the bank account indicated in accordance with Section 2.4.2, in accordance with the terms and conditions of this Agreement, provided that, in the event that the amount deposited in the Escrow Account is not sufficient for the full payment of any of the Installments, ENBPar shall then remain liable for the payment of the remaining amount; |
(vi) | in the event that any of the Installments is subject to an Advanced Payment, the Retained Amount referring to the same period shall be reduced by the amount of that Installment and released to ENBPar; and |
(vii) | twelve (12) months after the deposit of the Itaipu Compensation, after the payment of the Installments referring to the respective reference period, the Agent shall release any excess of funds to ENBPar, to a bank account to be informed by ENBPar to the Agent, after discounting any taxes that may apply in accordance with the applicable law and that shall be retained by the Agent. |
3 | CHAPTER III – SUSPENSIVE CONDITION |
3.1 Suspensive Condition. The obligations undertaken by the Parties hereunder will be suspended, pursuant to article 125 of the Civil Code and paragraph 2 of article 3° of Law 14,182, until the liquidation of the Offer under the conditions approved by the CPPI Resolutions (“Suspensive Condition”).
3.2 Parties’ Obligations. In accordance with Law 14,182 and the CPPI Resolutions, each Party shall perform any and all acts that were attributed to them and that may be required for the satisfaction of the Suspensive Condition, to the extent that all legal provisions required for such are duly complied with and to the extent that all applicable corporate and governance approvals required for such are duly obtained.
4 | CHAPTER IV – EFFECTIVENESS AND TERMINATION |
4.1 Effectiveness. This Agreement shall remain in effect until the full compliance with all obligations provided herein.
4.2 Automatic Termination. This Agreement will be automatically terminated in the event that the Suspensive Condition is not satisfied until December 31, 2022, except if otherwise agreed between the Parties. Notwithstanding the foregoing, this Agreement may be terminated by mutual agreement in writing between the Parties.
4.3 Effects of Termination. Notwithstanding the termination of this Agreement pursuant to Section 4.2, the obligation of the Parties provided in Chapters 1, 4 and 6 shall survive the termination of this Agreement.
CHAPTER V – TRANSITION SERVICES
5 |
5.1 Responsibility for the Management of Itaipu. Once the Suspensive Condition is satisfied, and once the Transaction is closed, it shall also be considered as immediately transferred to ENBPar the responsibility for the Brazilian management of Itaipu and its assets, as well as the responsibility for the commercialization of the energy produced by the power plant of Itaipu that is consumed in Brazil, in accordance with the Decree No. 10,791, dated September 10, 2021 (“Management of Itaipu”).
5.2 Transition Services. Eletrobras will assist ENBPar during the transition of the Management of Itaipu, in order to ensure the operational, commercial, financial, regulatory and administrative continuity of Itaipu’s activities, also preserving its governance in general (“Transition Services”).
5.2.1 | The Transition Services will be provided during a period of one hundred and eighty (180) days after the Transaction (“Deadline for the Completion of the Transition”). |
5.2.2 | Until the closing of the Transaction, Eletrobras shall deliver to ENBPar a detailed transition plan to be revised, commented and approved by ENBPar, which shall include (i) the order of the activities that will be needed by Eletrobras and ENBPar, in order to assure the continuity of the Management of Itaipu, including an estimate of the deadline for each activity; (ii) the minimum criteria that ENBPar shall observe in order to receive the proper support in the transition; (iii) the date of delivery of documents, information, proprietary systems and other instruments that may be required for the Management of Itaipu; and (v) a supporting report that includes (a) a description of the main activities performed in the context of the Management of Itaipu and (b) a reasonable estimate from Eletrobras with respect to the number of people and type of infrastructure required for the Management of Itaipu. |
5.2.3 | ENBPar shall structure an internal department, allocate responsibilities and perform all other activities that may be required for the purpose of assuring the continuing Management of Itaipu. |
5.2.4 | ENBPar shall engage a service for the independent assurance of accounting and financial information of the Management of Itaipu, in order to assure that the related assets and liabilities comply with the level of risk that is acceptable to ENBPar. |
5.2.5 | At least two (2) months in advance of the Deadline for the Completion of the Transition, the Parties shall notify the Federal Government informing the status of the Management of Itaipu. |
5.2.6 | In the event that the Federal Government decides to extend the Deadline for the Completion of the Transition, the terms, conditions and additional term for the Transition Services shall be mutually agreed between the Parties. |
5.2.7 | Eletrobras will be compensated for the Transition Services in the amount of [●] Reais (R$[●]) per month. |
6 | CHAPTER VI – MISCELLANEOUS |
6.1 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Federative Republic of Brazil.
6.2 Dispute Resolution. Disputes, controversies and/or differences between the Parties related to or in connection with this Agreement, and provided that they involve exclusively corporate law matters, as well as available equity rights, according to article 1, paragraph 1, of the Brazilian Law No. 9,307, dated September 23, 1996 (“Arbitration Law”), shall be definitively settled by arbitration administered by the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (the “Chamber”) in accordance with the Rules of the Chamber (the “Regulation”), in effect at the time of arbitration, as it does not conflict with this Agreement, except as they may be modified herein. The arbitration will be by law, and the arbitration panel shall not rule based on equity.
6.2.1 The arbitration panel shall be composed by three (3) arbitrators, and the appointment of such arbitrators shall be provided in the Regulation, provided that the third arbitrator, that shall act as the arbitration panel’s chairman, will be chosen by the Parties according to the list prepared by the other arbitrators.
6.2.2 The arbitration shall have its seat in the city of [•], State of [•], Brazil, and shall be conducted in Portuguese. The arbitration shall be processed and judged in accordance with the Brazilian laws.
6.2.3 The Parties may only seek injunctions and other provisional remedies that are expressly subject to revision by the arbitration panel. Before the arbitration panel’s formation, injunctions and other provisional remedies and/or enforcement actions, as applicable, may be required, at the option of the interested party, (i) in the jurisdiction of the seat of arbitration; or (ii) in an emergency arbitration proceeding according to the Regulation. After the arbitration panel’s formation, any other legal remedies authorized by the Arbitration Law shall be required in the jurisdiction of [•], State of [•], Brazil.
6.2.4 The resolution of any dispute that is not in the scope of the arbitration provided for in Section 6.2 above shall occur at the regular courts, in the jurisdiction of [•], State of [•], Brazil, which is hereby exclusively chosen by the Parties.
6.3 Extrajudicial Title. The Parties acknowledge that this Agreement constitutes an extrajudicial title, in accordance to article 784 of the Code of Civil Procedure.
6.4 Notices. All notices, consents, requests and other communications required or permitted hereunder shall be in writing and delivered to the applicable person in person, by recognized courier service, or registered mail, e-mail or recognized express delivery service, provided that in any case it shall be delivered with proof of receipt, to the address indicated in the preamble of this Agreement.
If to ENBPar, to:
[full name], [telephone], [e-mail]
At Esplanada dos Ministérios, block U, ground floor, Zip Code 70065-900, Brasília, Distrito Federal
If to Eletrobras, to:
[full name], [telephone], [e-mail]
At SCN square 06, tower “A”, block “A”, 6th floor, Shopping ID, city of Brasília, Distrito Federal, Zip Code 70716-900
6.4.1 Any notice, consent, request and other communication required or permitted hereunder shall be deemed to have been duly delivered (i) on the day of delivery, if delivered in person; or (ii) on the date that proof of receipt is issued, if sent by registered mail, courier service or express delivery service.
6.5 Binding Effect; Assignment. This Agreement is binding upon and inure to the benefit of the Parties and their respective successors and assigns. This Agreement is not assignable by any Party without the prior written consent of the other Party.
6.6 Taxes. All and any taxes, charges and contributions of any nature that levied or that will levy on the transactions provided in this Agreement will be the responsibility of and shall be paid by the respective party that is considered as responsible therefor according to the applicable tax law.
6.7 Irrevocability and irreversibility. This Agreement is executed between the Parties in irrevocable and irreversible character, for all rights end, except the provisions provided otherwise in the applicable law, and binds not only the Parties, but also their respective successors and assignees that undertake the obligations hereunder at any title.
IN WITNESS WHEREOF, the Parties enter into this Agreement in two (2) counterparts of same content and form, in the presence of the two (2) witness identified below.
[date]
[Signature page below]
__________________________________________________ EMPRESA BRASILEIRA DE PARTICIPAÇÕES EM ENERGIA NUCLEAR E BINACIONAL S.A. – ENBPAR By: Title: |
__________________________________________________ CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS By: Title: |
Witnesses:
_________________________________________ Name: ID: CPF/ME: | __________________________________________________ Name: ID: CPF/ME: |
São Paulo, October 9th, 2021
To
Brazilian National Economic and Social Development Bank (“BNDES”)
Attn.: Sr. Guilherme Garcia
Av. República do Chile n° 100
Rio de Janeiro - RJ
Re.: Eletrobras Group Modelling Assumptions Report
Dear Sir,
According to the contract for service performance No. 084/2021 executed between BNDES and the Consórcio Nova Eletrobras on May 27, 2021, we here by present the assumptions results for the modeling Eletronuclear, which serves as grounds for the financial modeling procedure of the asset.
The work carried out by Thymos Energia team has been developed exclusively to support the BNDES in the financial modeling process in the scenario of the current transaction and in the scenario projected by the Eletrobras group and its capitalization, provided that the results found were based primarily in the information provided by the assessed companies of the group. All values have been consolidated with public information obtained before area-relevant institutions whenever necessary.
The forecasts made by Thymos Energia are indicated along this report. Thymos Energia is a consulting company specialized in the national electric sector, and its capacity to be familiar with the context and perspectives of the market agents and sector-relevant institutions is a well-known distinction.
In the current version, the consolidation of the issues raised by BNDES and new information made available recently by the sector-relevant institutions (MME/BNDES) and by the Eletrobras is presented.
Eletronuclear Financial Modelling Assumptions Report
(October 2021)
Content
1. CONTEXT | 4 |
1.1. WORK STRUCTURE | 4 |
1.2. OVERVIEW OF ELETROBRAS ELETRONUCLEAR | 4 |
2. ELETROBRAS ELETRONUCLEAR | 6 |
2.1. POWER GENERATION ASSETS | 6 |
2.1.1. Summary of the termonuclear assets | 6 |
2.1.2. Regulated trading Framework (ACR) – QUOTAS | 7 |
2.1.3. Costs | 19 |
2.1.4. Investments – Capex | 20 |
2.1.5. Depreciation and amortization | 22 |
ANNEX 1 - MACROECONOMIC ASSUMPTIONS | 23 |
1. CONTEXT
1.1. | WORK STRUCTURE |
This report aims to analyze the main aspects of Eletronuclear, Provide the technical and operational assumptions necessary to the economic-financial assessment modeling (valuation) of the generation and transmission segments and other related business.
The assumptions and projections which will be presented have been based in a due diligence carried out in the current Business Plan of the Company, as well as the documents of the current administration provided to the Consortium, such as revenue, taxes, sector relevant charges, technical indicators, and possible risks of revenue loss and/or expenses increase projections.
In addition to the operational and technical assumptions, the regulatory assumptions for the tariff projections which apply to the companies of the Eletrobras group will be presented.
All information has been consolidated with public information, Proceedings and rules of the electrical sector provided by sector-related entities (MME, ANEEL, ONS, CCEE, EPE).
All methodology and rationale applied shall be presented. All data and projections shall be provided in a data file attached here to.
1.2. | OVERVIEW OF ELETROBRAS ELETRONUCLEAR |
A Eletrobras Eletronuclear was founded in 1997, resulting from the spinoff of the nuclear sector of Furnas and, from this point on, was a part of the group of companies controlled by the holding company Eletrobras.
At that point, Excalibur was responsible for continuing the operation of Angra 1 and for the conclusion of the construction works of Angra 2. The spinoff of the nuclear business of Furnas was determined by the National Privatization Council (CND) as a preparatory measure for the privatization of this company.
Eletrobras Eletronuclear, therefore, aims to operate and construct nuclear power plants in Brazil and is a partially government owned company. In the National Integrated Electric Power System (SIN), the location of the Angra 1 and 2 power plants in the Angra dos Reis municipalities, near the main consuming markets of the country, is an important
characteristic of its production. The conclusion and expansion of Eletrobras Eletronuclear with Angra 3 has been included in Law No. 14,120/21 and the feasibility of the project is under assessment with BNDES.
Currently the power plants in operation are Angra 1, with the power generation capacity of 640 MW and Angra 2, with 1,350 MW. The expansion through Angra 3 project is very similar with the Angra 2 project, with the addition of technological advances, and will have the capacity of 1,405 MW. Additionally, the National Energy Plan (PNE 2050) determines the need to construct new nuclear centrals in the regions of southeast and northeast Brazil.
The energy amount originated in the nuclear centrals off Angra one and Angra to our allocated as quotas in the National Integrated Electric Power System (SIN). ANEEL periodically defines the volumes of quotas of each distribution concessionaire, for inclusion in their energy procurement portfolio, and the price to be paid by it to Eletrobras Eletronuclear.
2. | ELETROBRAS ELETRONUCLEAR |
2.1. | POWER GENERATION ASSETS |
2.1.1. Summary of the THERMONUCLEAR assets
Eletronuclear is the concessionaire off thermal nuclear power generation assets, the installed capacity of which total lies 1990 MW. All the power plants off Eletronuclear are located in the subsystem Southeast/Mid-West, in the state of Rio de Janeiro, and use uranium as fuel. The guarantee in force is of 1,714.5 MW in average as of the publication of Law No. 14,182, dated July 12, 2021.
Power Plant | Eletronuclear Interest | Start of Concession | End of current concession |
Almirante Álvaro Alberto – Unidade I (Angra I) | 100% | Jan-85 | Jan-25 |
Almirante Álvaro Alberto – Unidade I (Angra I) | 100% | Sept-00 | Sept-40 |
UTN Almirante Álvaro Alberto – Unidade I (new name of UTN Angra I) was granted in 1957 and transferred to Eletronuclear at the end of the 90s, when the company was founded. The power plan is located in the Angra dos Reis municipality, in the state of Rio de Janeiro. Its commercial operation started in the year of 1985 with 640 MW of installed capacity.
UTN Almirante Álvaro Alberto – Unidade II (new name of UTN Angra II) was granted in 1962 and transferred to Eletronuclear at the end of the 90s, when the company was founded. The power plan is located in the Angra dos Reis municipality, in the state of Rio de Janeiro, in the same complex as UTN Almirante Álvaro Alberto – Unidade I. Its commercial operation started in the year of 2001 with 1,350 MW of installed capacity.
Power Plant | Capacity (MW) | Physical Guarantee (average MW) | Subsystem | Subsystem | State |
Almirante Álvaro Alberto – Unidade I (Angra I) | 640 | 509.8 | SE/CO | Uranium | RJ |
Almirante Álvaro Alberto – Unidade I (Angra I) | 1,350 | 1,204.7 | SE/CO | Uranium | RJ |
Total | 1,990.0 | 1,714.5 |
Eletronuclear holds 100% of its thermal nuclear assets. In relation to the concession term, we highlight that the authorizations will terminate in January 2025 for Angra 1 and September 2040 for Angra 2. In October 2019, Excalibur formally filled with CNEN the documentation for the formalization of the License Renewal Request for Angra 1 for another 20 years from the end of 2024. With the extension of the useful life of Angra 1
for another 20 years, from 2025 on, 640 MW additional capacity will be added to the National Integrated Electric Power System - SIN.
Eletronuclear holds an authorization issued by the national Department of Waters and Electrical Power - DNAEE, the predecessor of ANEEL, through the DNAEE regulation No. 315, dated July 31, 1997. The referred regulation does not set forth the end date for the authorization concession. In addition to the authorization to act in the Electric power sector, the projects must be licensed by Ibama, for environmental regulation purposes, and by the National Commission of Nuclear Power – CNEN, for nuclear power regulation purposes.
Since Eletronuclear has already initiated the investment in Angra I useful life extension, and the international precedents indicates the renewal of the concession, as occurred in the United States, where nuclear reactors had their respective original licenses of 40 years extended for another 20 years, we understand that, for protection purposes, it is reasonable to assume that there will be an extension.
Hence, the extension renewal is considered in the other assumptions, among which we stress the CAPEX, which comprises the projects related to the useful life extension of Angra I, additionally to what has been already spent to allow for such extension.
We understand that the best assumption is to consider that the installed capacity and the guaranteed power of each of the power plants is constant until the end of their respective concession.
2.1.2. Regulated trading Framework (ACR) – QUOTAS
Law No. 12,111 sets forth that after 2013 the payments to Eletronuclear of the revenue arising off the power generation of Angra 1 and 2 Power Plants shall be divided among all the concessionaires, holders of permission and holders of authorization for public distribution services in the National Integrated Electric Power System – SIN.
Therefore, Eletronuclear’s income arises of a division among the concessionaires of power quotas distribution, which provide a power coverage in exchange for the regulated payment which is calculated annually by ANEEL.
REN ANEEL 530/12 sets forth the conditions for trading of power of Angra 1 and 2 plants, with all concessionaires, holders of permission and holders of authorization for public
distribution services within the National Integrated Electric Power System – SIN. The tariff for the power plants of Angra shall be calculated considering the methodology of “cost per service with transfer of all identified costs considered prudent by ANEEL1.
Angra nuclear power plants are thermal based, with a practically fixed generation. The technology demands a stoppage for refilling fuel with fuel exchange, concurrently to which maintenance, tests and periodic inspections required under the technical specifications are carried out. This lasts approximately 1.5 months per year. The calculation of the “Angra quotas” considers the annual stoppages in the amount of expected power and the annual payment is made in twelve equal installments.
Submodule 6.7 of PRORET, revised under normative resolution ANEEL No. 838, dated December 26, 2018, sets forth the proceedings adopted for the calculation of the trading of electric power revenue arising from the power generation Centrals Angra I and II.
The following mechanisms are defined for the modification of the power sales revenue:
- Periodic revenue review: periodic revenue review carried out every five years, during which the revenue of Angra 1 and 2 is defined based on the analysis of the economic and financial balance equation of the nuclear power generation centers, aiming to define parameters which encourage efficient methods of generation;
- Annual revenue readjustment: annual revenue readjustments, except in the year in which the review occurs. Its object is maintaining the economic and financial balance of the revenue of Angra 1 and 2, defined in the review process, through the application of the readjustment rules.
2.1.2.1. Periodic revenue review
The sale revenue is composed by a fixed income – RF, which shall be paid monthly by the quota distributors. The fixed income of our generation centrals Angra 1 and 2 he is determined with the sum of Part A, Part B and the Adjustment Part, according to the following formula:
1 Law 12, 111/09 allows demanding additional revenue in the plants off Angra for the power generation above the physical guarantee (GF), 50% of which is to be shared among buyers. Nevertheless, the aforementioned payment of GS is not probable, Since the frequency off programmed stoppages is an obligation for nuclear technology, and the calculation of GF already considered the technological patterns of availability.
Where:
VPA: value of the Part A, R$;
VPB: value of the Part B, R$;
: adjustment part related to the cost of i associated to Angra 1 and 2, in R$, corresponding to the 12 months preceding the review proceeding; and
PIS/Cofins: sum of all the tax rate of the Social Integration Programs and Public Officer Fund Generation Programs, PIS/Pasep, and the Contribution for the Social Security Funds, Cofins.
Part A comprises the costs which, at a certain level, are not within the wheel or the control of Eletronuclear, particularly those related to the use and connection of the transmission systems, use and connection of the distribution systems, nuclear fuel acquisition, this commissioning fund and sector-specific charges.
Part B comprises the costs of its own generation activity, subject to the control and influence of management practices adopted by Eletronuclear for Angra 1 and 2, as well as the specific costs for the generation of nuclear power activity. Its amount is calculated based on the Cost of Generation associated with Angra 1 and 2, as follows:
Where:
CG: Cost of Generation considering the periodic tariff review, R$;
n: number of years of the tariff period;
i: tariff period year;
: weighted average cost of capital after taxes, in effective terms;
CAOM: Management, Operation and Maintenance Costs;
RC: capital compensation, R$; and
QRR: Regulatory Reintegration Quota, R$.
For the determination of the Generation Costs, it is necessary to calculate the annual value of the Management, Operation and Maintenance costs, capital compensation and Regulatory Reintegration Quota.
The Capital Compensation depends on the Regulatory Compensation Basis and the cost of capital, according to the following formula:
where:
RC: Capital Compensation, R$;
i: tariff period year;
BRRI: Net Regulatory Compensation Basis, R$;
RGR: negative balance of the General Reversal Reserve – RGR, R$;
: weighted average cost of capital before taxes; and
: Cost of Capital of RGR
The Regulatory Reintegration Quota (QRR) corresponds to the port which considers the depreciation and amortization of investments made and aims to restore the assets related to the service provision during its useful life.
where:
QRR: Regulatory Reintegration Quota, R$.
i: tariff period year;
BRRb: Gross Regulatory Compensation Basis, R$;
ð: average rate of depreciation of the facilities; and
Créditos PIS/Cofins: PIS/Cofins credits related to the book value depreciation, R$.
The calculation of the compensation basis will be made according to the operations occurred (additions, write-offs and depreciation) and the corresponding updates since the entry into commercial operation of Angra 1 and 2. The calculation of the compensation basis shall take into account the operations occurred during the last review cycle.
Operations occurred, as well as initial balance of the assets, shall be updated according to the variation of the IPCA, between the first accounting entry and the date of revenue review in national currency.
The effects of the accumulated depreciation between the date of entry into operation and the periodic revenue review shall be considered for the calculation of the compensation basis.
The fixed assets arising from France of the RGR shall be compensated according to the interest rates for loans obtained by Eletronuclear with the RGR manager, reduced by the IPCA average rate in the last three years prior to the review proceeding date.
The referred interest-rate shall be calculated according to the rate of 5% per year, pursuant to Law No. five, 5.655 of 1971, increased by the weighted average management fee for the loans granted to Eletronuclear by the RGR manager.
The balance of the investments made with the financing with RGR funds shall be compensated with the cost of the loans in effective terms, since the tariff readjustments consider the monetary update of Part B; the investments made during the tariff cycle are
equally updated according to inflation when they are included in the regulatory compensation basis.
The remainder company assets shall be compensated according to the regulatory cost of capital (WACC).
2.1.2.2. ANNUAL REVENUE REVIEW
For the Annual Revenue Review, the fixed income of the Power Generation Centrals Angra 1 and 2 shall be calculated according to the following formula:
VPA: value of the Part A, R$;
VPB: value of the Part B in the previous tariff proceeding;
IA: rate obtained by the division of the IPCA rates, disclosed by IBGE, in the second month prior to the readjustment in process date and the second month prior to the tariff proceeding in the previous year date;
PIS/Cofins: tax rate of the Social Integration Programs and Public Officer Fund Generation Programs, PIS/Pasep, and the Contribution for the Social Security Funds, Cofins; and
: adjustment part related to the cost of i associated to Angra 1 and 2, in R$, corresponding to the 12 months preceding the review proceeding.
Part A is comprised by the sum of the components in the following formula:
VPA: value of the Part A, associated to Angra 1 and 2, R$;
CT: Connection and use of transmission systems costs associated with Angra 1 and 2, R$;
CD: Connection and use of distribution systems costs associated with Angra 1 and 2, R$;
CC: Nuclear Fuel Cost associated with Angra 1 and 2, R$;
ES: Sector-specific charges defined in the applicable law associated with Angra 1 and 2, R$; and
FD: decommissioning fund associated with Angra 1 and 2, R$
The values comprised by Part B must be annually adjusted by the IPCA, until the next periodic review in 2023 occurs, and so forth, in subsequent cycles.
2.1.2.3. ANNUAL REVENUE PROJECTION
The revenue to be accrued by ELETRONUCLEAR defined by the National Electric Energy Agency, in a specific tariff process for 2021, is R$ 3.4 billion, according to the calculation made available by ANEEL, and presented in the table below:
1. PART A | 1.291.866.399,98 |
TFSEE | 8.505.206,20 |
ONS | 258.992,52 |
RGR | 104.429.966,78 |
Transportation costs | 164.220.896,72 |
Fuel costs | 827.670.000,00 |
Decommissioning costs | 186.781.337,77 |
2. PART B | 2.126.301.549,94 |
Operational costs | 994.999.240,14 |
Capital compensation | 627.928.426,60 |
Regulatory Reintegration Quota | 503.373.883,20 |
3. PART A + PART B | 3.418.167.949,92 |
4. ADJUSTMENT PART | -310.433.830,27 |
Adjustment part - transportation, RGR e TFSEE Adjustment part - fuel Adjustment part - other | -6.504.528,47 -303.929.301,80 0,00 |
5. PIS/COFINS | 316.766.287,68 |
6. FIXED INCOME | 3.424.500.407,32 |
7. ESTIMATED TARIFF - (R$/MWh) |
Periodic review processes occur at intervals of 5 years; the next processes will occur in cycles: 2023, 2028, 2033, 2038 and 2043, since the concession extension of Angra I will last until 2044.
2.1.2.3.1. part A projection
Electric Power Services Inspection Fee – TFSEE
As defined by Sub-module 5.5 of PRORET, all generation projects, regardless of their exploration regime (public service or PIE) must collect TFSEE, except for CGHs, as they only have registration with ANEEL.
The Electronuclear calculation performed is the estimated annual Part B value multiplied by 0.4%.
ONS Fee
The ONS Associative Contribution is charged to power generators, transmission players and to consumers. This contribution is calculated based on an estimated annual budget made by the ONS, which must be divided using different weights for each paying category.
The estimated amount to be paid by Power Generators must be calculated for each generator by its proportion of Installed Capacity over the total value of capacity registered in the ONS.
The assumption adopted for the coming years is to update the current annual contribution by the Brazilian inflation index IPCA, proportional to installed capacity.
RGR
The RGR is a charge of the Brazilian electricity sector paid monthly by energy generation, transmission and distribution concessionaires. Created in 1957, via the Decree No. 41,019, the Global Reversion Reserve Account finances improvement and expansion projects for companies in the energy sector.
The coverage relating to RGR quotas for the year 2020 considered the amounts contained in Decision No. 2,190, dated August 8, 2019. However, due to the issuance of Decision No. 2,403, dated August 14, 2020, which changed the value of these quotas, a negative financial amount of BRL 4,707,383.65 was formed, for prices of December 2020, to be considered in the Adjustment Part to be offset in 2021. Since the value defined for the RGR in 2021 was R$ 104.4MM, we understand the best assumption updating it by the IPCA, in proportion to the installed capacity.
Transportation Costs
Connection and transmission system use costs
The costs with the use of the transmission systems refer to the amounts paid to the Transmission Companies, pursuant to the Contract for the Use of the Transmission System – CUST entered into with the ONS, for the access to the SIN transmission network. For purposes of calculating this cost associated with Angra 1 and 2, the Transmission System Usage Tariffs - TUST defined in REH No. 2,726/2020, and the Transmission System Use Amounts - MUST in force under the Amendment No. 07 to
CUST No. 089/2002. The use of the indicated values corrected for inflation, proportional to the installed power of the plants, is recommended.
The cost of connection to the transmission system refers to the exclusive use of Other Transmission Installations – DIT that are not part of the Basic Network and belong to the transmission companies. Its values are established by ANEEL and, for the current cycle, were approved by means of REH nº 2,725/2020. The use of the indicated values corrected for inflation, proportional to the installed power of the plants, is recommended.
Connection and use of distribution system costs
Costs with the use of distribution systems refer to amounts paid to distributors, pursuant to the Distribution System Usage Agreement – CUSD entered into with the electricity distribution concessionaires. For purposes of calculating this cost associated with Angra 1 and 2, the Tariffs for Use of the Distribution System - TUSD defined in REH No. 2,666/2020, the Amounts for Use of the Distribution System - MUSD in force in the CUSD executed between Eletronuclear and Enel Distribuição Rio. The use of the indicated values corrected for inflation, proportional to the installed power of the plants, is recommended.
Fuel costs
Submodule 6.7 of PRORET sets forth that Eletronuclear shall present the estimated nuclear fuel cost for the readjustment year based on the values corresponding to the to the annual events contractually scheduled with Indústrias Nucleares do Brasil – INB in the schedule of recharges of Angra 1 and Angra 2. This estimate was sent by letter ACM.O-006/20, and totals R$ 827,670,000.00.
Also pursuant to PRORET, adjustments in the fuel cost actually carried out and the coverage given in the previous process were calculated, according to values validated by the SFF. This calculation considered payments for the year 2020. This adjustment totaled a negative amount of R$303,929,301.80.
The assumption adopted for the coming years is to update these values with the following proportion:
IGP-DI | EURO | DOLLAR |
62% | 33% | 5% |
Decommissioning Fund
The Decommissioning Fund is the coverage given to the formation of the financial fund necessary for the decommissioning of Angra 1 and 2 Power Generation Plants after their respective shutdowns.
Based on the total estimated resources for the decommissioning of Angra I and II, the coverage to be granted in 2021 was calculated for the composition of the fund, which considered the estimated remaining useful life of the plants, the tariff coverage previously granted, the return of 2% per year until the estimated deadline in 2033 and an average exchange rate value of R$ 4.23, according to procedures established in PRORET Sub-Module 6.7. Thus, the 2021 decommissioning fund portion was set at R$ 186,781,337.77.
Funds required for the decommissioning | ||
Power Plant | US$ | R$ |
Angra I | 601,211,984.00 | 2,540,951,980.45 |
Angra II | 708,292,836.00 | 2,993,516,650.14 |
Total | 1,309,504,820.00 | 5,534,468,630.59 |
2.1.2.3.2. part b projection
Capital compensation
The Capital Compensation – RC corresponds to the compensation for the investments made by Eletronuclear related to Angra 1 and 2 nuclear centrals. The Capital Compensation depends fundamentally on the Regulatory Compensation Bases and the cost of capital. In the last periodic review proceeding of 2018, the values of the RC were:
Description | 2018 review (re: dec-2018) |
Total Net Compensation Basis | 6,495,713,741 |
Other investments RGR Balance | 306,164,000 |
Real WACC before taxes | 7.16% |
Other Investments RGR Rate | 1,80% |
The parameters for the WACC are defined in Sub-module 12.3 of PRORET, and the resulting effective WACC is 6.96% before taxes, to be considered as a premise in the next review processes.
The capital installments financed with funds from the RGR will be compensated at the rate of the loans taken by Eletronuclear with the manager of the RGR, 1.80% per year in real terms.
Operational Costs
For the purposes of the Eletronuclear tariff review, operating costs are defined as the costs of Personnel, Materials, Third-Party Services and Other Operating Costs – PMSO. These costs are, by their nature, the most manageable by companies.
As explained by ANEEL in its last tariff review process, there was no expansion of the plant’s installed capacity, and it understood that there are no grounds for large variations in operating costs. Therefore, the methodology used in the previous review is maintained and the lowest cost observed in the period, which occurred in 2006, is considered as a reference in the calculation, which reached the amount of R$ 994,999,240.14, at estimated prices in December 2021.
Regulatory Compensation Basis
For the definition of BRR, the approach adopted for the distribution and transmission concessionaires of electric energy will be used. The compensation basis approved in the previous periodic review will be shielded. Shielded Basis is understood as the amounts approved in previous cycles, associated with assets in operation, excluding operations that have taken place (write-offs and depreciation) and including the respective updates. The book values for incremental investments occurred between the previous and current base date, which will be updated by the IPCA, shall equally be taken into account. In its last periodic review process 2018, the values referring to the Remuneration Basis were:
Description | 2018 review (re: dec-2018) |
Gross Compensation Basis | 15,436,623,295 |
Accumulated depreciation | -8,940,909,553 |
Total Net Compensation Basis | 6,495,713,741 |
Other Investments RGR Balance | 306,164,000 |
Depreciation Rate | 3.26% |
As stated in Memorandum No. 554/2018-SFF/ANEEL, dated October 12, 2018, the definitive value of the average depreciation rate to be used in the calculation of the revision of Eletronuclear’s revenue is 3.26%, and should be adopted as a premise in the next revisions.
For incremental investments, three distinct treatments must be adopted. For the 2018-2020 cycle, the incremental investments provided for in the last periodic review were considered, which amount to BRL 38,541,090.49 annually, with a base date in December 2018, for the 2021-2030 cycle, the investments provided for in the business plan provided by Eletronuclear should be considered, and for the period between 2031 and the end of the authorizations, the investment forecast in the CAPEX section must be considered, according to informed benchmarks.
Para os investimentos incrementais devem ser adotados três tratamentos distintos. Para o ciclo 2018-2020 foram considerados os investimentos incrementais previstos na última revisão periódica R$ 38.541.090,49 anuais, com data base em dezembro de 2018, para o ciclo 2021-2030 deve se considerar os investimentos previstos no plano de negócios fornecidos pela Eletronuclear, e para o período entre 2031 e o fim das autorizações deve-se considerar o investimento previsto na seção de CAPEX, conforme benchmarks informados.
2.1.2.3.3. PIS/COFINS AND R&D
No R&D payment by Eletronuclear for the exploitation of the thermonuclear power plants is expected.
The constant rates of PIS and COFINS are 1.65% and 7.6%, calculated upon income. There is also the possibility of PIS and COFINS tax credits, at their same rates.
Tax | Rate |
PIS | 1.65% |
COFINS | 7.60% |
Currently, there are divergences[2] within the Brazilian Federal Revenue Service - RFB in relation to the correct understanding of the costs of companies in the energy sector that are subject to PIS and COFINS credit. However, some of the items that are accepted:
2 Nevertheless, there are no relevant divergences for Eletrobras. Therefore, they were not tackled in this report.
· | Electricity acquired for resale - Electricity acquired for resale conforms to the item “goods acquired for resale”, present in articles 3, items I, of Laws No. 10.637/02 and nº 10,833/03; |
· | Materials (goods and services used as inputs in the production of goods and in the provision of services) - Credits referring to "inputs" are covered by articles 3, items II, of Laws No. 10,637/02 and No. 10,833/03, which indicate as creditable the expenditure referring to “goods and services, used as input in the provision of services and in the production or manufacture of goods or products intended for sale”; |
· | Materials and maintenance services for electrical systems – These are expenses with the acquisition of parts to be used in the company's electrical system, directly in the power generation as well as in the provision of maintenance services for these systems; |
· | Charges for the use of the transmission system - the PIS/COFINS legislation allows the credit of expenses related to the acquisition of goods and services applied or consumed in the production of other goods and in the provision of services. Thus, the amounts paid by companies as charges for the use of the transmission system, if they correspond to the consideration for the service for using the networks, will confer the credit of the contributions as "inputs". This, in fact, is the orientation expressed by the RFB, through the General Taxation Coordination (COSIT - OS Cosit Nº 60); |
· | CAPEX - The PIS and COFINS legislation allows the credit of expenditure on machinery, equipment and other goods incorporated into fixed assets, for use in the production of goods intended for sale or in the provision of services. Such is provided for in Article 3, item VI, of Law No. 10,637/02. This assumption must be included in the DCTF (Declaration of Federal Tax Credits and Debts), where the Internal Revenue Service checks the taxes and contributions that are made by the projects, in addition to the amounts that were used for their settlement, but we were unable to project this item. Due to materiality, it is possible to apply the Pis/COFINS rate on the total CAPEX according to the depreciation terms. |
Despite the divergences3 discussed by the RFB in each case, we understand that the PIS and COFINS credit can and should be applied to those inputs directly linked to the
3 Entretanto, para a realidade da Eletrobrás não existem divergências relevantes. Sendo assim, não foram consideradas no relatório.
company’s core operation, such as MSO, which we apply in their entirety for modeling purposes as a market practice, and can then be used regarding the costs identified and presented below:
• MSO Costs – Materials, Services and Other Costs;
• Transport Costs – Connection and usage charges (TUST and TUSD);
• Energy purchased at ACL;
• CAPEX - On depreciation.
2.1.3. Costs
2.1.3.1. operational expenses and costs – PMSO
To estimate the costs and expenses of Eletronuclear plant below, historical data from the period 2018 to 2020 were used.
For the analysis of historical years, the actual values on the base date of Dec/2020 were considered. For this purpose, we updated the historical values by the inflation calculated by the IPCA for each period.
We mapped out and analyzed the accounts, whose respective balances are linked to the company's PMSO, as they are related to our scope for preparing assumptions and projections.
For purposes of MSO projection, we indicate the average of the values in real terms made by Eletronuclear in the last three years per MW of installed capacity.
For the projection of personnel costs and expenses, we recommend the use of the amount realized in 2020 in real terms made by Eletronuclear per MW of installed capacity, since the company has undergone an employee termination incentive program in recent years.
We understand that, in the specific case of Eletronuclear, the adoption of past costs is more appropriate than a sector benchmark, since the company will remain under state control after the restructuring.
2.1.3.2. INTERNAL USage
Com base no plano de negócios fornecido pela Eletronuclear deve-se considerar o montante de consumo interno de Angra I e Angra II o valor anual de 919.800 MWh.
2.1.3.3. Unavailability rate
Based of NEWAVE deck as of September 2021, the unavailability rate to be taken into account is:
- Angra I - TEIF 2,79% - IP 10,33%
- Angra II - TEIF 1,15% - IP 9,89%
2.1.4. Investments – Capex
Extension
Eletronuclear has installed capacity preservation initiatives, promoting the extension of the Angra 1 license for another 20 years, building the Dry Storage Unit – UAS, in response to the risk of depletion of spent fuel pools of Angra 1 and Angra 2.
As provided by the company, the investment values in reais in nominal values, for the years between 2021-2030, referring to the construction of the Dry Storage Unit – UAS are:
2021 | 2022 | 2023 | 2024 | 2025 | |
Dry Storage Unit - LTO | 45,637,000.00 | 288,282,000.00 | 579,705,000.00 | 641,851,000.00 | 574,022,000.00 |
Dry Storage Unit - UAS | 64,022,755.81 | - | - | - | - |
2026 | 2027 | 2028 | 2029 | 2030 | |
Dry Storage Unit - LTO | 463,094,000.00 | 345,938,000.00 | 104,844,000.00 | 46,708,000.00 | 37,764,000.00 0 |
Dry Storage Unit - UAS | - | - | - | - | - |
Maintenance
The Maintenance CAPEX assumptions for the Eletronuclear Plants underwent a detailed analysis in order to use a simple concept to formulate the operating cost, and after the analysis of the characteristics of the plants, two distinct methodologies were created. According to values provided by the company under to its business plan, which establishes the nominal values, in reais, of continuous improvement in the maintenance and performance of generation assets for the period between 2021 and 2030:
For the period after 2030, international benchmarks were sought in order to seek efficient maintenance costs. efficiency of comparable power plants. For the Angra I plant, the study of Nuclear Costs in Context 2020 was used as a reference, prepared by NEI (Nuclear Energy Institute), the organization responsible for the policy of the nuclear technology industry in the United States. The study collects data from American plants in operation with the intention of carrying out comparative benchmarking of costs between operators of nuclear power plants. As the majority of the considered plants’ technology is similar to Angra I, with over 40 years of operation and their concessions were renewed for another 20 years, we believe they are a good guide for the projection, and the estimated value of generated energy is US$ 7.81/MWh, for the currency reference year of 2019. For the Angra II plant, which is a newer plant and uses technology different from Angra II, the average cost of similar plants in Germany was used for comparison, in plants with two reactors or more as disclosed by the Federal Secretariat for the German Government’s Nuclear Waste Management Security (Bundesamt für die Sicherheit der nuklearen Entsorgung - BASE), with generated power estimated value of US$ 3.53/MWh of, for the currency reference year of 2019.
2.1.5. Depreciation and amortization
Fixed Asset
Depreciation rates were based on Eletronuclear’s financial statements. The corporate rates establish that the asset is depreciated according to its useful life, thus we find that the Agent recognizes the depreciation in accordance with OCPC 05 - Concession Agreements - guidance approved by the CPC.
As taxas de depreciação foram baseadas nas demonstrações financeiras da Eletronuclear. As taxas societárias estabelecem que o bem seja depreciado de acordo com a sua vida útil, desta forma constatamos que o Agente efetua o reconhecimento da depreciação de acordo com o OCPC 05 - Contratos de Concessão - orientação essa aprovada pelo CPC.
Fixed assets | Rate % per year |
In service (average rate) | 3.26 |
Computer assets | 16.67 |
Vehicles | 14.29 |
Administrative Assets | 6.25 |
The annual rates of depreciation are determined in table XVI in the annex to ANEEL Normative Resolution No. 674 dated August 11, 2015 (DOU of August 18, 2015, and December 7, 2015, rectification) and in ANEEL Normative Resolution No. 529 of 21st of December 2012 (DOU of December 28, 2012): 3.26% per year the average rate for fixed assets in service at the Angra 1 and 2 Power Plants; 16.67% for computer assets; 14.29% for vehicles and 6.25% for other assets used administratively.
ANNEX 1 - MACROECONOMIC ASSUMPTIONS
The table’s reference is the macroeconomic analyzes of Banco Santander Brasil S.A. (August/2021) that were used for the projections in the flows of revenues, costs and expenses.
Economic variables | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 |
GDP - effective growth | 1.5% | 2.0% | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% |
IPCA-IBGE | 6.7% | 4.0% | 3.3% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% |
IGP-M | 19.8% | 5.2% | 3.3% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% |
CDI | 6.9% | 6.9% | 7.0% | 7.0% | 7.0% | 7.0% | 7.0% | 7.0% | 7.0% | 7.0% |
Exchange rate - R$/US$ | 5.05 | 5.55 | 5.20 | 5.00 | 4.80 | 4.85 | 4.89 | 4.94 | 4.99 | 5.04 |
Economic variables | 2031 | 2032 | 2033 | 2034 | 2035 | 2036 | 2037 | 2038 | 2039 | 2040 |
GDP - effective growth | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% |
IPCA-IBGE | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% |
IGP-M | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% |
CDI | 7.0% | 7.0% | 7.0% | 7.0% | 7.0% | 7.0% | 7.0% | 7.0% | 7.0% | 7.0% |
Exchange rate - R$/US$ | 5.09 | 5.14 | 5.19 | 5.24 | 5.29 | 5.34 | 5.40 | 5.45 | 5.50 | 5.56 |
�� |
ANNEX 10
Eletronuclear Investment Agreement
INVESTMENT AGREEMENT
This Investment Agreement (this “Agreement”) is entered into by and between, on one side:
(i) EMPRESA BRASILEIRA DE PARTICIPAÇÕES EM ENERGIA NUCLEAR E BINACIONAL S.A. – ENBPAR, a state-owned company, duly incorporated and existing in accordance with the laws of the Federative Republic of Brazil, enrolled with the National Taxpayers’ Registry of the Ministry of Economy (“CNPJ/ME”) under No. 43.913.162/0001-23, with its head office in the city of Brasília, Federal District, at Esplanada dos Ministérios, block U, ground floor, Zip Code 70065-900, hereby duly represented pursuant to its bylaws (“ENBPar”);
and, on the other side:
(ii) CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS, a company of mixed capital (sociedade de economia mista), duly incorporated and existing in accordance with the laws of the Federative Republic of Brazil, enrolled with the CNPJ/ME under No. 00.001.180/0001-26, with its head office in the city of Brasília, Federal District, at SCN square 06, tower “A”, block “A”, 6th floor, Shopping ID, Zip Code 70716-900, hereby duly represented pursuant to its bylaws (“Eletrobras” and, jointly with ENBPar, hereinafter referred to as “Parties” and, individually, as “Party”);
WHEREAS:
I. on July 12, 2021, it was issued the Brazilian Law No. 14,182 (“Law 14,182”), which set forth the main terms and conditions for the privatization of Eletrobras (“Privatization”);
II. Law 14,182 provided that the Privatization will be performed by means of a capital increase of Eletrobras, under a public offering of new common (voting) shares of Eletrobras, with the waiver of preemptive rights by the Federal Government, provided that such offering may occur jointly with the sale of shares issued by Eletrobras and held directly or indirectly by the Federal Government, by means of a secondary public offering of shares (“Global Offer”);
Página 1 de 17 |
III. in accordance with the duties granted by the Brazilian Law No. 13,334, dated September 13, 2016, the Board of the Investment Partnerships Program (Conselho do Programa de Parcerias de Investimentos) issued the Resolution No. 203, dated October 19, 2021 (“CPPI Resolution 203”) and Resolution No. 221, dated December 29, 2021 (“CPPI Resolution 221” and, jointly with the CPPI Resolution 203, the “CPPI Resolutions”), providing the details of the operating model, adjustments and conditions for the Privatization;
IV. the CPPI Resolutions approved the terms and conditions related to the reorganization involving ELETROBRAS TERMONUCLEAR S.A., a company of mixed economy, duly incorporated and existing under the laws of the Federative Republic of Brazil, enrolled with the CNPJ/ME under No. 42.540.211/0001-67, with its head office in the city of Rio de Janeiro, State of Rio de Janeiro, at Rua da Candelária, No. 65, 2nd to 14th floor, Zip Code 20091-020 (“Eletronuclear”) (such terms and conditions jointly referred to as “Eletronuclear Reorganization”), in which:
(i) | the signing, between Eletrobras and ENBPar, of an investment agreement providing at least the obligations of the parties to: |
(a) | participate in raising new financing for Angra 3 Thermonuclear Power Plant, operated by Eletronuclear (“Angra 3”), by means of granting personal guarantees, as well as by means of transfer of financing in the form of loans to Eletronuclear, in the total amount required for the conclusion of Angra 3, according to the terms of the studies conducted by BNDES as set forth in the Brazilian Decree No. 9,915, dated July 16, 2019 and in the Brazilian Law No. 14,120, dated March 1st, 2021, and proportionally to their participation in the voting capital of Eletronuclear and, for purposes of calculating such proportion, the guarantees, loans and contractual support obligations that already exist between the Federal Government or Eletrobras and Eletronuclear must be disregarded, provided that those guarantees, loans and contractual support obligations must be maintained; and |
(b) | perform all acts attributed to them for the purposes of the subscription of new shares of Eletronuclear, as determined by the studies engaged by BNDES, proportionally to their participation in the voting capital of Eletronuclear; and |
(ii) | signing, between Eletrobras and ENBPar, of a shareholders’ agreement of Eletronuclear (“Shareholders’ Agreement”) in order to provide for the governance of Eletronuclear, providing at least the following: |
(a) | the maintenance of COANGRA, as defined in the Shareholders’ Agreement and in the CPPI Resolutions; |
Página 2 de 17 |
(b) | ENBPar’s right of first refusal with respect to the sale of shares of Eletronuclear held by Eletrobras; and |
(c) | the right of Eletrobras to appoint the Chief Financial Officer of Eletronuclear; |
V. Angra 3 is currently under construction;
THEREFORE, the Parties agree to enter into this Agreement, in accordance with the following terms and conditions:
CHAPTER I – ACTS TO BE PERFORMED ON THE DATE OF THE GLOBAL OFFER SETTLEMENT |
1.1 Payment by Eletrobras. To the extent that the Condition Precedent is fulfilled according to the Chapter III below, Eletrobras shall pay 166.379.229.311 (one hundred and sixty-six billion, three hundred and seventy-nine million, two hundred and twenty-nine thousand, three hundred and eleven) common shares and 86.326.103.046 (eight-six billion, three hundred and twenty-six million, one hundred and three thousand and forty-six) preferred shares by it subscribed in Eletronuclear, in the total amount of R$6,232,329,437.73 (six billion, two hundred and thirty-two million, three hundred and twenty-nine thousand, four hundred and thirty-seven reais and seventy-three cents), on the date of the payment’s receipt of the issued shares price to be issued under the Global Offer by Eletrobras (and by the sellers of the shares issued by Eletrobras, as applicable) (“Global Offer Settlement”), as follows:
a) R$2,698,927,439.83 (two billion, six hundred and ninety-eight million, nine hundred and twenty-seven Thousand, four hundred and thirty-nine reais and eight-three cents), using priority credits related to priority dividends accumulated against Eletronuclear;
b) R$3,529,308,617.02 (three billion, five hundred and twenty-nine million, three hundred and eight Thousand, six hundred and seventeen reais and two cents) primarily through the capitalization of advances for future capital increase made by Eletrobras at Eletronuclear until January 2022; and
c) the remaining amount, in national currency.
1.2 Payment by ENBPar. To the extent that the Condition Precedent is fulfilled according to the Chapter III below, ENBPar shall pay, in national currency on the Global Offer Settlement date, 141.916.224.437 (one hundred and forty-one billion, nine hundred and sixteen million, two hundred and twenty-four thousand, four hundred and thirty-seven) common shares by it subscribed in Eletronuclear, in the total amount of R$3,500,000,000.00 (three billion and five hundred million reais).
Página 3 de 17 |
1.3 Payment of dividends. To the extent that the Condition Precedent is fulfilled according to the Chapter III below, the Parties shall cause Eletronuclear to, on the Global Offer Settlement date, pay the total minimum dividends approved in accordance with Section 3.1(ii)b).
1.4 Conversion of shares. To the extent that the Condition Precedent is fulfilled according to the Chapter III below, the Parties shall cause Eletronuclear to perform, on the Global Offer Settlement date, all necessary acts to the conversion of the common shares of Eletrobras in preferred shares in the form of adhesion previously carried out by Eletrobras to the optional conversion program.
CHAPTER II – CONTRIBUTION, FINANCING AND GUARANTEE |
2.1 Contribution and financing. The Parties shall cooperate with Eletronuclear for the raising of new funds for Angra 3’s construction conclusion, under this Chapter.
2.1.1 Upon agreement between Eletrobras and ENBPar, the provided in this Chapter will apply, as applicable, to new thermonuclear power plants projects and new projects established in the creation law and in Eletronuclear’s bylaws.
2.1.2 If the Parties do not express their interest under the terms of Section 2.1.1, there shall be no obligation to contribute, finance and guarantee the financing operations of new projects.
2.1.3 The Parties shall exercise their voting rights and will instruct the members of the Eletronuclear’s board of directors appointed by them appointed so that the construction or operation of new thermonuclear power plants, as well as other Eletronuclear’s activities, are developed to be compatible with the schedule, feasibility or availability of necessary resources to the construction and operation of Angra 3.
2.1.4 In case the provided in Section 2.1.3 is not complied with, Eletrobras may terminate the Agreement, according to the provided in Section 4.2 below.
2.1.5 The obligations assumed by Eletrobras under the equity support agreement currently in force on behalf of Eletronuclear, under the loan granted by Caixa Econômica Federal, will not be changed by the provisions of this Agreement, so that Eletrobras shall contribute the funds according to the established in that agreement, observing the maintenance, by ENBPar, of the majority of the Eletronuclear’s voting capital stock. If the issuance of new shares under this Section causes ENBPar not to hold Eletronuclear’s corporate control, any other contribution shall be done by Eletrobras by means of advances for future capital increase, loans and other structures that allow the payment or the settlement without the issuance of new common shares;
Página 4 de 17 |
2.2 Fundraising. Once defined, in the form of the studies conducted by BNDES provided for in the Decree No. 9,915/19 and in Law No. 14,120/21 (“BNDES Studies”), the necessary volume for the new contributions and new funding to enable the Angra 3 project, the Parties shall, according to the studies (a) cause Eletronuclear to issue new shares, to be subscribed and paid by the Parties (“Capital Contribution”) and (b) cause Eletronuclear’s Executive Officer, with BNDES support and its consultants hired under the agreement No. DAN.A/CT-4500020411, over guidance of the board of directors, search and submit to COANGRA, and subsequently to the Parties, proposals for obtaining such financing from financial institutions comply with the applicable legal requirements thereto (“Financing Proposals”).
2.3 Limits. The Parties will be required to make capital contributions, grant the necessary personal guarantees and/or structure the transfer operations to obtain the funding, according to Capital Contribution and Financing Proposals determined in the BNDES Studies, according to Section 2.2 above and subject to the proportions described in Sections 2.4 and 2.8.
2.3.1 Neither Party shall be required to contribute, guarantee or transfer the superior amounts provided for in this Agreement, pursuant to Sections 2.2, 2.4 and 2.8 (“Funding Commitment”), unless expressly agreed otherwise between the Parties.
2.3.2 Each Party shall honor its Funding Commitment if the other Party has also honored such commitment under this Agreement.
2.4 Capital Inputs. For the purposes of Capital Contributions, the Parties undertake to:
(i) | Within one hundred and twenty (120) days of the study’s conclusion or of the Offer, whichever occurs later, cause Eletronuclear to hold an extraordinary general meeting and to approve an capital increase in Eletronuclear, in amount and according to the payment established in the studies; |
(ii) | Ensure that the shares to be issued in the capital increase described in Section 2.4(i) above maintain the same proportion applicable to Eletronuclear between the common and preferred shares, all registered and without par value, whose issuance price will be equivalent to that defined in CPPI Resolutions, updated at the rate of eleven integers and twenty-three hundredths percent (11.23%) per year, in nominal terms, between 04/30/2022 until the last business day of the month of the subscription of shares; |
Página 5 de 17 |
(iii) | Subscribe and pay the shares pursuant to the capital increase of Section 2.4(i) above, in an amount proportional to their respective participation in the Eletronuclear’s voting capital (not considering the other shareholders) so that the participation of both Parties in the Eletronuclear’s voting capital is maintained. |
2.4.1 ENBPar’s Funding Commitment will be subject to compliance with the approval rites and applicable legislation, including, without limitation, the respective budget in the Annual Budget Law (Lei Orçamentária Anual – LOA) for the fiscal year in question.
2.4.2 After complying with the obligations contained in Section 2.4, neither Party will be obliged to make new Capital Contributions.
2.5 Financing Proposal. Each Financing Proposal shall include the best applicable financing conditions (pursuant for in BNDES Studies and market research), considering the following possible structures, respecting the rules on the calculation of the Associated Instalment, as defined and established in Section 2.8:
(i) | Obtaining financing directly by Eletronuclear, with personal guarantees from ENBPar and/or Eletrobras, as appropriate, pursuant to the conditions established in Section 2.6 (“Guaranteed Financing”); |
(ii) | Obtaining financing by ENBPar and/or Eletrobras, as appropriate, for subsequent transfer to Eletronuclear, through loans, under the same conditions of the original financing, pursuant to the conditions established in Section 2.7 (“Financing Transference”); or |
(iii) | Mixed structure of alternatives (i) and (ii) above (including proportions of different modalities between the Parties). |
2.5.1 If one of the Parties understands that satisfactory Financing Proposal have not been received, it shall request Eletronuclear to search new Financing Proposal from different financial institutions, or even search to renegotiate conditions with institutions that have already submitted Financing Proposals. This additional round of search for new Financing Proposals (or renegotiation of Financing Proposals already submitted) will be considered closed after the expiration of one hundred and twenty (120) days from the delivery of the first Financing Proposal by Eletronuclear to the Parties, unless the Parties by mutual agreement decide to extend such period (in any case, the end of such period will be referred to as “End of Search for Financing”).
Página 6 de 17 |
2.5.2 Until the End of Search for Financing, the Parties may submit questions regarding Financing Proposals already presented, and the must make Eletronuclear’s executive officer to clarify them with the applicable financial institution in the shortest period possible.
2.5.3 At the End of Search for Financing, the Parties shall make Eletronuclear to appoint which Financing Proposal presented, jointly, the terms and conditions that are more favorable for the final debtor party (that is, Eletronuclear). The most favorable Financing Proposals will be send to COANGRA for approval and communication to the Parties.
2.6 Guaranteed Financing. In the Guaranteed Financing cases, ENBPar and/or Eletrobras, as appropriate, shall grant the necessary personal guarantees to obtain such Guaranteed Financing, in accordance with the following terms:
(i) | The contractual instruments signed under the Guaranteed Financing may (a) establish subsidiary or jointly liability between one Party and Eletronuclear, for the amount guaranteed by such Party, but there will be no subsidiary or jointly obligation between the Parties for the amounts guaranteed by each of them and (b) establish the waiver by the Parties of their rights established in articles 827 and 835 of the Brazilian Civil Code; |
(ii) | The Parties shall not be required to grant real guarantees under this Agreement, nor personal guarantees in terms other than those contained in the Financing Proposal or this Agreement; |
(iii) | In case of granting a guarantee for an indefinite period, the Parties agree that the right established in article 835 of the Brazilian Civil Code will not be exercised, except upon mutual agreement between the Parties. |
2.7 Financing Transference. In the Financing Transference cases, ENBPar and/or Eletrobras shall transfer, by means of granting loans to Eletronuclear, the amounts received, in the following terms:
(i) | The value of the Financing Transference will be obtained by the applicable Parties and, on the same date of its receipt, will be transferred by the applicable Parties to Eletronuclear, through the execution of a loan agreement prepared pursuant to this Section; |
Página 7 de 17 |
(ii) | The Parties shall make Eletronuclear to afford with all the payments and obligations arising from the Financing Transference, and shall make all the applicable payment to the account and order to the applicable Parties to the Financing Transference creditor, including any taxes applicable to Financing Transference, fines and amounts arising from early maturity of obligations; |
(iii) | Alternatively to item (ii) above, in case it proved to be more advantageous during negotiations with potential creditors, the financing may be paid directly by the Parties that have obtained the financing, after receipt by them of the respective payment by Eletronuclear, in order to adequately reflect the structure of guarantees agreed upon in the terms of new financing; and |
(iv) | In any of the structures provided above, the loan agreements signed between the Parties and Eletronuclear for the purpose of transferring resources shall replicate the same conditions as the original financing, including terms, administration fees, amortization schedule, interest rates, monetary adjustment criteria, fines, early maturity section and any other conditions that influences the working capital of the Parties. |
2.8 Associated Portion. The Parties agree that the total amount of the financing participation, by each Party, by means of Guaranteed Financing, Financing Transference or by a mixed structure (the total amount by each Party hereinafter referred to indistinctly as “Associated Portion”), will be calculated according to the following rules:
2.8.1 The Associated Portion of each Party shall be proportional to its participation in the Eletronuclear’s voting capital (not considering the other shareholders).
2.8.2 Any guarantees, loans and support commitments granted in the context of financing to Eletronuclear by the Parties prior to the execution of this Agreement are not part of the calculation of the Associated Portion.
2.8.3 The Parties undertake to maintain all guarantees, loans and support commitments granted in the context of financing to Eletronuclear by the Parties prior to the execution of this Agreement.
2.8.4 The payment of a Guaranteed Financing or a Financing Transference by Eletronuclear or reduction, for any reason, of the value of the guarantees granted under this Agreement shall not be considered for purposes of calculating the balance of the Associated Portion. After reaching the Associated Portion, neither Party is obligated to participate in new Guaranteed Financing or Financing Transference.
Página 8 de 17 |
2.9 Federal Government Guarantee. For each new Financing Proposal that establishes the Federal Government guarantee, ENBPar undertakes to request such guarantee and, if successful, its participation in the financing, for the calculation of the Associated Portion, shall be structured through Financing Transference to ENBPar, with personal guarantee of the Federal Government.
2.9.1 | If the Federal Government does not grant the guarantee requested under the terms of Section 2.9, the Parties shall make Eletronuclear to adopt the necessary measures to obtain a new Financing Proposal that does not require such guarantee. In the event that such new Financing Proposal is not obtained and this affects the Angra’s 3 construction schedule, the Parties shall make Eletronuclear’s executive office to present to the shareholders the implications of such lack of financing, propose measures to be adopted by Eletronuclear and held a general meeting of shareholders to resolve on such proposals. |
2.9.2 | The obligations of each Party in relation to the granting of personal guarantees and operation transfers are subject to the viability of the personal guarantees structure and the operation transfers to the Associated Portion to the other Party, according to the Financing Proposal. |
2.9.3 | The Associated Portion to ENBPar of the Financing Proposal that does not provide a Federal Governmental guarantee may be structured by means of Guaranteed Financing and/or Financing Transference, which is considered more advantageous for Eletronuclear, according to the Eletronuclear’s executive office proposal, with the Commission grant. |
2.10 Capital Insufficiency. In the event of Eletronuclear’s capital insufficiency to comply with its financial obligations related to the Guaranteed Financing, Financing Transference, other Eletronuclear’s obligations granted by the Parties and/or Eletronuclear’s financial obligations towards any of the Parties, after exhausting all attempts to renegotiate the terms and amounts with the respective creditors and, therefore, default being unavoidable, Eletronuclear shall make the payment of such obligations in order to maintain the proportions of the Total Financing Participation in relation to the voting capital held by the Parties.
Página 9 de 17 |
3 CHAPTER III – SUSPENSIVE CONDITIONS
3.1 Conditions Precedent. The performance of the acts to be executed on the Global Offer Settlement date, provided for in Chapter I, as well as the validity of the obligations provided in Chapter II, are subject to prior satisfaction of the following suspensive conditions (jointly, “Conditions Precedent”):
(i) | Eletrobras shall have made, between October 2021 and January 2022, contributions in the amount of R$1,417,464,016.00 (one billion, four hundred and seventeen million, four hundred and sixty-four thousand and sixteen reais) at Eletronuclear, by means of one or more advance for future capital increase; |
(ii) | Eletronuclear’s shareholders shall have approved in the general shareholders’ meeting: |
a) | issuance, by Eletronuclear, of 308,443,302,951 (three hundred and eight billion, four hundred and forty-three million, three hundred and two Thousand, nine hundred and fifty-one) new common shares, in the total amount of R$7,606,963,647.84 (seven billion, six hundred and six million, nine hundred and sixty-three Thousand, six hundred and forty-seven reais and eighty-four cents), and 86,367,502,441 (eighty-six billion, three hundred and sixty-seven million, five hundred and two Thousand, four hundred and forty-one) new preferred shares, in the total amount of R$2,130,033,121.60 (two billion, one hundred and thirty million, thirty three thousand, one hundred and twenty one reais and sixty cents) (jointly, “New Shares”), provided that, from the total issued amount, R$2,704,317,107.98 (two billion, seven hundred and four million, three hundred and seventeen thousand, one hundred and seven reais and ninety-eight cents) will be destined to the capital reserve formation to be used for the payment of the totality of the dividends described in Section 3.1(ii)b), while the remaining amount will be allocated to the share capital account; |
b) | statement, by Eletronuclear, of the totality of minimum dividends attributed to preferred shares, to be paid to the capital reserve account, in the amount of R$2,704,317,107.98 (two billion, seven hundred and four million, three hundred and seventeen thousand, one hundred and seven reais and ninety-eight cents); |
c) | amendment of Eletronuclear’s bylaws to: |
(c.1) change of the rights (z) of the preferred shares issued by Eletronuclear, extinguishing the right to cumulative dividends and the right to vote in resolutions related to the amendment of Eletronuclear’s bylaws, and giving priority in the capital reimbursement and (y) of the common shares, extinguishing the right to differentiated dividends;
Página 10 de 17 |
(c.2) include authorization for dividends payment to the preferred shareholders with rights to cumulative dividends to the capital reserve account mentioned in item (b) above, pursuant to article 17, paragraph 6, of Law No. 6,404, dated December 15, 1976;
(c.3) create a committe for the matters related to the planning and execution of Angra 3, named Statutory Monitoring Committee of the Angra 3 Thermonuclear Power Plant – COANGRA, which will operate until the beginning of Angra’s 3 commercial operation, with the purpose of advising the Board of Directors of Eletronuclear, including the analysis and issuing a prior opinion on the goods contracting, services, construction, financing and guarantees linked to the project, composed of five (5) members, guaranteeing the representative parity of ENBPar and Eletrobras, up to two (2) members appointed by the ENBPar’s directors, and up to two (2) members appointed by Eletrobras’ directors and one (1) external independent member appointed by mutual agreement by Eletrobras and ENBPar, all duly remunerated;
(c.4) change the composition and organization of the board of executive officers’ capacities: (x) segregate the assignments of the Administration and Finance Director in an Administration Director and an Finance Director as long as the Shareholders’ Agreement is valid, and (y) make provision, until the beginning of Angra’s 3 commercial operation, of Angra’s 3 Director office, which will be in charge of coordinating activities to support the conclusion of the services hired with BNDES and contracting engineering services, contracting financing and project management necessary for the conclusion of Angra 3; and
(c.5) set the reimbursement amount in cases of right to withdraw to provide that such amount will be higher between the equity value and the economic value of the respective equity interest, determined in an independent assessment;
d) | program for the optional conversion of ONs issued by it into PNs, at a rate of 1:1, respecting the limit provided for in §2 of article 15 of Law No. 6,404/1976, already considering for this purpose the effective subscription of New Shares, according to items (iii) and (v) below. |
(iii) | Eletrobras must have subscripted of the shares indicated in Section 1.1, and the respective payment must take place on the Global Offer’s Settlement date, according to Section 1.1; |
Página 11 de 17 |
(iv) | Eletrobras shall have validly and effectively assigned to ENBPar, without charge, preference rights to the subscription of the shares indicated in Section 1.2, issued according to item (ii) above, in a volume equivalent to R$3,500,000,000.00 (three billion and five hundred million reais); |
(v) | ENBPar shall have exercised its preference rights to the subscription of the shares indicated in Section 2.1, assigned in the terms of item (iv) above, and the payment must occur in the Global Offer Settlement date, in national currency; |
(vi) | Eletrobras shall have adhered the optional conversion program of the letter (d) of item (ii) above, covering the largest volume of ONs held by Eletrobras as possible, respecting the applicable legal limit; |
(vii) | Eletrobras and ENBPar shall have sign the Shareholders’ Agreement in order to provide for the governance of Eletronuclear, providing at least, the matters set forth in item (ii) of the Whereas IV of the Agreement; |
(viii) | Eletrobras and ENBPar shall have sign an agreement that disciples the operational transaction of the management and assignment of sales agreements under the Program to Encourage Alternative Sources of Energy (Programa de Incentivo às Fontes Alternativas de Energia Elétrica – PROINFA), the management of the current account named National Program for the Preservation of Electricity (Programa Nacional de Conservação de Energia Elétrica – Procel), the financing agreement that uses the Global Reservation of Reversion (Reserva Global de Reversão – RGR), the programs of More Electricity to Amazônia and Electricity for All (Mais Luz para a Amazônia e Luz para Todos) and the management of the Federal Government assets provided in Law-Decree No. 1,383, dated December 26, 1974, as well as the assumption, by Eletrobras, without charge, to provide support and advice to ENBPar to the management of the activities, including training, availability of databases and information; |
(ix) | Eletrobras shall have transferred to Eletronuclear the ownership of the quotas of the Decommissioning Fund (Fundo de Descomissionamento) for nuclear power plants, provided for in Resolution No. 8, dated September 17, 2002, of the National Political, Social, and Economic Council (Conselho Nacional de Política Econômica – CNPE), with the compensation of the transfer obligations of the associated resources between the companies; |
Página 12 de 17 |
(x) | Global Offer Settlement in the terms approved by CPPI shall have occured; and |
(xi) | Eletronuclear and Eletrobras shall have not approved any act until the Global Offer Settlement that may substantially change the economic and financial situation of Eletronuclear and/or compromise the execution of this Agreement sections, in order to significantly change or make it impossible to sign. |
3.1.1 As Partes concordam que a eventual satisfação de quaisquer das Condições Suspensivas antes mesmo da assinatura do presente Acordo não deverá de nenhuma forma afetar este Acordo ou a necessidade de satisfação das demais Condições Suspensivas.
3.2 Parties’ Obligations. In accordance with Law 14,182 and the CPPI Resolutions, each Party shall perform any and all acts that were attributed to them and that may be required for the satisfaction of the Conditions Precedent, to the extent that all legal provisions required for such are duly complied with and to the extent that all applicable corporate and governance approvals required for such are duly obtained.
3.3 Conditioning Effectiveness. The Conditions Precedent will be considered satisfied even if the act in it described be practice or approved with its effectiveness conditioned to the Global Offer Settlement (hypothesis in which the satisfaction of the Conditions Precedent in question will occur with the Global Offer Settlement).
3.4 Negative Covenant. Until the satisfaction of the Conditions Precedent, the Parties shall make Eletronuclear to not practice any act or fact that may harm, delay or otherwise negatively affect the Eletronuclear Reorganization.
CHAPTER IV – EFFECTIVENESS AND TERMINATION |
4.1 Effectiveness. This Agreement shall remain in effect for fifteen (15) years, and it shall be automatically terminated by that term, except if otherwise agreed between the Parties. Notwithstanding the foregoing, this Agreement may be terminated by means of mutual agreement in writing between the Parties.
4.2 Effects of the termination. Notwithstanding the termination of this Agreement pursuant to the terms of Section 4.1, the following obligations of the Parties shall survive the termination of this Agreement:
(i) | the provisions of Chapters IV and V; |
(ii) | the obligations undertaken by the Parties and Eletronuclear under the Guaranteed Financings and the Financings with Transfer of Funds that were already signed at the time, including loans performed by the Parties to Eletronuclear in accordance with this Agreement; and |
Página 13 de 17 |
(iii) | in the event of a granting of guarantee for undetermined term, the Parties agree that the right set forth in article 835 of the Civil Code shall not be exercised, except if previously agreed by Eletronuclear. |
5 | CHAPTER V – MISCELLANEOUS |
5.1 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Federative Republic of Brazil.
5.2 Dispute Resolution. Disputes, controversies and/or differences between the Parties related to or in connection with this Agreement, and provided that they involve exclusively corporate law matters, as well as available equity rights, according to article 1, paragraph 1, of the Brazilian Law No. 9,307, dated September 23, 1996 (“Arbitration Law”), shall be definitively settled by arbitration administered by the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (the “Chamber”) in accordance with the Rules of the Chamber (the “Regulation”), in effect at the time of arbitration, as it does not conflict with this Agreement, except as they may be modified herein. The arbitration will be by law, and the arbitration panel shall not rule based on equity.
5.2.1 The arbitration panel shall be composed by three (3) arbitrators, and the appointment of such arbitrators shall be provided in the Regulation, provided that the third arbitrator, that shall act as the arbitration panel’s chairman, will be chosen by the Parties according to the list prepared by the other arbitrators.
5.2.2 The arbitration shall have its seat in the city of [•], State of [•], Brazil, and shall be conducted in Portuguese. The arbitration shall be processed and judged in accordance with the Brazilian laws.
5.2.3 The Parties may only seek injunctions and other provisional remedies that are expressly subject to revision by the arbitration panel. Before the arbitration panel’s formation, injunctions and other provisional remedies and/or enforcement actions, as applicable, may be required, at the option of the interested party, (i) in the jurisdiction of the seat of arbitration; or (ii) in an emergency arbitration proceeding according to the Regulation. After the arbitration panel’s formation, any other legal remedies authorized by the Arbitration Law shall be required in the jurisdiction of [•], State of [•], Brazil.
5.2.4 The resolution of any dispute that is not in the scope of the arbitration provided for in Section 5.2 above shall occur at the regular courts, in the jurisdiction of [•], State of [•], Brazil, which is hereby exclusively chosen by the Parties.
Página 14 de 17 |
5.3 Extrajudicial Title. The Parties acknowledge that this Agreement constitutes an extrajudicial title, in accordance to article 784 of the Brazilian Law No. 13,105, dated March 16, 2015.
5.4 Penalties. Notwithstanding the right stablished in Section 5.3 above, upon any default of the Agreement, the defaulting Party shall pay to the harmed Party a daily fine in the amount of [=] as long as such default if not cured, in addition to the applicable losses and damages.
5.5 Notices. All notices, consents, requests and other communications required or permitted hereunder shall be in writing and delivered to the applicable person in person, by recognized courier service, or registered mail, e-mail or recognized express delivery service, provided that in any case it shall be delivered with proof of receipt, to the address indicated in the preamble of this Agreement.
If to ENBPar, to:
[full name], [telephone], [e-mail]
At Esplanada dos Ministérios, block U, ground floor, Zip Code 70065-900, Brasília, Distrito Federal
If to Eletrobras, to:
[full name], [telephone], [e-mail]
At SCN square 06, tower “A”, block “A”, 6th floor, Shopping ID, city of Brasília, Distrito Federal, Zip Code 70716-900
5.5.1 Any notice, consent, request and other communication required or permitted hereunder shall be deemed to have been duly delivered (i) on the day of delivery, if delivered in person; or (ii) on the date that proof of receipt is issued, if sent by registered mail, courier service or express delivery service.
5.6 Binding Effect; Assignment. This Agreement is binding upon and inure to the benefit of the Parties and their respective successors and assigns. This Agreement is not assignable by any Party without the prior written consent of the other Party.
5.7 Taxes. All and any taxes, charges and contributions of any nature that levied or that will levy on the transactions provided in this Agreement will be the responsibility of and shall be paid by the respective party that is considered as responsible therefor according to the applicable tax law.
Página 15 de 17 |
5.8 Voting Commitment. The Parties undertake to vote, and to make the management of Eletronuclear that they indicated to vote, in a manner to comply with the terms and conditions set forth in this Agreement, and will abstain, and will make Eletronuclear to abstain, to practice any act that violate this Agreement.
5.9 Irrevocability and irreversibility. This Agreement is executed between the Parties in irrevocable and irreversible character, for all rights end, except the provisions provided otherwise in the applicable law, and binds not only the Parties, but also their respective successors and assignees that undertake the obligations hereunder at any title.
IN WITNESS WHEREOF, the Parties enter into this Agreement in two (2) counterparts of same content and form, in the presence of the two (2) witness identified below.
[•] [•], 2021
[Signature page below]
Página 16 de 17 |
__________________________________________________ EMPRESA BRASILEIRA DE PARTICIPAÇÕES EM ENERGIA NUCLEAR E BINACIONAL S.A. – ENBPAR By: Title:
|
__________________________________________________ CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS By: Title:
|
Witnesses:
_________________________________________ Name: ID: CPF/ME: | __________________________________________________ Name: ID: CPF/ME: |
Página 17 de 17 |
ANNEX 11
Eletronuclear Shareholders’ Agreement
SHAREHOLDER’S AGREEMENT
This Shareholder’s Agreement (this “Agreement”) is entered into by and between, on one side:
(i) EMPRESA BRASILEIRA DE PARTICIPAÇÕES EM ENERGIA NUCLEAR E BINACIONAL S.A. – ENBPAR, a state-owned company, duly incorporated and existing in accordance with the laws of the Federative Republic of Brazil, enrolled with the National Taxpayers’ Registry of the Ministry of Economy (“CNPJ/ME”) under No. 43.913.162/0001-23, with its head office in the city of Brasília, Federal District, at Esplanada dos Ministérios, block U, ground floor, Zip Code 70065-900, hereby duly represented pursuant to its bylaws (“ENBPar”);
And, on the other side:
(ii) CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS, a company of mixed capital (sociedade de economia mista), duly incorporated and existing in accordance with the laws of the Federative Republic of Brazil, enrolled with the CNPJ/ME under No. 00.001.180/0001-26, with its head office in the city of Brasília, Federal District, at SCN square 06, tower “A”, block “A”, 6th floor, Shopping ID, Zip Code 70716-900, hereby duly represented pursuant to its bylaws (“Eletrobras” and, jointly with ENBPar, hereinafter referred to as “Parties” and, individually, as “Party”);
WHEREAS:
I. on July 12, 2021, it was issued the Brazilian Law No. 14,182 (“Law 14,182”), which set forth the main terms and conditions for the privatization of Eletrobras (“Privatization”);
II. Law 14,182 provided that the Privatization will be performed by means of a capital increase of Eletrobras, under a public offering of new common (voting) shares of Eletrobras, with the waiver of preemptive rights by the Federal Government, provided that such offering may occur jointly with the sale of shares issued by Eletrobras and held directly or indirectly by the Federal Government, by means of a secondary public offering of shares (“Global Offer”);
III. in accordance with the duties granted by the Brazilian Law No. 13,334, dated September 13, 2016, the Board of the Investment Partnerships Program (Conselho do Programa de Parcerias de Investimentos) issued the Resolution No. 203, dated October 19, 2021 (“CPPI Resolution 203”) and Resolution No. 221, dated December 29, 2021 (“CPPI
Page 18 of 13 |
Resolution 221” and, jointly with the CPPI Resolution 203, the “CPPI Resolutions”), providing the details of the operating model, adjustments and conditions for the Privatization;
IV. the CPPI Resolutions approved the terms and conditions related to the reorganization involving ELETROBRAS TERMONUCLEAR S.A., a company of mixed economy, duly incorporated and existing under the laws of the Federative Republic of Brazil, enrolled with the CNPJ/ME under No. 42.540.211/0001-67, with its head office in the city of Rio de Janeiro, State of Rio de Janeiro, at Rua da Candelária, No. 65, 2nd to 14th floor, Zip Code 20091-020 (“Eletronuclear”) (such terms and conditions jointly referred to as “Eletronuclear Reorganization”), in which:
(i) | the signing, between Eletrobras and ENBPar, of an investment agreement providing at least the obligations of the parties to: |
(a) | participate in raising new financing for Angra 3 Thermonuclear Power Plant, operated by Eletronuclear (“Angra 3”), by means of granting personal guarantees, as well as by means of transfer of financing in the form of loans to Eletronuclear, in the total amount required for the conclusion of Angra 3, according to the terms of the studies conducted by BNDES as set forth in the Brazilian Decree No. 9,915, dated July 16, 2019 and in the Brazilian Law No. 14,120, dated March 1st, 2021, and proportionally to their participation in the voting capital of Eletronuclear and, for purposes of calculating such proportion, the guarantees, loans and contractual support obligations that already exist between the Federal Government or Eletrobras and Eletronuclear must be disregarded, provided that those guarantees, loans and contractual support obligations must be maintained; and |
(b) | perform all acts attributed to them for the purposes of the subscription of new shares of Eletronuclear, as determined by the studies engaged by BNDES, proportionally to their participation in the voting capital of Eletronuclear; and |
(ii) | signing, between Eletrobras and ENBPar, of a shareholders’ agreement of Eletronuclear (“Shareholders’ Agreement”) in order to provide for the governance of Eletronuclear, providing at least the following: |
(a) | the maintenance of COANGRA, as defined in the Shareholders’ Agreement and in the CPPI Resolutions; |
(b) | ENBPar’s right of first refusal with respect to the sale of shares of Eletronuclear held by Eletrobras; and |
(c) | the right of Eletrobras to appoint the Chief Financial Officer of Eletronuclear; |
Page 19 of 13 |
VI. Eletrobras’ shareholders approved the Eletronuclear Reorganization, which includes the signing of the Investment Agreement, signed on [date] and is on the Schedule I of this Agreement) and this Agreement;
VI. The Investment Agreement provides the acts to be executed on the Global Offer settlement will only be executed after the compliance of the conditions provided in that agreement; and
VII. Angra 3 is currently under construction;
THEREFORE, the Parties agree to enter into this Agreement, in accordance with the article No. 118 of Law No. 6,404/1976 in order to provide for the governance of Eletronuclear, providing the following:
CHAPTER I – SUSPENSIVE CONDITIONS
1.1 Suspensive Conditions. The effective date of this Agreement is subject to the performance of the acts described in Chapter I of the Investment Agreement and the Global Offer settlement.
CHAPTER II – GENERAL PRINCIPLES
2.1 All Shares from time to time, shall be subject to this Agreement.
2.1.1 For the purposes of this Agreement, “Share” and “Shares” means any shares issued by Eletronuclear held, on the date hereof, or to be held in the future by the Parties, at any title, from time to time; provided that all Shares are subject to this Agreement, including: (i) any shares issued by Eletronuclear arising from subscription, acquisition, Share bonuses, and/or split or reverse split of Shares, dividends distribution with the payment in shares or that will be held by any Party as a result of the incorporations (including of shares), mergers, spin-off or any other corporate reorganization or as a result of a purchase option or any other form; (ii) any titles, convertible or exchangeable security into shares and/or share’s subscription rights issued by Eletronuclear, including the right to subscribe (to the acquisition and/or subscription), priority rights and right of first offer, call option or put option and/or priority, that shall be acquired or granted any time to the Parties; (iii) any shares that may be held by the Parties as a result of the conversion or exercise of any of the security and/or rights provided for in item “ii” above; (iv) any Eletronuclear shares that may be held by the Parties, in any capacity, including by means of shares’ acquisition from other Eletronuclear shareholders or as a result of succession in any capacity; (v) any subscription bonus, debentures or any other security and/or convertible security into Shares issued by Eletronuclear held, or that may be held, by the Parties, as well as the
Page 20 of 13 |
shares resulting from the conversion of such subscription bonus, debentures or other security into shares; and (vi) any security issued by other people that may replace the Shares due to a spin-off, merger, extinction, incorporation, incorporation of shares, contribution to a capital increase or any other form of corporate reorganization involving Eletronuclear and its issued shares.
2.2 The Parties may not enter into any other shareholder agreements that bind, directly or indirectly, their Shares, or any other agreement or contract that regulates the voting rights of the Parties and/or that is contrary or incompatible with the provisions of this Agreement.
2.3 Pursuant to §8 of article 118 of Law No. 6.404, dated December 15, 1976, the presidents of the Eletronuclear’s general meeting or of the meetings of the management offices of Eletronuclear shall not compute any vote cast in disagreement with the provisions herein, observing the provisions of §9 of article 118 mentioned above, in the event of non-attendance or abstention from voting in resolutions of general meetings or meetings of the Board of Directors of Eletronuclear.
2.3.1 The Parties undertake to vote and to cause the members of the board of directors of Eletronuclear appointed by them to vote in order to comply with the terms and conditions set forth in this Agreement, and shall abstain, and shall cause Eletronuclear refrain from performing any act that violates the provisions of this Agreement. If one or more matters regulated herein have been approved prior to the effectiveness of this Agreement, the Parties shall remain obliged not to change them during the period of execution.
2.3.2 As a condition of their election, the directors and officers appointed by the Parties shall expressly declare that they are aware of and in accordance with the provisions of this Agreement, and in good faith, shall comply with such provisions, including the obligations of the Parties that indicated them, as applicable.
2.4 The Parties shall exercise their voting rights and instruct the members of Eletronuclear's board of directors appointed by them so that (i) the Investment Agreement, including the provisions of Sections 2.2 and 2.4 of such instrument, is duly observed, and (ii) the construction or operation of new thermonuclear plants, as well as other activities by Eletronuclear, are developed in such a way as to make their activities compatible with the schedule, feasibility or availability of resources necessary for the construction and operation of Angra 3.
CHAPTER III - MANAGEMENT
3.1 Board of Directors. The Parties hereby agree to exercise its voting rights in the general meetings of Eletronuclear that the Board of Directors shall be comprised of seven (7) board
Page 21 of 13 |
members, and one of them being appointed as president.
3.1.1 During the term of this Agreement, the Parties shall exercise their voting rights at Eletronuclear's general shareholders' meetings to appoint members of the Board of Directors, so that it is ensured that (i) ENBPar always appoints the majority of the members , including the president, and one of such directors must be appointed by the supervising Ministry to which Eletronuclear is bound, (ii) Eletrobras appoints 1 (one) member, unless a greater number is obtained by the adoption of election by multiple vote, and (iii) the employees appoint 1 (one) member.
3.2 Executive Board. The Parties hereby agree to exercise its voting rights in the general meetings of Eletronuclear in order to create and maintain, during the term of this Agreement, the positions of Chief Administrative Officer and Chief Financial Officer (in place of the Chief Administrative and Financial Officer), and create and maintain the position of Chief Angra 3 Officer, the latter being responsible for coordinating activities to support the completion of services contracted with BNDES, contracting engineering services, contracting financing and project management, necessary for the completion of Angra 3.
3.2.1 During the term of this Agreement, Eletrobras shall appoint the Chief Financial Officer of Eletronuclear, so that the Parties shall instruct the members of the Board of Directors appointed by them to vote in favor of the election of such person.
3.2.2 After the beginning of the commercial operation of Angra 3, the Parties shall cause a general meeting of shareholders of Eletronuclear to be held to resolve on the amendment of Eletronuclear's Bylaws for the extinction of the position of Officer of Angra 3, and the Parties shall vote in favor of such resolution.
3.3 Eletronuclear’s Audit and Risk Committee. The Parties will adopt the necessary measures to segregate the current Audit and Risk Committee into 2 (two) distinct committees - an Audit Committee and a Risk Committee - according to attributions to be indicated by the Board of Directors of Eletronuclear, always subject the provisions of the applicable legislation, in particular Law No. 13.303/2016 and Decree No. 8.945/2016. Furthermore, the Parties shall ensure that the Eletronuclear’s Bylaws provide for the maintenance of such committees, as advisory bodies directly linked to the Eletronuclear’s Board of Directors.
3.3.1 The Parties agree that the Audit Committee and the Risk Committee will each be composed of 5 (five) members, all chosen and elected by the Board of Directors of Eletronuclear, as follows:
(i) three (3) members appointed from among the board of directors, two (2) from among the board members appointed by ENBPar and one (1) from among the independent members; and
Page 22 of 13 |
(ii) two (2) external and independent members, according to the independence criteria contained in Section 4.3 below and observing the provisions of Section 3.3.2 below, and the coordinator of the Audit Committee will be one of these independent members.
3.3.2 The appointment of the members described in Section 3.3.1(ii) above shall be preceded by a selection process with the support of a consultancy specialized in the recruitment of senior executives and members of advisory committees..
3.4 Other Advisory Committees. The Parties will adopt the necessary measures to ensure that Eletronuclear's Bylaws provide that the Board of Directors of Eletronuclear will rely on the advice of ENBPar's Governance and Sustainability Committee, as well as ENBPar's People, Eligibility, Succession and Compensation Committee in the regarding the attributions of the Eligibility Committee provided for in Law No. 13,303/2016 and its regulations.
CHAPTER IV – ANGRA 3 STATUTORY MONITORING COMMITTEE
4.1 COANGRA. The Parties undertake to ensure that the Board of Directors install and maintain, until the beginning of commercial operation of Angra 3, a statutory committee for matters related to the planning and execution of Angra 3, with its own budget, which will have the purpose of Eletronuclear's Board of Directors advise, including performing analysis and issuing a prior opinion on the contracting of goods, services, works, financing and guarantees linked to the Angra 3 project (“COANGRA”).
4.2 Composition. The Parties shall ensure that COANGRA is composed of five (5) members, all duly compensated, to be appointed by the Board of Directors of Eletronuclear for a term of three (3) years, reelection being allowed, with parity of representative members being guaranteed ENBPar and Eletrobras:
(i) | up to two (2) members will be appointed by the members of the Board of Directors appointed by ENBPar; |
(ii) | up to two (2) members will be appointed by the members of the Board of Directors appointed by Eletrobras; and |
(iii) | one (1) member will be external and independent, appointed by mutual agreement between Eletrobras and ENBPar, subject to the independence requirements established in this Agreement. |
4.2.1 In the event of resignation, dismissal, death or permanent impediment of any member of COANGRA, as well as at the end of the term of office of a member of COANGRA, its replacement will be appointed (i) by the Party that appointed the member to be replaced or (ii) by both parties, in the case of the independent member of COANGRA.
Page 23 of 13 |
4.2.2 Any Party that wishes to replace a COANGRA member appointed by it may do so, at any time, by sending a written communication to Eletronuclear and the other Party and, upon receipt of such notification, the chairman of the Board of Directors of Eletronuclear shall convene a meeting of the Board of Directors of Eletronuclear so that the referred replacement may be deliberated and approved. The independent member of COANGRA may only be replaced upon agreement of both Parties.
4.2.3 The Parties expressly acknowledge that the members of COANGRA will be appointed exclusively as provided for in this Chapter IV.
4.3 Independent member of COANGRA. A natural person who meets the eligibility criteria of an independent board member under the terms of article 22, paragraph 1, of Law No. 13.303, dated June 30, 2016, and article 36, paragraph 1, of the Decree nº 8.945, dated December 27, 2016 and pursuant to the Regulation of Level 2 of Corporate Governance of B3 S.A. – Brasil, Bolsa, Balcão, or rules that replace them, respecting the strictest criteria, in case of divergence between the rules.
4.3.1 Within up to five (5) business days prior to the appointment or, in the event of dismissal, death, permanent impediment or resignation or at the end of the term of office of the independent member of COANGRA, each Party may send it to the other Party other two (2) names of candidates for the position of independent member of COANGRA, accompanied by the curriculum of such candidates, indicating the experiences that make them suitable candidates for the position, and also providing the documents and information that are reasonably necessary for the verification of the independence requirements established in this Agreement. If neither Party submits names of candidates for the position of independent member within the aforementioned period, the COANGRA members appointed by them may submit such names (together with the documents and information referred to above) within an additional period of five (5) days from the end of the aforementioned period, maintaining the obligation to comply with legal requirements.
4.3.2 After the deadline for submitting the names of candidates for the position of independent member of COANGRA established in Section 4.3.1, the Parties shall, by mutual agreement, choose one of such candidates, within a period of five (5) days counted the expiration of the aforementioned period. If, within this period, the Parties do not reach an agreement, the independent member will be chosen by drawing lots from among the nominated candidates.
CHAPTER V – ENCUMBRANCE AND TRANSFER OF SHARES
5.1 Share encumbrance. The Parties undertake not to create any liens, individually and voluntarily, on the Shares, in any capacity and by any means, in whole or in part, directly or
Page 24 of 13 |
indirectly, unless mutually agreed between the Parties.
5.2 Transfer of Shares. The transfer of Shares by any Party will be cumulatively conditioned:
(i) | compliance with this Chapter V and of art. 177, item V, of the Federal Constitution and art. 118 of Law 6.404/1976; |
(ii) | the simultaneous formal and unrestricted adhesion of the assignee to this Agreement, through the signature of the term of adhesion to this Agreement, and such assignee shall be bound by all the terms and conditions of this Agreement; and |
(iii) | the receipt of all consents and authorizations from government entities necessary as a result of the transfer, and the costs related to obtaining such consents and authorizations shall be the responsibility of the transferee or the transferring Shareholder, as the case may be, in the form agreed by them. |
5.3 Preemptive right. In the event that Eletrobras receives a proposal from any person to transfer part or all of the Shares owned by it ("Shares Offered"), ENBPar will have the preemptive right to acquire all (and not less than all) of the Offered Shares, for the same price and under the same terms and conditions of a binding offer presented by the proposing person (“Preemptive Rights”), except for the provisions of Section 5.3.7 In this sense, Eletrobras must notify ENBPar of the start of a process for the sale of Offered Shares.
5.3.1 Upon receipt of a binding proposal, Eletrobras shall send a written notification to ENBPar (“Proposal Notification”), indicating: (i) the number, type and class of the Shares Offered; (ii) the complete qualification of the applicant, its main activity and, if it is a legal entity, the indication of its controllers; (iii) the main terms and conditions of the proposal, including the price offered per Share Offered and the payment terms and conditions; and (iv) other conditions of transfer, such as warranties and indemnity terms, attaching a copy of the proposal ("Proposal").
5.3.2 Within a period of one hundred and twenty (120) days counted from the receipt of the Notification of the Proposal, ENBPar may send a notification to Eletrobras ("Notification of Preference") informing if: (i) it wishes to exercise the Right of Preference for the acquisition of all (and not less than all) of the Offered Shares, for the sale price and under the same terms and conditions of the Proposal, except for the provisions of Section 5.3.7; or (ii) does not wish to acquire the Offered Shares, it being agreed that the silence or untimely sending of the Preference Notice will be interpreted as a decision by ENBPar not to exercise the Preemptive Right.
5.3.3 In case ENBPar exercises its Preemptive Right, ENBPar and Eletrobras shall draw up the corresponding share transfer term in the registered share transfer registry
Page 25 of 13 |
book and the registration in the registered share registry book of Eletronuclear and/or the signature of other applicable documents and measures, given that the transfer of the Offered Shares and the payment of the price will occur under the same terms of the Proposal, except for the provisions of Section 5.3.7.
5.3.4 In case ENBPar: (i) does not timely deliver the Notice of Preference; and/or (ii) deliver such notification stating that it does not want to acquire the Offered Shares, Eletrobras will be free to transfer the Offered Shares to the proposing person, exactly under the same terms and conditions stated in the Notification of the Proposal and provided that the transfer is consummated within one hundred and twenty (120) days from the end of the period provided for in Section 5.3.2 above.
5.3.5 After the period mentioned in Section 5.3.4 above has elapsed without the transfer of the Offered Shares to the proposing person having occurred, if Eletrobras still wishes to transfer the Offered Shares, it must repeat the procedure of this Chapter V. In the event that the person proposing changes the terms of the Proposal, it shall be considered a new proposal and the mechanism referred to in this Chapter V shall be repeated.
5.3.6 If authorizations from any governmental entities or approvals from third parties are required for the transfer of Offered Shares in compliance with the rights and obligations contained in this Chapter V, the applicable deadlines for completion of the transfer in question will be suspended from the moment in which said authorization or approval is required until such time as authorization is granted or denied.
5.3.7 The Parties agree that ENBPar's payment obligation for the acquisition of the Shares offered as a result of its exercise of the Preemptive Right will always observe the following:
(i) | The price to be paid by ENBPar will always be in national currency. If the Proposal contains an offer for payment in goods or foreign currency, Eletrobras shall indicate in the Proposal Notification what is its corresponding value in national currency, observing the exchange rate on the date of the proposal; and |
(ii) | The payment term, by ENBPar, of the Offered Shares will never be less than one hundred and twenty (120) days from the promulgation date of the Annual Budget Law (Lei Orçamentária Annual - LOA) for the fiscal year following the exercise date of the Preemptive Right. |
Page 26 of 13 |
CHAPTER VI – EFFECTIVENESS AND TERMINATION
6.1 Effectiveness. This Agreement shall remain in effect for fifty (50) years, and it shall be automatically renewed by successive periods if it is not terminated by any Party at least six (6) months prior the effective term of the Agreement. Notwithstanding, this Agreement (i) may be terminated by mutual and written agreement between the Parties and (ii) shall be automatically terminated if Eletrobras no longer holds at least fifty percent (50%) of the total share capital of Eletronuclear and one (1) common share.
6.2 Effects of Termination. Notwithstanding the termination of this Agreement pursuant to Section 6.1, the obligation of the Parties provided in Chapter VII shall survive the termination of this Agreement.
CHAPTER VII – MISCELLANEOUS |
7.1 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Federative Republic of Brazil.
7.1 Dispute Resolution. Disputes, controversies and/or differences between the Parties related to or in connection with this Agreement, and provided that they involve exclusively corporate law matters, as well as available equity rights, according to article 1, paragraph 1, of the Brazilian Law No. 9,307, dated September 23, 1996 (“Arbitration Law”), shall be definitively settled by arbitration administered by the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (the “Chamber”) in accordance with the Rules of the Chamber (the “Regulation”), in effect at the time of arbitration, as it does not conflict with this Agreement, except as they may be modified herein. The arbitration will be by law, and the arbitration panel shall not rule based on equity.
7.1.1 The arbitration panel shall be composed by three (3) arbitrators, and the appointment of such arbitrators shall be provided in the Regulation, provided that the third arbitrator, that shall act as the arbitration panel’s chairman, will be chosen by the Parties according to the list prepared by the other arbitrators.
7.1.2 The arbitration shall have its seat in the city of [•], State of [•], Brazil, and shall be conducted in Portuguese. The arbitration shall be processed and judged in accordance with the Brazilian laws.
7.1.3 The Parties may only seek injunctions and other provisional remedies that are expressly subject to revision by the arbitration panel. Before the arbitration panel’s formation, injunctions and other provisional remedies and/or enforcement actions, as applicable, may be required, at the option of the interested party, (i) in the jurisdiction of the seat of arbitration; or (ii) in an emergency arbitration proceeding according to
Page 27 of 13 |
the Regulation. After the arbitration panel’s formation, any other legal remedies authorized by the Arbitration Law shall be required in the jurisdiction of [•], State of [•], Brazil.
7.1.4 The resolution of any dispute that is not in the scope of the arbitration provided for in Section 7.1 above shall occur at the regular courts, in the jurisdiction of [•], State of [•], Brazil, which is hereby exclusively chosen by the Parties.
7.2 Extrajudicial Title. The Parties acknowledge that this Agreement constitutes an extrajudicial title, in accordance to article 784 of the Brazilian Law No. 13,105, dated March 16, 2015.
7.3 Notices. All notices, consents, requests and other communications required or permitted hereunder shall be in writing and delivered to the applicable person in person, by recognized courier service, or registered mail, e-mail or recognized express delivery service, provided that in any case it shall be delivered with proof of receipt, to the address indicated in the preamble of this Agreement.
If to ENBPar, to:
[full name], [telephone], [e-mail]
At Esplanada dos Ministérios, block U, ground floor, Zip Code 70065-900, Brasília, Distrito Federal
If to Eletrobras, to:
[full name], [telephone], [e-mail]
At SCN square 06, tower “A”, block “A”, 6th floor, Shopping ID, city of Brasília, Distrito Federal, Zip Code 70716-900
7.3.1 Any notice, consent, request and other communication required or permitted hereunder shall be deemed to have been duly delivered (i) on the day of delivery, if delivered in person; or (ii) on the date that proof of receipt is issued, if sent by registered mail, courier service or express delivery service.
7.4 Binding Effect; Assignment. This Agreement is binding upon and inure to the benefit of the Parties and their respective successors and assigns. This Agreement is not assignable by any Party without the prior written consent of the other Party.
7.5 Agreement Registration. This Agreement shall be registered in the Eletronuclear head office and registered in the Eletronuclear’s registered shares book (livro de registro de ações
Page 28 of 13 |
nominativas), on the pages relating to each Party, under the Law No. 6,404, dated December 15, 1976, consigning the following:
“The rights inherent to the shares represented by this registration are subject to the Shareholders’ Agreement entered into by and between Empresa Brasileira de Participações em Energia Nuclear e Binacional S.A. – ENBPAR and Centrais Elétricas Brasileiras S.A. – Eletrobras on [date]”.
7.6 Irrevocability and irreversibility. This Agreement is executed between the Parties in irrevocable and irreversible character, for all rights end, except the provisions provided otherwise in the applicable law, and binds not only the Parties, but also their respective successors and assignees that undertake the obligations hereunder at any title.
IN WITNESS WHEREOF, the Parties enter into this Agreement in two (2) counterparts of same content and form, in the presence of the two (2) witness identified below.
[•] [•], 2021
[Signature page below]
Page 29 of 13 |
__________________________________________________ EMPRESA BRASILEIRA DE PARTICIPAÇÕES EM ENERGIA NUCLEAR E BINACIONAL S.A. – ENBPAR By: Title: |
__________________________________________________ CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS By: Title: |
Witnesses:
_________________________________________ Name: ID: CPF/ME: | __________________________________________________ Name: ID: CPF/ME: |
Page 30 of 13 |
Annex 12
ELETRONUCLEAR S.A
CNPJ nº 42.540.211/0001-67
NIRE nº 33300158006
BYLAWS
Chapter I
Name, Organization, Headquarters and Corporate Purpose
Art. 1. Eletronuclear S.A. is a mixed capital company, incorporated in accordance with the authorization set forth in Decree No. 76,803, of 1975, the purpose of which is the exploitation, on behalf of the Federal Government, of nuclear activities for the generation of power, under the Decree dated May 23, 1997.
Sole Paragraph. Eletronuclear is under the control of Empresa Brasileira de Participações em Energia Nuclear e Binacional – ENBpar, incorporated in accordance with the authorization set forth in Decree No. 10,791, of 2021, and in accordance with Law No. 14,182, of 2021.
Art. 2. Eletronuclear registered address is located in the city of Rio de Janeiro, Rio de Janeiro State; Eletronuclear shall operate for an indefinite period and may open offices and branches in Brazil or abroad.
Art. 3. Eletronuclear shall comply with Law No. 13,303, of 2016, and its regulation, as well as Law No. 6,404, of 1976.
Art. 4. Eletronuclear’s corporate purpose shall be the construction and operation of nuclear power plants, the generation, transmission, commercialization of electric power of such plants and the provision of engineering and related services, including:
I – obtaining all technology related to it, notably regarding the Steam Generator Nuclear System;
II – development, in Brazil, of the capacity to project and engineer nuclear power plants, subcontracting other engineering companies to complete the services of Eletronuclear and the execution of partnerships with research institutions; and
III – promotion of the Brazilian industry in the fabrication of nuclear power plants components.
Art. 5. For the implementation of the corporate purpose set forth in Art. 4, Eletronuclear shall:
I – execute contracts the object of which shall be the execution of development, project, construction, installation and commissioning of nuclear plants, as well as the provision of other services of technical support to plants in operation compatible with its object;
II – incorporating subsidiaries, acquiring the equity control of and/or holding equity interest in other companies, related to its corporate purpose, provided such act is expressly authorized by law; and
1 |
III – developing any activity and taking any measures related to its corporate purpose.
Chapter II
Public Interest
Art. 6. Eletronuclear’s activities may be guided by its controlling shareholder, whenever in line with its corporate purpose, in order to contribute to the public interest that justified its incorporation.
Sole Paragraph. Eletronuclear shall conduct its acts and decisions according to the principle that nuclear security is a priority and may not be compromised, for any reason, according notably to the following guidelines:
I – The management of the company shall be continuously committed to nuclear security, the physical protection of its nuclear installations and the compliance with the international safeguards on the use of nuclear materials.
II – All members of the Board of Officers, Board of Directions, Fiscal Council and other corporate governance bodies shall be trained on the Fundamentals of Nuclear Security as soon as they take or re-take office.
Art. 7. In the exercise of the prerogative referred to in Art. 6, the controlling shareholder may only lead the Company to undertake obligations or responsibilities, including the implementation of projects of investment and undertaking specific operating costs/results, under conditions which differ from those of any private company that conducts business in the same market, if:
I - is provided by law or regulation, as well as established in a contract, agreement, or understanding executed with the government agency with authority to establish it, provided such instruments are public; and
II - its costs and revenues are broken down and disclosed in a transparent manner, including their accounting statements.
Art.8. For the purposes of complying with Art. 7, item II above, Eletronuclear management must:
a) evidence the obligations or responsibilities undertaken in specific explanatory notes to the year-end financial statements; and
b) describe them in a specific topic in the management report.
Chapter III
Obligations
Art. 9. Eletronuclear, pursuant to the applicable law, shall, among other obligations:
I – direct its actions towards the sustainability through economic, financial, social and environmental balance in its operations and business opportunities;
2 |
II – complying with the Compliance Program, drafted in accordance with Law No. 13,303, of 2016;
III – complying with and, if there a subsidiaries, causing them to comply with the transparency requirements of the applicable law; and
IV – act in compliance with the Code of Conduct and Ethics, as well as any other anticorruption law applicable, or any other law, rules or regulations with similar purposes and effects, abstaining from performing any act which might be prohibited to persons subject to the Brazilian anticorruption legislation.
Art. 10. Eletronuclear must take all appropriate measures so that its administrators, agents, employees and any other persons acting on its behalf, and, when if any, in its controlled companies, administrators, agents, employees and any other persons acting on their behalf, proceed in accordance with the provided for in the Code of Conduct and Ethics and in the Brazilian anticorruption legislation.
Chapter IV
Capital Stock, Shares, and Shareholders
Art. 11. The capital stock is R$ 8,493,035,701.18 (eight billion, four hundred and ninety-three million, thirty-five thousand, seven hundred and one reais and eighteen cents), represented by 37,658,166,491 (thirty-seven billion, six hundred and fifty-eight million, one hundred and sixty-six thousand, four hundred and ninety-one) common shares, with voting rights, and 10,544,698,994 (ten billion, five hundred and forty-four million, six hundred and ninety-eight thousand, nine hundred and ninety-four) preferred shares without voting rights, all of which nominative and without par value.
Sole Paragraph. The preferred shares shall, as preference, confer priority in the reimbursement of capital, without premium.
Art. 12. Eletronuclear’s capital increases shall be carried out by private subscription and/or absorption of reserves, under the rules and conditions set forth in the types of capital increase allowed by law.
§1 The capital increase will be subject to the Extraordinary General Shareholders’ Meeting by the Board of Directors upon proposal of the Executive Board, accompanied by an opinion from the Audit Committee.
§2 The shareholder who does not pay the subscribed shares in accordance with the rules and conditions referred to in this article shall automatically be deemed in default, and shall pay monetary correction, interest of 12% (twelve percent) per year and a fine of 10% (ten percent) upon the amount of the overdue installment.
3 |
Chapter V
Shareholders’ Meeting
Section I - Characteristics
Art. 13. An Ordinary General Shareholders’ Meeting shall be held within the first 4 (four) months following the end of the fiscal year, at a date and time previously set, in the registered officers of Eletronuclear, to:
I - review the managers’ accounts, and examine, discuss and vote on financial statements;
II - decide the allocation of the net profit for the year and the distribution of dividends; and
III - elect and remove the members of the Board of Directors and the Fiscal Council, and set the total and individual compensation of the managers, Fiscal Council members, members of committees, in compliance with the applicable laws.
Sole Paragraph. The decision on calling the General Shareholders’ Meeting shall be taken by the Board of Directors. Such attribution might be further exercised by the Fiscal Council and the shareholders, in the cases the law allows it.
Section I – Composition
Art. 14. The General Shareholders’ Meeting is composed of all the Company's shareholders, regardless of voting rights. The General Meeting will be directed by the Chairman of the Board of Directors of the Company (or by the substitute that he/she may designate), who will choose the secretary of the General Shareholders’ Meeting.
Section III – Call
Art. 15. Expect as provided for in Law No. 6,404, of 1976, the General Shareholders’ Meetings will be called by the Chairman of the Board of Directors or by the substitute that he/she may designate, respecting the deadlines provided for in the legislation.
Art. 16. Regardless of any formality provided for in these Bylaws and in Law No. 6,404, of 1976, any General Shareholders’ Meeting attended by all shareholders will be considered correctly convened.
Section IV – Convening and Resolutions
Art. 17. Subject to the exceptions provided for by law, the General Shareholder’s Meeting will be convened, on first call, with the presence of shareholders representing at least 1/4 (one quarter) of the voting interest.
Art.18. Subject to the qualified quorum provided for by law for the resolution of certain matters, the resolutions of the General Shareholders’ Meeting will be taken by the majority of the voting shares and will be recorded in the minutes book, which can be drafted in summary form.
Art. 19. The General Shareholders’ Meetings will resolve exclusively on the matters specified in the call notices, and the inclusion of general matters in the agenda of the Assembly shall not be allowed.
4 |
Section V – Reserved Matters
Art. 20. The General Shareholders’ Meeting, in addition to the matters provided for in Law nº 6.404, of 1976, and Decree nº 1.091, of 1994, will resolve on:
I - transfer, in whole or in part, of shares of its capital stock or, when it is not a reserved matter of the Board of Directors, of its subsidiaries; public offering shares or modifying the share capital; sale of securities, if held in treasury; sale of debentures, held by it, of companies in which it holds interest and issuance of debentures convertible into shares;
II - spin-off, mergers, dissolution and winding-up operations of the company;
III – exchange of shares or other securities;
IV - amendment to the Bylaws;
V - authorization for the company to file a civil liability lawsuit against the administrators for the damage caused to its assets;
VI - approval of the construction, operation and decommissioning of nuclear power plants;
VII - election and dismissal, at any time, of liquidators, reviewing their accounts;
VIII - appraisal of assets that a shareholder contributes to the formation of share capital; and
IX - other matters proposed by the Board of Directors or the Audit Committee.
§1 The Call Notice may condition the shareholder’s representation at the General Shareholders’ Meeting, in addition to the requirements provided for by law, to the delivery, at the company's headquarters, of the receipt issued by the depositary financial institution of the shares in custody 72 (seventy-two) hours in advance of the day scheduled for the General Shareholders’ Meeting.
§2 The resolutions of the Meeting will be recorded in the minutes book, and may be drafted in summary form.
CHAPTER VI
Management
Art. 21. The Company will have a General Shareholders’ Meeting and the following corporate governance bodies:
I - Board of Directors,
II – Board of Officers,
III- Fiscal Council,
IV - Audit Committee,
V - Risk Committee,
VI - People, Eligibility, Succession and Compensation Committee,
5 |
VII - COANGRA,
VIII - Other advisory committees to the Board of Directors.
Art. 22. Eletronuclear will be managed by a Board of Directors, a collegial body with deliberative functions, with attributions provided for in the law and in these Bylaws, and an Board of Officers.
Sole paragraph. Subject to the legal norms related to indirect public administration, the managers must guide the execution of the Company’s activities in compliance with the principles and best practices adopted and formulated by national and international institutions and forums that are a reference in the corporate governance theme.
Art. 23. The members of the Board of Directors must be Brazilian and the members of the Board of Officers and of the Support Committees for the Board of Directors must be Brazilian, resident and domiciled in the country.
§1 The minutes of the General Shareholders’ Meeting or Board of Directors meeting that elect, respectively, Eletronuclear Board members and officers shall contain the qualification of each of those elected and the term of office and, when the law requires certain requirements for the investiture, only those who have delivered the necessary documentation, of which a certified copy will be filed at the Eletronuclear headquarters, may be elected and take office.
§2 The requirements must be documented, and, for this purpose, the information contained in the standardized form shall be used, approved by the Secretariat for Coordination and Governance of State-owned Companies.
Art. 24. The company's managers, including directors representing employees and minority shareholders, must meet the mandatory requirements and comply with the prohibitions in the exercise of their activities provided for in Laws No. 6.404, of 1976, No. 13.303 of 2016, and Decree No. 8.945, of 2016, as well as those provided for in specific regulations.
§1 In addition to the conditions for investiture mentioned in the main section of this article, the person appointed for the position of officer, including the Chief Executive Officer, must have professional experience of at least 05 (five) years, in an activity or function directly related to the main activity of the position in the Board of Officers.
§2 The maximum limit for a member's participation in Boards of Directors may not exceed 5 (five), including in Eletronuclear’s, subject to the compensation limitation.
§3 The elected managers must participate, when they take office and annually, in specific training on corporate and capital market legislation, information disclosure, internal controls, code of conduct, Law No. 12,846, of 2013, and other topics related to the activities of the Eletronuclear.
§4 The reappointment of a manager who has not participated in any annual training provided by the company in the last two years is prohibited.
§5 The requirements and prohibitions required for managers must be respected in all appointments and elections held, including in case of reappointment.
6 |
§6 The requirements referred to in this Art. 24 must be documented, in the form required by the standardized form, approved by the Secretariat for Coordination and Governance of State-owned Companies and made available on its website.
§7 The absence of the documents referred to in §6 will result in rejection of the form by the Eletronuclear Personnel, Eligibility, Succession and Compensation Committee.
§8 The Personnel, Eligibility, Succession and Compensation Committee shall verify that the requirements and prohibitions established in this Art. 24 are met, by analyzing the statement presented by the nominee and its respective documentation, pursuant to Art. 24.
Art. 25. Each member of the Board of Officers must, before entering into the exercise of their functions, present to the Company, which will ensure its confidentiality, access to the Annual Statements for Individual Income Tax – DIRPF and any corrections presented to the Secretariat of the Federal Revenue Service of Brazil - RFB, according to the form provided by the Federal Court of Auditors. The chief officers must also send to the Public Ethics Commission of the Presidency of the Republic - CEP/PR, annually, as appropriate, a Confidential Information Statement - DCI, according to Law No. 6,728, of 1979, and Law No. 12,813, 2013, Art. 9, item I.
Art. 26. The directors and chief officers will be invested in their positions by signing a specific term of investiture within 30 (thirty) days from the election or appointment, made available by the Eletronuclear, which will include the agreement to be subject to the Eletronuclear Code of Ethical Conduct and Integrity and other internal regulations issued by the Company.
§1 If the term of investiture is not signed within 30 (thirty) days after the election, it will become null and void, unless the justification is accepted by the corporate governance body for which the person has been elected.
§2 The term of investiture shall contain, under penalty of nullity, the indication of at least one domicile in which the manager will receive summons and subpoenas in administrative and judicial proceedings relating to acts of his management, which shall be deemed to be served by delivery to the address indicated, which can only be changed by means of written communication to the Eletronuclear.
Art. 27. At the meetings of collegial bodies, prior to the decisions, the member who is not impartial in relation to the matter under discussion must manifest his/her conflict of interest or personal interest, withdrawing from the meeting. If such member does not do so, any other person may make a statement on the conflict, if aware of it, and the collegial body shall deliberate on the conflict in accordance with its bylaws and applicable legislation.
Art. 28. The members of the Board of Directors and the Board of Officers shall be liable, under the terms of current legislation, individually and jointly, for the acts they perform and for the damages that result from them to the Eletronuclear, unless the dissenting administrator states it in the minutes of meeting of the respective management body his/her dissent or, if it is not possible, immediate and written notice thereof to the management body, the fiscal council or the shareholders' meeting.
§1 The Eletronuclear will ensure the members and former members of the Board of Officers, the Board of Directors, the Fiscal Council, the Audit Committee and the Risk Committee their defense in legal and administrative proceedings brought against them, for the practice of acts in the exercise of the position or function, through its legal counsel or through a specially hired lawyer, in cases where there is no incompatibility with the interests of the Eletronuclear.
7 |
§2 The members and former members of the Board of Officers, the Board of Directors, the Fiscal Council, the Audit Committee and the Risk Committee shall have access to the information and documents in the Company's records or database, required for the administrative or judicial defense, in actions proposed by third parties, of acts performed during their term of office or mandate, unless such availability would be detrimental to the interest of the Eletronuclear.
§3 The benefit provided for in the first paragraph of this article applies to the persons holding senior positions currently and in the past and other employees and former employees regularly invested with powers delegated by the administrators.
§4 The form of the benefit mentioned in §§1 and 3 will be defined by the Board of Directors, after consultation with the Eletronuclear legal department.
§5 If any of the holders of the positions or functions mentioned in §§1 and 3 is convicted, in a final court decision, based on violation of the law or the Bylaws, or resulting from negligent or intentional act, he/she shall reimburse Eletronuclear for all costs and expenses arising from the defense referred to in §§1 and 3, in addition to any damages caused.
§6 Eletronuclear may maintain, in the form and to the extent defined by the Board of Directors, a permanent insurance contract in favor of the holders of the positions or functions mentioned in this article, to cover the procedural expenses and legal fees of administrative or judicial proceedings brought against them and relating to its attributions with Eletronuclear.
§7 The managers of Eletronuclear who create salary advantages without any provision or in disagreement with what is established in the employment contracts, job and salary plan, collective bargaining agreement, internal rules or with the current legislation will be liable for the damages caused to Eletronuclear under the main section of this article.
Art. 29. The Board of Directors and the Board of Officers will meet, with a quorum of an absolute majority, half of the elected members plus one, and will resolve by the vote of the majority of the members present.
Single paragraph. In the resolutions of the Board of Directors and resolutions of the Board of Officers, the respective Presidents will have, in addition to their personal vote, the tiebreaker.
CHAPTER VII
Board of Directors
Art. 30. The Board of Directors, the superior collegial body of Eletronuclear, will be composed of 07 (seven) members, elected by the General Shareholder’s Meeting, with a unified term of office of 02 (two) years, with a maximum of 03 (three) consecutive reappointments.
§1 In the composition of the Board of Directors, ENBPar must appoint the majority of members and there must necessarily be, at least:
8 |
I – 01 (one) member elected to represent the employees, chosen in accordance with current legislation; and
II - 01 (one) member elected by the minority shareholders, if they are not entitled to a greater number by the multiple vote process provided for in Law No. 6,404, of 1976.
§2 Among the directors appointed by ENBpar, as the Company's controlling shareholder, 1 (one) director must be appointed by the supervising Ministry to which Eletronuclear is linked.
§3 The board member representing the employees shall not participate in discussions and deliberations on matters involving union relations, compensation, benefits and advantages, including matters of supplementary pension and assistance, in which cases a conflict of interest exists.
§4 Matters that constitute a conflict of interest, as provided for in §3 above, will be resolved at a special meeting exclusively called without the presence of the board member representing the employees, provided he/she shall have access to the minutes of the meeting and documents relating to the resolutions, within 30 (thirty) days.
§5 At least 25% (twenty-five percent) of the Board of Directors members shall be independent members, as provided for in Art. 22 of Law No. 13.303 of 2016.
§6 The Board of Directors will make a non-binding recommendation of new members of this collegial body and their profiles for approval by the shareholders’ meeting, always in accordance with the results of the evaluation process and the guidelines of the nomination policy and the succession plan.
§7 ENBPar shall appoint the independent members of the Board of Directors referred to in §5 of this article, if the other shareholders do not do so.
§8 In addition to the cases provided for by law, the position shall be vacant when the member of the Board of Directors fails to attend, without justification, 02 (two) consecutive meetings or 03 (three) inconsecutive, in the last 12 (twelve) meetings, without justification.
§9 In the event of a vacancy in the position of Board member, the Chairman of the board shall call the general shareholders’ meeting to designate the replacement to complete the term of office of the previous member.
§10 The term of office of the members of the board of directors will be extended until the effective investiture of the new members.
§11 Within the period provided for in the main section of this article, previous office periods occurring less than 02 (two) years before will be considered.
§12 Once the maximum term of management provided for in the main section of this article has been reached, the return of the board member may only occur after a period equivalent to a term of management has elapsed.
9 |
§13 The term of office of the members of the Board of Directors will be extended until the effective investiture of the new members.
Art. 31. The Board of Directors will hold ordinary meetings 01 (once) a month, and, extraordinary meetings whenever necessary.
§1 The Board of Directors will meet at least twice a year with the presence of external auditors.
§2 The Board of Directors will be convened by its chairman or by the majority of the members of the Board of Directors and its meetings will be recorded in minutes, which will be signed by all members present, which, when they contain resolutions intended to produce effects before third parties, will be filed with the competent Board of Trade and published.
§3 The meetings of the Board of Directors must, as a rule, be in person, and the virtual meeting or the participation of a member by tele or videoconference shall be exceptionally allowed, upon justification approved by the board.
§4 In the event of a non-unanimous decision, the justification for the dissenting vote shall be recorded, at the discretion of the respective member, provided that the dissenting director who records his disagreement in the minutes of the meeting or, if not possible, informs the Board of Directors thereof immediately and in writing shall not be liable for the resolution.
§5 The monthly compensation of the members of the Board of Directors, determined by the General Meeting, shall not exceed 10% (ten percent) of the average monthly remuneration of the chief officers, excluding the amounts related to additional vacation and benefits, provided that the payment of participation, of any kind, in the company's profits shall be prohibited.
§6 The members of the Board of Directors will be reimbursed for their transport and accommodation expenses, whenever domiciled outside the city where the meeting is held, and transport only, when domiciled in the city.
Art. 32. The Board of Directors shall establish the general orientation of Eletronuclear business, the ultimate control of the approved programs, as well as the verification of the results obtained. In the exercise of its attributions, the Board of Directors, without prejudice to the powers provided for in current legislation, shall:
I - resolve on reserved matters in accordance with the current reserved matters policy;
II - authorize Eletronuclear to take out loans or financing, in Brazil or abroad, in accordance with the current reserved matters policy;
III - authorize granting collaterals for loans or financing, obtained in Brazil or abroad, in accordance with the current reserved matters policy;
IV – authorize the performance of business acts aimed at the acquisition of goods and contracting of works and services, in accordance with the current reserved matters policy;
V - appoint and dismiss Eletronuclear chef officers and members certain technical and advisory bodies and oversee their management;
10 |
VI - implement and supervise the risk management, internal controls and compliance systems established for the prevention and mitigation of the main risks to which Eletronuclear is exposed, including risks related to the integrity of accounting and financial information and those related to the occurrence of corruption and fraud;
VII - analyze, at least quarterly, the balance sheet and other financial statements, notwithstanding the role of the Audit Committee;
VIII - decide on the constitution of business consortia or participation in companies that are intended, directly or indirectly, to achieve the corporate purpose of Eletronuclear, under the regime of concession, authorization or permission;
IX - approve the appointment, made by the Board of Directors, of the members of the boards and administrative and fiscal councils of the companies in which Eletronuclear holds interest, including associations and foundations;
X - approve the organizational structure of Eletronuclear;
XI - monitor the company's management by requesting information or examining records and documents, as well as request information about contracts entered into or about to be entered into and about any other acts;
XII - approve the management and internal controls reports, as well as the Board of Officers’ accounts;
XIII - authorize Eletronuclear to issue bonds and securities;
XIV - choose and dismiss independent auditors, in compliance with the relevant law;
XV - resolve on the appointment and dismissal of the holder of a position in the Internal Audit, after approval by the Ministry of Transparency and General Comptroller of the Union, and the Ombudsman;
XVI - resolve on the attributions and functioning of the Internal Audit and the Ombudsman;
XVII - resolve on proposals for the implementation of corrective measures or for the improvement of procedures and routines, as a result of the analysis of the manifestations received by the Ombudsman;
XVIII - request periodic internal audit on the activities of the closed pension fund that manages Eletronuclear’s benefit plan;
XIX - prepare, amend and approve the Internal Regulations of Eletronuclear and the technical and advisory bodies, observing the rules on composition and attributions set forth in these Bylaws and in the applicable law;
XX - resolve on the estimates of Eletronuclear’s revenues, expenses and investments in each fiscal year, proposed by the Board of Executives;
11 |
XXI - resolve on the distributions to shareholders, based on the interim results calculated under the terms of the applicable legislation;
XXII - resolve on making and accepting donations with or without charges, subject to the provisions of the Compliance Manual and the Code of Conduct and Ethics, as well as the current reserved matters policy;
XXIII - resolve on the acquisition, sale or encumbrance of property, not related to the fulfillment of the Eletronuclear's corporate purpose, in accordance with the current reserved matters policy, in compliance with the applicable legislation;
XXIV – authorize the sale or acquisition of property, directly related to the fulfillment of the Eletronuclear's corporate purpose, in accordance with the current reserved matters policy, in compliance with the applicable legislation;
XXV - call the General Shareholders’ Meetings;
XXVI - approve the opening and closing of branches, agencies and offices in Brazil or abroad;
XXVII - resolve on the temporary absence of directors, when the term exceeds 30 (thirty) consecutive days;
XXVIII - meet, at least 01 (once) a year, without the presence of the Chief Executive Officer of Eletronuclear, including for approval of the Annual Plan of Internal Audit Activities - PAINT and the Annual Report of Internal Audit Activities - RAINT;
XXIX - resolve on the use or exploitation, in any capacity, and by any person or entity, of equipment, facilities, goods or other assets of Eletronuclear, not linked to the execution of the corporate purpose, in accordance with the current reserved matters policy;
XXX - approve and amend Eletronuclear business and management plan;
XXXI - carry out the individual and collective performance evaluation of the managers, at least 01 (once) a year, in accordance with current law;
XXXII - approve the policy for related parties transactions, in accordance with the requirements of competitiveness, compliance, transparency, and fairness, which will be reviewed at least annually;
XXXIII - resolve on the creation, operation, by means of internal regulations, and extinction of Support Committees for the Board of Directors to further the strategic studies, as well as elect and dismiss its members, in compliance with current law;
XXXIV - grant vacations or optional leave to the Chief Executive Officer;
XXXV - approve the personnel regulations and establish the number of senior functions of Eletronuclear senior management;
XXXVI - approve the maximum number of personnel and the call for public personnel selection procedures of Eletronuclear;
12 |
XXXVII - approve and supervise the fulfillment of the specific goals and results to be achieved by the members of the Executive Board;
XXXVIII - annually promote an analysis regarding the fulfillment of goals and results in the execution of the business plan and strategic management, publishing its conclusions and informing the National Congress and the Federal Court of Auditors, directly or through ENBPar, under the terms of current applicable law;
XXXIX - resolve on contracts relating to the sale of energy and fuels and to the operations of contracting financing and insurance accepted and necessary to guarantee legal proceedings and the financial settlement of operations carried out within the scope of the CCEE, as well as in cases of energy exports, subject to the approval limits for contracts for the purchase and sale of electricity and subsequent acts linked to them, including the contracting of accepted financing and insurance required for guarantee, in accordance with the current reserved matters policy.
XL - submit to the Board of Directors of ENBpar and to shareholders who individually hold shares representing 10% (ten percent) or more of the Company’s capital stock, when requested, a report on the results of energy trading, including the latest accounting available in the CCEE;
XLI - discuss, approve and monitor decisions involving corporate governance practices, relationships with interested parties, personnel management policy and agents’ code of conduct;
XLII - resolve on the shareholders' agreements to be signed by the Eletronuclear, if any, or its subsidiaries, when they exist, before their execution, in compliance with current legislation;
XLIII - express its opinion on the proposals to be submitted for deliberation by the shareholders at the meeting;
XLIV - to approve the Regulations for Tenders and Contracts;
XLV - comment on the report presented by the Board of Officers resulting from the internal audit on the activities of the closed pension fund;
XLVI - express its opinion (which shall not be binding) on the compensation of the members of the Board of Officers and other members of the management of Eletronuclear, including any members of technical and advisory bodies of the Eletronuclear, whether set forth in the bylaws or not, as well as the participation, by the members of the Board of Officers, in the company's profits;
XLVII - to establish a spokesperson policy aimed at eliminating the risk of contradiction between information from different areas and that of the company's executives; and
XLVIII - decide on cases not covered by these Bylaws.
§1 The number of senior positions of Eletronuclear senior management and the maximum number of personnel, approved by the Board of Directors pursuant to items XXXV and XXXVI of this article, shall be submitted, pursuant to the law, to the approval of the Secretariat of Coordination and Governance of State-Owned Companies – SEST.
13 |
§2 The matters to be submitted to the analysis of the Board of Directors will be prepared by the Board of Officers.
§3 The publication obligation referred to in item XXXVIII does not apply to information of a strategic nature, the disclosure of which may prove to be harmful to the company’s interests.
Art. 33. The Board of Directors shall submit the annual management report and the respective financial statements for each fiscal year to the Fiscal Council's analysis.
Article 34. The Board of Directors, in each fiscal year, will examine and submit to the decision of the Ordinary General Shareholders’ Meeting, the Management Report and the financial statements prepared by the Board of Officers in accordance with the applicable corporate law, as well as the proposed distribution of dividends and application of excess amounts, attaching the opinion of the Supervisory Board and the certificate of the independent auditors.
Chapter VIII
Advisory Committees
Art. 35. The Monitoring Committee of the Angra 3 Nuclear Power Plant - COANGRA ("COANGRA"), which shall be temporary and be maintained until the beginning of the commercial operation of the Nuclear Plant Angra 3, will have the purpose of advising the Company’s Board of Directors, including performing analysis and issuing a prior opinion on the contracting of goods, services, construction works, financing and collaterals related to the Angra 3 Nuclear Power Plant project.
Art. 36. COANGRA will be composed of 5 (five) full members, one of whom must be an external and independent member, to be appointed by the Board of Directors for a term of 3 (three) years, the reelection of which will be permitted.
Single paragraph. In the event of a vacancy of a COANGRA member, the Chairman of the Board of Directors shall call a meeting of the Board of Directors to elect the new member to complete the term of office of the previous member.
Art. 37. The investiture of COANGRA members will comply with the conditions imposed by the applicable legislation, as well as those foreseen in its own regulations.
§1 The members of COANGRA will be invested in their positions regardless of the signing of the term of investiture.
§2 The monthly compensation payable to the members of COANGRA, set by the General Shareholders’ Meeting, shall not exceed 10% (ten percent) of the average monthly compensation of the chief officers, excluding the amounts related to additional vacation and benefits, and payment of participation in the company profit and payment of compensation in an amount higher than that paid to the board of directors.
§3 The defense and insurance set forth in §§1 and 6 of Art. 28 of these statutes apply to the members of COANGRA.
14 |
§4 The limitations provided for in §2 of Art. 24 of these bylaws apply to the members of COANGRA.
§5 COANGRA may request the Company to appoint qualified personnel to act as secretary and provide technical support.
Article 38. The Board of Directors will have the support of the Audit Committee, the Risk Committee and the Personnel, Eligibility, Succession and Compensation Committee.
§1 The committees mentioned in the main section of this article will have their work rules provided for in their respective internal regulations, as defined in Law No. 13.303 of 2016, and other applicable legislation.
§2 Notwithstanding its legal attributions, the Board of Directors of Eletronuclear may establish additional attributions to the Audit Committee and the Risk Committee, and extend their scope and performance to the subsidiaries of Eletronuclear.
§3 The Audit Committee and the Risk Committee, which will be permanent, will each be composed of three members of the Board of Directors (one of them being one of the independent members) and two independent external members, with term of office non-coincident and independent of the term of office of the Board of Directors, and will also comply with the conditions imposed in the applicable legislation and regulation.
§4 The members of the Audit Committee and the Risk Committee must have professional experience or academic training compatible with the position, preferably in the accounting, auditing or the sector in which the Company operates, provided that at least 1 (one) member of the Audit Committee must have recognized professional experience in corporate accounting matters.
§5 The members of the Audit Committee and the Risk Committee, at their first meeting, shall elect their Chairman, who shall be an independent member of the Board of Directors, who shall be responsible for complying with the body’s resolutions, registered in the minutes book .
§6 The Personnel, Eligibility, Succession and Compensation Committee shall issue an opinion on compliance with the requirements and prohibitions for members.
§7 The Audit Committee and the Risk Committee will have operational autonomy and budget allocation, annually or by project, within the limits approved by the General Shareholders’ Meeting, to conduct or determine the carrying out of consultations, assessments and investigations within the scope of their activities, including the hiring and use of independent experts.
§8 The compensation of the members of the Company's Committees shall be fixed by the General Shareholders’ Meeting in an amount no inferior to the compensation of the fiscal council members.
§9 The members of the Board of Directors who hold a position on the Audit Committee or on the Company’s Risk Committee shall opt for the compensation of a member of the relevant committee.
15 |
§10 The term of office of the members of the Audit Committee and the Risk Committee will be 2 (two) years, not coinciding for each member of the respective Committee, and one single reelection shall be permitted.
§11 In case of a vacancy of a member of the Audit Committee or the Risk Committee, the Board of Directors will elect his successor to start a new term of office.
§12 The position of member of the Audit Committee and the Risk Committee is personal and does not admit a temporary replacement. In the event of absences or eventual impediments of any member of the committee, the committee will convene its meetings with the remaining members, subject to the presence of at least three members.
§13 At least one of the members of the Audit Committee and one of the members of the Risk Committee must participate in the meetings of the Board of Directors that analyze the periodic financial statements, the hiring of the independent auditor and the Annual Plan of Internal Audit Activities - PAINT .
§14 The Audit Committee and the Risk Committee are governed, with regard to other matters, including their meetings and powers, by the provisions of Law 13,303 of 2016 and the corresponding regulation.
§15 Whenever there is a need to evaluate transactions with the Federal Government, its bodies and foundations and federal state-owned companies, and if such are outside the normal course of business of the Company, and are within the reserved matters which require the approval of the Board of Directors, the Audit Committee and the Risk Committee shall provide prior advice, issuing their opinions regarding the intended transaction.
§16 The Personnel, Eligibility, Succession and Compensation Committee shall advise shareholders and the Board of Directors in the processes of appointment, assessment, succession and compensation of managers and fiscal council members, in addition to other duties assigned to it by the Board of Directors and contained in its Internal Regulation.
§17 Notwithstanding the provisions of the previous paragraph and the other attributions provided for in Decree 8,945, of 2016, the Personnel, Eligibility, Succession and Compensation Committee shall: I –provide an opinion in order to assist the members of the Board of Directors in the appointment of members to the members of the Board of Officers; II – assist the Board of Directors in preparing and monitoring the succession plan for directors; and III - to assist the Board of Directors in the evaluation of proposals relating to the personnel policy and in its follow-up.
§18 The Committee's statement shall be forwarded to the Board of Directors, which shall include, in the management's proposal for the General Shareholders’ Meeting the agenda of which includes the election of members of the Board of Directors and the Audit Committee, its statement about the compliance of nominees with legal, regulatory and bylaws requirements and prohibitions in view of the self-declaration and documents presented by the nominee and the committee's statement.
§19 The same procedure described in the previous paragraph must be followed in the election of members of the Board of Officers, and the Committee's statement must be included in the minutes of the Board of Directors meeting the agenda of which is to elect the members of the Board of Officers.
16 |
§20 The Personnel, Eligibility, Succession and Compensation Committee shall be composed of 3 (three) to 5 (five) members in total, and shall be composed of members of the Board of Directors, without additional compensation, and may also have up to 2 (two ) external members, the compensation of which shall be determined by the General Shareholders’ Meeting and subject to the duties and responsibilities referred to in Article 165 of Law 6,404, of 1976, with a term of office of 2 (two) years.
§21 The minutes of the meetings of the Personnel, Eligibility, Succession and Compensation Committee dealing with the analysis of the eligibility of managers and/or fiscal councilors shall be disclosed on the Company's website; provided that their disclosure in the form of extracts is permitted, when other matters of a different nature and of a strategic nature for the Company are also addressed.
§22 The restriction referred to in the previous paragraph shall not be enforceable against the controlling bodies, which will have full and unrestricted access to the contents of the minutes of the Personnel, Eligibility, Succession and Compensation Committee, subject to the transfer of confidentiality rules and the provisions of Law No. 13,709, of 2018, with respect to the processing of personal data.
Chapter IX
Board of Officers
Art. 39. The Board of Officers is the executive body for management and representation, and within the guidelines laid down by the General Shareholders’ Meeting and the Board of Directors, shall ensure the regular functioning of Eletronuclear.
Art. 40. The Board of Officers will be composed of 06 (six) members, a Chief Executive Officer, a Chief Financial Officer, a Chief Administrative Officer, a Chief Operations and Commerce Officer, a Chief Technical Officer and a Chief Officer of Angra 3 Nuclear Power Plant, all elected by the Board of Directors, who will exercise their functions on a full-time basis, with a unified term of office of 02 (two) years and a maximum of 03 (three) consecutive reappointments shall be allowed.
§1 The term of office of the members of the Board of Officers will be extended until the effective investiture of the new members.
§2 Within the period provided for in the main section of this article, previous management periods occurring less than 02 (two) years and the transfer of a chief officer to another Board of Officers position shall be considered.
§3 Once the maximum term of office provided for in the main section of this article has been reached, the director's reappointment may only occur after a period equivalent to a term of management has elapsed.
§4 The assumption of commitment to specific goals and results to be achieved, which must be approved by the Board of Directors, is a condition for taking office as a director.
17 |
Art. 41. The members of the Board of Officers may not leave office for more than thirty consecutive days, except in case of vacation or leave, under penalty of loss of office, except in cases authorized by the Board of Directors under the terms of these bylaws.
§1 The members of the Board of Officers shall be entitled, annually, to 30 (thirty) days of paid leave, which may be accumulated up to a maximum of two periods, and its conversion into cash and indemnification shall be prohibited.
§2 Payment in double of the compensation related to vacations not taken during the concession period is prohibited.
§3 In case of temporary impediment, leave or vacation of any member of the Board of Officers, the substitute will be appointed from among the other members of the Board of Officers.
Art. 42. If a position on the Board of Officers is definitively vacant, the same criterion contained in § 3 of Art. 41 shall be used for the replacement, until the meeting of the Board of Directors that decides for the definitive replacement and takes possession of the new director, filling, thus, the vacant position, for the term that remained to the substituted one.
Art. 43. The members of the Board of Officers are prevented from carrying out activities that constitute a conflict of interest, subject to the form and term established in the pertinent legislation.
§1 After the exercise of management, the former member of the Board of Officers who is in a situation of impediment may receive an indemnification payment equivalent only to the fixed monthly fee for the function he/she occupied, subject to §§ 2 and 3 of this article.
§2 The actual existence of the situation of impediment will depend on the prior opinion of the Public Ethics Commission of the Presidency of the Republic.
§3 The former member of the Board of Officers who returns, before the end of the period of impediment, to the performance of the function he/she occupied in the public or private administration prior to his investiture shall not be entitled to indemnification, provided that such does not characterize a conflict of interests.
Art. 44. In the exercise of its attributions, the Board of Officers, in compliance with the guidelines and policies established by Eletronuclear Board of Directors, shall:
I - approve, in compliance with the fundamental guidelines established by the Board of Directors, guidelines for the activities of Eletronuclear;
II - prepare plans for issuing bonds and securities to be submitted to the Board of Directors and subsequently to the General Shareholders’ Meeting;
III - prepare and submit to the approval of the Board of Directors:
a) Eletronuclear Strategic Plan and Business and Management Plan for the following fiscal year and the updated long-term strategy with analysis of risks and opportunities for at least the following 05 (five) years, until the last ordinary meeting the Board of Directors of the previous year;
18 |
b) the annual expenditure and investment programs of Eletronuclear with the respective projects;
c) Eletronuclear costs and investment budgets; and
d) the evaluation of the performance result of the activities of Eletronuclear;
IV - prepare, amend and approve its Internal Regulations;
V - decide on the hiring of construction works, services, inspection, leasing of services, consultancy, supplies and similar involving financing in accordance with the current reserved matters policy;
VI - approve rules for the assignment of use, rental or lease of real estate owned by Eletronuclear;
VII - approve administrative, technical, financial and accounting manuals and standards and other regulations necessary to guide the functioning of Eletronuclear;
VIII - submit to the approval of the Board of Directors a proposal on plans that provide for admission, career, access, benefits and conduct rules for Eletronuclear employees;
IX - to approve the names indicated by the chief officers to fill the positions that are directly subordinate to them;
X - grant powers to the chief officers to decide, separately, on matters included in the attributions of the Board of Officers;
XI - grant powers to the Chief Executive Officer, chief officers and employees to authorize expenses, establishing limits and conditions, in accordance with the current reserved matters policy;
XII – issue opinions in cases of admission, praise, punishment, transfer and dismissal of employees directly subordinate to the chief officers;
XIII - promote and provide the internal organization, keeping it constantly updated;
XIV - submit requests to the Board of Directors for raising funds, contracting loans and financing, providing collaterals and participating in partnerships, in the country or abroad, in accordance with the current reserved matters policy;
XV - propose waivers or judicial or extrajudicial transaction, to put an end to litigation or pending matters, submitting them to the approval of the Board of Directors, except for cases already regulated by law and subject to the limit established in the current legislation;
XVI - prepare, in each fiscal year, the financial statements established by the current corporate law, submitting them to the examination of the independent auditors, as well as preparing the proposal for the distribution of dividends and application of excess amounts, to be submitted to the Board of Directors, the Fiscal Council, the Audit Committee and the Risk Committee, and, to the examination and resolution of the General Shareholders’ Meeting;
19 |
XVII - appoint Eletronuclear employees for missions abroad;
XVIII - transfer Eletronuclear resources and formalize obligations in general, upon signature of the Chief Executive Officer and a chief officer in the respective documentation, provided such power may be granted to Eletronuclear’s attorneys or employees, in specific acts of the Board, in accordance with the current reserved matters policy;
XIX - authorize vacations or leaves of absence for up to 30 (thirty) days to any of its members, except the Chief Executive Officer, appointing a replacement pursuant to paragraph 3 of Art. 41 of these Bylaws;
XX - resolve on the acquisition, sale or encumbrance of property, in accordance with the current reserved matters policy;
XXI - inspect and monitor companies, including Special Purpose Entities - SPEs, in which Eletronuclear holds equity interest, with regard to governance practices, the results achieved and control, proportional to the relevance, materiality and risks of the business; and
XXII - approve voting instructions for Eletronuclear representatives at company Meetings, in which it holds equity participation, if any.
Art. 45. The Board of Officers will hold ordinary meetings once a week, subject to the presence of the majority of its members and extraordinary meetings upon the call of the Chief Executive Officer or the majority of members, and their meetings will be recorded in minutes, which will be signed by all members present.
§1 The meetings of the Board of Officers must, as a rule, be in person, and the virtual meeting or the participation of a member by tele or videoconference shall be exceptionally allowed, upon justification approved by the board.
§2 In the event of a non-unanimous decision, the justification for the dissenting vote shall be recorded, at the discretion of the respective member, provided that the dissenting chief officer who records his/her disagreement in the minutes of the meeting or, if not possible, informs the Board of Directors thereof immediately and in writing, shall not be liable for the resolution.
Chapter X
Attributions of the
Chief Executive Officer and Chief Officers
Art. 46. Notwithstanding other attributions of the Board of Officers, the Chief Executive Officer, in addition to guiding the administrative policy and representing Eletronuclear, shall:
I - oversee Eletronuclear's business;
II - coordinate, through the actions of the Board of Officers, the activities of Eletronuclear, and, directly, those pertaining to the Legal Superintendence, Social Communication, Governance, Risk Management and Compliance, Nuclear Safety, Business Planning and Social and Environmental Responsibility;
20 |
III - represent Eletronuclear, in or outside court, or before other companies, shareholders or the general public and supervisory and control bodies, provided he/she shall be allowed to grant such powers to any chief officer, as well as appoint representatives, attorneys, agents or agents;
IV - hire and fire employees;
V - formalize the appointments approved by the Board of Officers;
VI - appoint an election commission for the purpose of organizing the election of the employees' representative on the Board of Directors, including the attribution for proclaiming the winning nominee and communicating the result to the controlling partner for the adoption of the necessary measures for the appointment of the employees' representative on the Board of Directors; and
VII - perform other duties as determined by the Board of Directors.
Art. 47. The duties of the other chief officers, notwithstanding other activities assigned to them by the Board of Directors, are:
§1 Chief Financial Officer shall be responsible for planning, coordinating and proposing guidelines, plans and goals for the activities of Financial Planning and Budgets, including: economic and financial analyses, tariff studies, budgets, establishing contacts and understandings with clients, business, banking and/ or governmental authorities; as well as promoting, through the area responsible for competing procedures and contracts management for the acquisition and supply of goods and services in the Company, following the approved schedule.
§2 The Administrative Director shall:
I. formulate the Company's Personnel Management Policy and guide its implementation, with a focus on valuing and developing, health and safety of human beings; with emphasis on achieving engagement and results; effectiveness in training the staff in the managerial, technical and administrative areas; as well as conducting activities related to labor and union relations; and
II. plan, coordinate, supervise and manage activities and services related to information technology, comprising: development, maintenance of systems and applications, support of computer equipment and corporate telecommunications in the Company, in conjunction with the other areas involved.
§3 The Operations and Marketing Director shall:
I. promote the implementation of policies, guidelines and standards to be adopted in the activities of operation, maintenance, decommissioning and management of spent fuel and waste from Eletronuclear Nuclear Power Plants, as well as in the sale of energy generated in these units;
21 |
II. evaluate and recommend new alternatives for the commercialization of energy production, resulting from electro-energy or economic-financial studies carried out under its initiative and jurisdiction; and
III. promote the operation and maintenance, as well as the management of spent fuel and rejects, the extension of the service life and the decommissioning of the Plants, ensuring that the following activities are carried out by the bodies within its jurisdiction:
a) Nuclear safety assessment and operational performance of the Plants' systems, components, facilities and equipment, carrying out studies and corrective actions, ensuring that the safety limits and operational capacity are respected and maintaining reliability with the electrical system;
b) monitoring the activities of the Plants with the systematic evaluation of results and identification of improvement needs;
c) continuous promotion of a high standard of performance and reliability for the operation of the Plants;
d) supervising compliance with legal and regulatory rules and obligations, required in the Plant Operating License, and performance of the activities necessary for the licensing of operators; as well as promoting the planning and coordination of activities related to radiological protection, preservation and monitoring of the environment and work safety; and
e) implementation and monitoring of recommendations arising from independent audits, promoted by international institutions to which Eletronuclear is associated.
§4 The Technical Director shall:
I. promote the implementation of policies, guidelines and standards to be adopted by the Company for the activities of Project Engineering and Operational Support, Management, Construction, Assembly and Commissioning of Projects, Specification and Procurement of Nuclear Fuel, Quality Assurance, Nuclear Safety Analysis, Licensing and Environmental Management, as well as directing the execution of these activities, in addition to coordinating activities related to Research, Development and Technological Innovation;
II. promote the preparation and approve the general physical and economic planning of the projects under his/her responsibility, in accordance with the proposed and approved guidelines and goals; by enabling its implementation, managing project activities, supplies, construction works, assembly and commissioning, in order to ensure compliance with the deadlines, costs and quality goals established in the general planning, as well as coordinating the formulation of the principles and criteria of the Policy and Quality Management; and
III. promote the management of nuclear scientific and technological knowledge, following the development of the sector, with the objective of providing engineering services for the plants in operation and for the development and implementation of new ventures, and coordinating activities related to the licensing processes of the activities and projects in operation and under implementation, acting before regulatory bodies and contracted companies; as well as coordinating the formulation of the principles and criteria of the Environmental Policy and Management.
22 |
§5 The Chief Officer of Angra 3 Nuclear Power Plant to promote the feasibility, implementation and entry into commercial operation of the Angra 3 Nuclear Power Plant, including the following activities:
I. coordinating the activities of Eletronuclear in support of the conclusion of the services contracted with the BNDES; and
II. coordinating the activities of Eletronuclear for procuring engineering services, contracting financing and project management necessary for the completion of the Angra 3 Power Plant;
§6 The Chief Officer of Angra 3 Nuclear Power Plant must have proven experience in project management and long-term financing.
§7 After the start of commercial operation of the Angra 3 Nuclear Power Plant, the existence of the Director of the Angra 3 Nuclear Power Plant will no longer be mandatory.
Chapter XI
Fiscal Council
Art. 48. The Fiscal Council, which shall be permanent, is composed of 05 (five) effective members and respective alternates, elected by the General Shareholders’ Meeting, all Brazilians and domiciled in the country, shareholders or not, with a term of office of 02 (two ) years, and a maximum of 02 (two) consecutive reappointments shall be allowed, as follows:
I. 02 (two) members and respective alternates appointed by ENBPAR;
II. 01 (one) member and respective alternate appointed by the minority shareholders;
III. 01 (one) member and respective alternate appointed by the holders of preferred shares; and
IV. 01 (one) member and respective alternate appointed by the Ministry of Economy, as a representative of the Brazilian Bureau of the Public Debt, who must be a public servant with a permanent employment contract with the federal public administration.
§1 Within the period provided for in the main section of this article, previous terms of office occurring less than 02 (two) years will be considered.
§2 Once the maximum period provided for in the main section of this article has been reached, the Fiscal Council member may only be reappointed after a period equivalent to a term of office has elapsed.
§3 The members of the Fiscal Council must meet the mandatory requirements and comply with the prohibitions for the exercise of their activities determined by Law No. 13,303, of 2016, by Decree No. 8,945, of 2016, and by other rules that regulate the matter.
23 |
§4 The Personnel, Eligibility, Succession and Compensation Committee shall give an opinion on the compliance with the requirements and prohibitions for the investiture of the members.
Art. 49. The investiture in the position of Fiscal Councilor of Eletronuclear will comply with the conditions imposed by the applicable legislation, as well as those set forth in the proper regulations.
§1 The members of the Fiscal Council will be invested in their positions regardless of the signing of the term of investiture, from the respective election, subject to the the conditions imposed by the applicable legislation, in particular the provisions of Article 26 of Law 13,303, of 2016, and to Art. 41 of Decree 8,945, of 2016, as well as those provided for in the internal regulations that regulate appointments for positions in governance bodies, and must always be preceded by an opinion issued by the Eligibility Committee.
§2 At the first meeting after the election, the members of the Fiscal Council will sign the term of adhesion to Eletronuclear Code of Ethical Conduct and Integrity and the current internal regulations defined by the Company, as well as elect its President, who will be responsible for forwarding to the ENBpar, for analysis, the positions and recommendations of the body, with record in the book of minutes of meetings and opinions of the Fiscal Council.
§3 In the event of a vacancy, resignation, impediment or unjustified absence from two consecutive meetings or three inconsecutive, in the last 12 (twelve) meetings, the member of the Fiscal Council will be replaced, until the end of the term of office, by the respective alternate, to whom the respective compensation shall be paid, until the effective election of the new member.
§4 The monthly compensation due to the members of the Fiscal Council, established at the General Shareholders’ Meeting, will not exceed 10% (ten percent) of the average monthly compensation of the chief officers, excluding the amounts related to vacation pay and benefits, provided that the payment of participation in the company's profit and payment of compensation in an amount greater than that paid to the directors shall be prohibited.
§5 The elected fiscal councilors must participate, on their entry into office and annually, in specific training on corporate and capital market legislation, disclosure of information, internal control, code of conduct, Law No. 12.846, of 2013, and other themes related to the activities of Eletronuclear.
§6 It is forbidden to reappoint the fiscal council member who does not participate in any annual training provided by the company in the last 2 (two) years.
§7 The provisions of §§1 to 6 of Art. 28 of these Bylaws apply to the members of the Audit Committee.
Paragraph 8. The limitations provided for in §2 of Article 24 of these Bylaws apply to the members of the Audit Committee.
Art. 50. The members of the Fiscal Council will elect their Chairman at their first meeting, who will be responsible for forwarding to Eletronuclear, for implementation, the deliberations of the body, with registration in the book of minutes of meetings and opinions of the Fiscal Council.
24 |
§1 In the event of a vacancy, resignation, impediment or unjustified absence from 2 (two) consecutive meetings or 3 (three) inconsecutive, in the last 12 (twelve) meetings, the member of the Fiscal Council will be replaced by the respective alternate, to whom the respective compensation shall be paid, until the effective election of the new member.
§2º The members of the Fiscal Council will be reimbursed for their transport and accommodation expenses, whenever domiciled outside the city where the meeting is held, and transport only, when domiciled in the city.
Art. 51. The resolutions of the Fiscal Council will be taken by majority of votes and registered in the “Book of Minutes of Meetings and Opinions of the Fiscal Council”; the Chairman, in addition to the common vote, shall cast the tie-breaking one.
Sole paragraph. The Fiscal Council will ask Eletronuclear to allocate qualified personnel to act as secretary and provide technical support.
Art. 52. At the request of any of its members, the Fiscal Council may request clarifications or information and the verification of specific facts to the independent auditors.
Art. 53. The Fiscal Council may, in order to ascertain a fact whose clarification is necessary for the performance of its functions, send, with justification, questions to be answered by an expert and request the Board of Officers to appoint, within 30 (thirty) days, 3 (three) experts, who may be individuals or legal entities, with solid knowledge in the relevant area, among which the Fiscal Council will choose one, whose fees will be the paid by Eletronuclear.
Art. 54. The Fiscal Council, notwithstanding other cases provided for by law, is responsible for:
I – issuing opinions on matters within its attribution that are submitted to it by the Board of Directors or the Board of Officers;
II - monitoring the property, financial and budgetary activities, and, for this purpose, it may examine books, any other documents and request information;
III - preparing, amending and approving its Internal Regulations;
IV - to inspecting, by any of its members, the acts of the managers and verifying the fulfillment of their legal and bylaws-determined duties;
V – issuing an opinion on the annual management report, including in its opinion the additional information it deems necessary or useful for the resolution thereon of the General Shareholders’ Meeting;
VI - issuing an opinion on the proposals of the management bodies, to be submitted to the General Shareholders’ Meeting, regarding the modification of the capital stock, issuance of bonds and securities, investment plans or capital budgets, distribution of dividends, transformation, incorporation, merger or spin-off of Eletronuclear;
VII - delating, by any of its members, to the management bodies and, if they do not adopt the necessary measures to protect the interests of Eletronuclear, to the General Shareholders’ Meeting, the errors, frauds or crimes they discover, and suggest useful measures to Eletronuclear;
25 |
VIII - calling the Annual General Shareholders’ Meeting, if the management bodies delay this call for more than one month, and the Extraordinary General Shareholders’ Meeting, whenever serious or urgent reasons occur, including in the agenda of the Meetings the matters they deem necessary;
IX - analyzing, at least quarterly, the balance sheet and other financial statements, periodically prepared by the Board of Officers;
X - examining the financial statements for the fiscal year and issue an opinion on them;
XI - exercising the duties provided for in this article, when applicable, during the possible winding-up of Eletronuclear;
XII - obligatorily attending the meetings of the Board of Directors or the Board of Officers, in which matters on which they must express their opinion, relating to items V, VI and X of this article, are resolved;
XIII - providing the shareholder or group of shareholders representing at least 5% (five percent) of the capital stock, whenever requested, with information on matters within its attributions;
XIV - examining the Annual Report of Internal Audit Activities – RAINT and the Annual Internal Audit Plan – PAINT;
XV - carrying out an evaluation of the performance of its members and of the Fiscal Council as a collegial body, at least once a year, in accordance with the applicable law;
XVI - monitoring the property, financial and budgetary activities, and, for this purpose, it may examine books, any other documents and request information; and
XVII – inspecting the compliance with Eletronuclear’s participation limit in the cost of health care and supplementary pension benefits.
Art. 55. The governance bodies are obliged, through written communication, to make available to the members of the Fiscal Council, within 10 (ten) days, copies of the minutes of their meetings and, within 15 (fifteen) days of receipt, copies of balance sheets and other financial statements prepared periodically and budget execution reports.
Art. 56. The Audit Committee will hold ordinary meetings once a month, and hold extraordinary meetings whenever called by the Chairman of the Board or by the majority of its members, and its meetings will be recorded in minutes, which will be signed by all members present.
§1 The meetings of the Fiscal Council must, as a rule, be in person, and the virtual meeting or the participation of a member by tele or videoconference shall be exceptionally allowed, upon justification approved by the board.
26 |
§2 In the event of a non-unanimous decision, the justification for the dissenting vote shall be recorded, at the discretion of the respective member, provided that the dissenting member who records his/her disagreement in the minutes of the meeting or, if not possible, informs the Board of Directors thereof immediately and in writing, shall not be liable for the resolution.
Chapter XII
Fiscal Year and Financial Statements
Art. 57. The fiscal year will coincide with the calendar year, starting on January 1st, ending on December 31st of each year and will comply, as regards the financial statements, with the provisions of the law on corporations and these bylaws.
§1 In each year, the distribution of at least 25% (twenty-five percent) of the adjusted net profit will be mandatory, in accordance with the applicable law.
§2º The distributions to the shareholders will be subject to financial charges, from the end of the fiscal year until the day of the effective payment, notwithstanding the applicability of default interest, when a payment does not occur on the date set by the General Shareholders’ Meeting.
Art. 58. The statute of limitations shall apply to the legal suit to claim dividends, which, if not claimed in a timely manner, will be retained and owned by Eletronuclear.
Art. 59. Eletronuclear, through its Chief Administrative and Chief Financial Officer, undertakes to:
I - submit its annual and quarterly financial statements, internal controls and fiscal and tax procedures to independent auditors;
II - send monthly to ENBpar and to shareholders who individually hold shares representing 10% or more of the Company's capital stock, according to the schedule defined by ENBpar, the financial statements prepared, except in the cases provided for in item III;
III - send quarterly to ENBpar and to shareholders who individually hold shares representing 10% or more of the Company's capital stock, according to the schedule defined by ENBpar, the financial statements prepared on, respectively, March 31, June 30 and September 30 of the same year, as well as auxiliary financial statements, if required, reviewed by its independent auditors;
IV - submit, annually, to ENBpar and to shareholders who individually hold shares representing 10% or more of the Company's capital stock, according to the schedule defined by ENBpar, the financial statements referring to December 31 of the previous year, comprising the 12 ( twelve) previous months, as well as auxiliary accounting statements if required, accompanied by an Audit Report issued by its independent auditors. Alternatively, upon prior request from ENBpar, the financial statements may be accompanied by a Comfort Letter issued by its independent auditors;
V - submit, annually, to the ENBpar and to the shareholders that individually hold shares representing 10% or more of the Company's capital stock, a report on the review of its internal controls, issued by its independent auditing company;
27 |
VI - grant free access to the independent auditors' working papers to the independent auditors of ENBpar and to shareholders who individually hold shares representing 10% or more of the Company's capital stock and/or authorize the adoption of additional audit procedures;
VII - promptly provide clarification and information of an accounting, financial, tax, legal and technical-operational (engineering) matters to the technical team of ENBpar and of shareholders who individually hold shares representing 10% or more of the Company's capital stock;
VIII - annually implement and test the internal control environment, through Management Tests, under the responsibility of the Internal Audit;
IX - provide the following documents to ENBpar and to shareholders who individually hold shares representing 10% or more of the Company's capital stock:
a) annually, as soon as it is prepared, the Letter of Recommendation of the independent auditors;
b) annually, according to the schedule defined by ENBpar, the complete Financial Statements, accompanied by management reports, opinion of the independent auditors and the Fiscal Council, without prejudice to the provisions of item IV of this article; and
c) special accounting statements to be drawn up at any time, whenever requested by ENBpar.
Art. 60. If the failure to comply with the commitments provided for in the previous article generates or contributes, as duly proven, to the imposition of fines or any penalty to ENBpar or its administrators, for delay in the presentation of any of its periodic accounting information, either by regulatory bodies or inspectors, national or international, Eletronuclear will be responsible for the reimbursement to ENBpar for the losses caused in a pro rata amount to the part of the imposed fine corresponding to such non-compliance.
Chapter XIII
Employees
Art. 61. The effective positions in the Internal Audit and the Ombudsman will be held by employees of the permanent career of Eletronuclear, which will be directly subject to the Board of Directors.
Art. 62. Employees will be subject to the legal regime of the Consolidation of Labor Laws – CLT, to ancillary laws and to the Company's internal regulations.
Art. 63. Hiring employees by Eletronuclear will be carried out through a competition procedure, in compliance with the legislation in force.
§1 Employees may be transferred to any place where Eletronuclear operates.
§2 The number of senior functions of Eletronuclear's senior management will be submitted to Eletronuclear Board of Directors' decision, pursuant to article 32, item XXXV and §1.
28 |
§3 The holders of a senior position who perform management acts and create salary advantages without any provision or in disagreement with what is established in the employment contracts, job and salary plan, collective bargaining agreement or with the current legislation will be liable for the damages caused to Eletronuclear under the main section of this article.
Art. 64. Notwithstanding the requirements provided for in the law, the assignment of employees of Eletronuclear will depend on specific authorization from the Board of Officers and will be carried out subject to the reimbursement of the corresponding costs, in compliance with the applicable law.
Art. 65. After the end of each financial year of Eletronuclear, and once the accumulated losses have been deducted and the provision for taxes has been made, employees will be entitled to participate in profits or results, in compliance with the applicable law, the guidelines established by the Secretary of Coordination and Governance of State-owned Companies and the rules provided for in the collective labor agreements and conventions signed by it.
Chapter XIV
General Provisions
Art. 66. The Governance, Risk Management and Compliance area will have as main duties:
I - the management of compliance with regard to compliance with laws, standards and ethical conduct;
II - corporate risk management; and
III - management of the internal control environment.
§1 In situations in which the Chief Executive Officer's involvement in irregularities is suspected or when he does not carry out the obligation to adopt necessary measures in relation to the situation reported to him, the Governance, Risk Management and Compliance area may report directly to the Board of Directors.
§2 In the situations mentioned in the previous paragraph, the matter will be discussed without the presence of the Chief Executive Officer of Eletronuclear.
Art. 67. The reimbursement value of the shares held by shareholders that eventually exercise the right of withdrawal under the terms of Law No. 6,404, of 1976, will be the equivalent of the highest value between (i) the book value of the respective shares, and (ii) ) the economic value of the respective shares, according to the appraisal report to be prepared by an independent third party, using the discounted cash flow method, as of the exercise of the right of withdrawal.
Sole paragraph. The amendment to Article 67 will grant dissenting shareholders (including preferred shareholders) the right to reimburse their shares for the amount calculated based on the provisions of the Bylaws prior to the amendment then made.
29 |
Chapter XV
Transitional Provisions
Art. 68. The payment of priority cumulative dividends to which preferred shares were entitled until the date of implementation of the conditions defined in art. 11 of CPPI Resolution No. 203, of October 19, 2021, as amended by CPPI Resolution No. 221, of December 29, 2021, related to years prior to that date, may be made to the account of capital reserves, as provided for by Law No. 6,404, of 1976.
Art. 69. The Company is authorized, exceptionally, to convert preferred shares into common shares within the terms, conditions and limits stipulated in CPPI Resolution No. 203, of 2021, as amended by CPPI Resolution No. 221, of 2021, and approved by a meeting of Eletrobras.
30 |
Annex 12A
ELETROBRAS TERMONUCLEAR S.A.
Mixed Capital Company
CNPJ/ME nº 42.540.211/0001-67
MANAGEMENT PROPOSAL FOR THE SHAREHOLDERS MEETING TO BE HELD ON [DATE] at [TIME]
To the Shareholders,
The management of Eletrobras Termonuclear S.A. (“Company”) hereby sends this management proposal (“Proposal”) regarding the Extraordinary Shareholder’s Meeting to be held on [date], at [time] (“Meeting”).
A - PRELIMINARY NOTES
On July 12th, 2021, Ordinary Law No. 14,182 (“Law 14,182”) was published, setting forth101856398.2 the main terms and conditions for the privatization of Centrais Elétricas Brasileiras S.A. (“Eletrobras” and “Privatization”).
Law 14,182 set forth that the Privatization will be implemented via a capital increase of Eletrobras, with the waiver of the subscription right of the Federal Government, and might be followed by the sale of shares issued by Eletrobras and held by the Federal Government, or an enterprise controlled by it, either directly or indirectly, via secondary public offering of shares (“Offer”).
Among the conditions of the Privatization, Law 14,182 set forth the implementation of a “corporate restructuring to maintain under the direct or indirect control of the Federal Government, enterprises, facilities and interest, held or managed by Eletrobras, specifically Eletrobras Termonuclear S.A. (Eletronuclear) and Itaipu Binacional” (free translation from the original.
Furthermore, the Management highlights that, as set forth in article 177 of the Brazilian Federal Constitution, the Federal Government holds the monopoly of the research, extraction, enrichment, reprocessing, industrialization and commerce of nuclear ore and minerals and their by-products, except for radioisotopes, the production, commercialization and use of which might be authorized under the permission regime.
Currently, the capital stock of the Company amounts to R$8,493,035,701.18 (eight billon, four hundred and ninety-three million, thirty-five thousand, seven hundred and one real and eighteen cents), divided into 37,658,166,491 (thirty-seven billion, six hundred and fifty-eight million, a hundred and sixty-six thousand, four hundred and ninety-one) common shares and 10,544,698,994 (ten billion, five hundred and forty-four million, six hundred and ninety-eight thousand, nine hundred and ninety-four) preferred shares, all of which are nominative and have no par value.
Eletrobras is currently the controlling shareholder of the Company and holds 37,651,029,535 (thirty-seven billion, six hundred and fifty-one million, twenty-nine thousand, five hundred and thirty-five) common shares and 10,528,730,390 (ten billion, five hundred and twenty-eight million, seven hundred and thirty thousand, three hundred and ninety) preferred shares, representative of 99.95% (ninety-nine point ninety-five percent) of the corporate capital of the Company.
Hence, it is a condition for the Privatization that the control of the Company ceases to be held by Eletrobras and is held either directly or indirectly by the Federal Government or by a company controlled by it.
The detailing of the operational form, adjustments and conditions of the Privatization, including the restructuring related to the Company, was approved by the Council of the Investment Partnerships Program, via the Resolution n. 203, of October 19, 2021, and Resolution 221, of December 29, 2021 (“CPPI Resolutions”).
The CPPI Resolutions approved the following adjustments and conditions related to the restructuring of the Company.
I – Capital contributions by Eletrobras in the Company in the amount of R$1,417,464,016.00 (one billion, four hundred and seventeen million, four hundred and sixty-four thousand and sixteen reais), as new advancements for future capital increases between October 2021 and January 2022, to be used to pay up a capital increase as referred to in subtitem “b” of item III below;
II – issuance by the Company of 308,443,302,951 (three hundred and eight billion, four hundred and forty-three million, three hundred and two thousand, nine hundred and fifty-one) new common shares, for the price of R$7,606,963,647.84 (seven billion, six hundred and six million, nine hundred and sixty-three thousand, six hundred and forty-seven reais and eighty-four cents) and 86,367,502,441 (eighty-six billion, three hundred and sixty-seven million, five hundred and two thousand, four hundred and forty-one) new preferred shares, for the total value of R$ 2,130,033,121.60 (two billion, one hundred and thirty million, thirty-three thousand, one hundred and twenty-one reais and sixty cents) (jointly referred to as “the New Shares”), provided that a part of the total issuance price, R$2,704,317,107.98 (two billion, seven hundred and four million, three hundred and seventeen thousand, one hundred and seven reais and ninety-eight cents) shall be allocated to the capital reserve to be used in the payment of the total accumulated amount of minimum dividends of the outstanding preferred shares issued by the Company, as set forth in item VI below, and the remaining value shall be allocated in the capital stock;
III – subscription, by Eletrobras, of a part of the New Shares: 166,379,229,311 (one hundred and sixty-six billion, three hundred and seventy-nine million, two hundred and twenty-nine thousand, three hundred and eleven) common shares and 86,326,103,046 (eighty-six billion, three hundred and twenty-six million, one hundred and three thousand and forty-six) preferred shares for the total issuance price of R$ 6,232,329,437.73 (six billion, two hundred and thirty-two million, three hundred and twenty-nine thousand, four hundred and thirty-seven reais and seventy-three cents) (jointly, the “New Eletrobras Shares”), the payment for which shall occur in the settlement of the Offer, as indicated below:
a) R$2,698,927,439.83 (two billion, six hundred and ninety-eight million, nine hundred and twenty-seven thousand, four hundred and thirty-nine reais and eighty-three cents), using primarily the credits relative to the accumulated priority dividends gainst the Company, as set forth in item VI below;
b) R$ 3,529,308,617.02 (three billion, five hundred and twenty-nine million, three hundred and eight thousand, six hundred and seventeen reais and two cents) primarily through the capitalization of advancements for future capital increase made by Eletrobras in the Company until January 2022; e
c) in national currency, for the remaining amount;
IV - assignment, by Eletrobras to Empresa Brasileira de Participações em Energia Nuclear e Binacional S.A. – ENBpar (“ENBPar”), free of charge, of the preemptive right to subscribe a part of the New Shares, in a volume equivalent to R$3,500,000,000.00 (three billion and five hundred million reais), corresponding to 141,916,224,437 (one hundred and forty-one billion, nine hundred and sixteen million, two hundred and twenty-four thousand, four hundred and thirty-seven) common shares ("New ENBPar Shares");
V - exercise, by ENBPar, of the right of the preemptive right to subscribe the New ENBPar Shares transferred to it pursuant to item IV above, and the payment must occur on the date of settlement of the Offer, in national currency;
VI - distribution by the Company of all the minimum dividends attributed to the preferred shares, to be paid with the capital reserve, accumulated until the amendment to the bylaws provided for in item VII below;
VII - modification of the rights of the preferred shares issued by the Company, extinguishing the right to cumulative minimum dividends and the right to vote in deliberations regarding the amendment of the Company's bylaws, and giving priority in the reimbursement of capital;
VIII - approval, by the Shareholders Meeting of the Company, of an optional conversion program of common shares of its issuance into preferred shares, at the rate of 1:1, respecting the limit provided for in §2 of Article 15 of Law No. 6,404 of 1976, and for such purpose the subscription of the New Shares shall be taken into account;
IX – Eletrobras’ adhesion to the optional conversion program referred to in item VIII above, covering the largest possible volume of common shares held by Eletrobras, respecting the applicable limit;
X - creation of a committee for matters related to the planning and execution of the Angra 3 Thermonuclear Power Plant, operated by the Company (“Angra 3”), denominated the Statutory Committee for Monitoring the Project of the Angra 3 Thermonuclear Power Plant ("COANGRA"), which will operate until the beginning of the commercial operation of Angra 3, with the purpose of advising the Company's Board of Directors, including conducting analysis and issuing prior opinion on contracts for goods, services, construction works, financing and collaterals linked to the project, which shall consist of five (5) members, provided ENBPar and Eletrobras may appoint the same number of members (up to 2 (two) members appointed by the Directors elected by ENBPar, up to 2 (two) members appointed by the Directors elected by Eletrobras) and 1 (one) independent external member appointed by mutual agreement between Eletrobras and ENBPar, all duly paid for such services;
XI - change the composition and organization of attributions of the Executive Board of Eletronuclear, to:
1. separate the functions of the Chief Administrative and Financial Officer between one Chief Administrative Officer and one Chief Financial Officer while the shareholders' agreement referred to in item XIV below is in force; and
2. provide for the existence, until the beginning of the commercial operation of Angra 3, of the position of Chief Angra 3 Officer, which will have the attribution of coordinating the activities to support the completion of the services contracted with BNDES and contracting the engineering services, contracting of financing and project management necessary for the completion of Angra 3;
XII – setting forth the reimbursement value in the cases of exercise of the right of withdrawal of shareholders of the Company so that such value will be the highest value between (i) the book value of the respective shares, and (ii) the economic value of the respective shares, according to the assessment report to be prepared by an independent third party, according to the discounted cash flow method, as of the exercise of the right of withdrawal;
XIII - execution, between Eletrobras and ENBPar, of an investment agreement providing, at least, for the obligations of the parties to:
a) participate in the raising of new financing for Angra 3, through the granting of collaterals, as well as through the transfer of loans in the form of new loans to the Company, in the total volume necessary for the completion of Angra 3, pursuant to the studies conducted by BNDES provided for in Decree No. 9,915 of July 16, 2019, and Law No. 14,120 of March 1, 2021, and in proportion to their interest in the voting capital stock of the Company, provided that the calculation of the proportion described above should disregard the collaterals, loans and equity support agreements existing between the Federal Government or Eletrobras and the Company on the date of execution of the investment agreement, which, in any case, shall be maintained after the execution of the agreement; and
b) perform all acts of their responsibility for the purpose of subscribing the new issuance of shares of the Company, in the form to be determined by the studies contracted by it with BNDES, in proportion to its interest in the voting capital stock of the Company;
XIV - execution, between Eletrobras and ENBPar, of a shareholders’ agreement of the Company's to regulate the governance of this company, providing for, at least:
a) the continuation of the operation of COANGRA, as defined in the Resolutions;
b) ENBPar's right of first refusal over the sale of shares issued by the Company held by Eletrobras; and
c) right of appointment, by Eletrobras, of the Company's Chief Financial Officer; and
XV - transfer, by Eletrobras to the Company, of the ownership of the quotas of the decommissioning fund of nuclear power plants, provided for in Resolution No. 8 of September 17, 2002, of the National Council for Economic Policy - CNPE, with the offset of liabilities related to the transfer of related amounts between companies.
B - AGENDA OF THE SHAREHOLDERS’ MEETING
In view of the above, the Management of the Company hereby calls the Meeting, to resolve on the matters of the following agenda:
1 Issuance of new shares by the Company, according to the following conditions:
(a) | issuance of (i) 308,443,302,951 (three hundred and eight billion, four hundred and forty-three million, three hundred and two thousand, nine hundred and fifty-one) new common shares, for the price of R$7,606,963,647.84 (seven billion, six hundred and six million, nine hundred and sixty-three thousand, six hundred and forty-seven reais and eighty-four cents) and unitary issuance price of R$0.0246624373914023 and (ii) 86,367,502,441 (eighty-six billion, three hundred and sixty-seven million, five hundred and two thousand, four hundred and forty-one) new preferred shares, for the total issuance price of R$ 2,130,033,121.60 (two billion, one hundred and thirty million, thirty-three thousand, one hundred and twenty-one reais and sixty cents) and unitary issuance price of R$0.0246624373914023; the issuance of price of the common and preferred shares was determined according to the profitability criteria of the Company, under Article 170, paragraph 1, item I, of Law No. 6,404 of December 15th, 1976 (“Corporations Law”); |
(b) | pursuant to article 171, paragraph 1, subparagraph b, of the Corporations Law, the Company's shareholders shall be granted a period of 30 (thirty) days from the Meeting to (i) exercise their respective preemptive right in the subscription of new shares, in proportion to their interest in the Company’s capital stock, and the assignment of such preemptive rights to third parties is allowed and (ii) submission of requests for reserves of unsubscribed leftover shares, which must be made in the subscription bulletin presented by the shareholders, provided that , if there are unsubscribed leftover shares, these will be allocated among the interested persons in proportion to the amounts subscribed by them, pursuant to article 171, paragraph 8, of the Corporations Law; |
(c) | the shares subscribed under the capital increase above will be paid in national currency and/or by offsetting credits held by the subscribers against the Company, pursuant to Article 369 of Law 10,406, of January 10, 2002 (“Civil Code”), as chosen by the subscriber and indicated in the subscription bulletin, and payment must take place on the date of settlement of the Offer; |
(d) | R$7,032,679,661.46 (seven billion, thirty-two million, six hundred and seventy-nine thousand, six hundred and sixty-one reais and forty-six cents) shall be allocated in the capital stock and R$2,704,317,107.98 (two billion, seven hundred and four million, three hundred and seventeen thousand, one hundred and seven reais and ninety-eight cents) shall be allocated to the capital reserve, provided that, in case there are unsubscribed shares, the amount to be allocated in the capital stock and the capital reserve shall be reduced proportionately; |
(e) | In view of the possibility of partial subscription of shares issued pursuant to this item of the agenda, it is stated that the corresponding amendment to the Company's bylaws will depend on the confirmation of the effective number of shares subscribed as proposed herein and the effective value the increase in the Company's capital stock; and |
(f) | unsubscribed shares (including through the allocation of unsubscribed leftover shares) within the period described in item (b) above will be automatically canceled. |
2 Provided that the capital reserve is constituted, pursuant to item 1 of this agenda, in a sufficient amount, the declaration of dividends to preferred shareholders, in the amount of R$2,703,020,820.70 (two billion, seven hundred and three million, twenty thousand, eight hundred and twenty reais and seventy cents), equivalent to the cumulative minimum dividends which were not paid and correspond to the fiscal years of 2010 (inclusive) to 2021 (inclusive), to be paid with the capital reserve of the Company, on the date of settlement of the Offer, since there was no profit in the referred fiscal years. Proof of payment of the dividends to be distributed as herein set forth will serve as discharge proof for the payment of dividends. The shareholders certify that once the dividend in the amount defined above is paid, the balance of unpaid dividends is settled.
3 The modification of the rights of the preferred shares issued by the Company, which will no longer grant the right to cumulative minimum dividends and voting rights in resolutions involving the amendment of the Company’s bylaws, and will now confer priority in the reimbursement of capital.
4 The modification of the rights of common shares issued by the Company, which will no longer grant the right to dividends equivalent to 12% (twelve percent) per year prior to the payment of remaining dividends to holders of preferred shares.
5 Optional conversion program of up to 124,541,409,099 (one hundred and twenty-four billion, five hundred and forty-one million, four hundred and nine thousand and ninety-nine) common shares issued by the Company into preferred shares, at the rate of 1 (one) common share to 1 (one) preferred shares, according to the following conditions:
(a) | shareholders interested in converting common shares must indicate their interest within 15 (fifteen) days of the publication of the minutes of shareholders meeting approving the conversion of shares, by means of a written statement sent to the Company, indicating the number of common shares that they are interested in converting; e |
(b) | if, after the expiry of the period for receiving notices of interest in converting common shares, the Company ascertains the total number of shares that the shareholders intend to convert is greater than to 124,541,409,099 (one hundred and twenty-four billion, five hundred and forty-one million, four hundred and nine thousand and ninety-nine) common shares, the number of shares to be converted shall be allocated among the interested shareholders considering the proportion of their percentage interest in the common shares issued by the Company, disregarding the interest of the other holders of common shares, subject to the maximum number of shares each shareholder intends to convert. |
6 Inclusion in the Company’s bylaws of a transitional provision related to the conversion program of preferred shares.
7 Amendment of the provisions related to the statutory bodies of the Company's management to modify the composition, operation, attributions and duties of the executive board (including the segregation of the positions of Chief Financial Officer and Chief Administrative Officer, as well as the creation of the position of Chief Angra 3 Officer), Board of Directors and fiscal council.
8 The creation of a committee for matters related to the planning and execution of the Angra 3 Thermonuclear Power Plant, operated by the Company (“Angra 3”), denominated the Statutory Committee for Monitoring the Project of the Angra 3 Thermonuclear Power Plant ("COANGRA"), which will operate until the beginning of the commercial operation of Angra 3, with the purpose of advising the Company's Board of Directors, including conducting analysis and issuing prior opinion on contracts for goods, services, construction works, financing and collaterals linked to the project, which shall consist of five (5) members, provided ENBPar and Eletrobras may appoint the same number of members (up to 2 (two) members appointed by the Directors elected by ENBPar, up to 2 (two) members appointed by the Directors elected by Eletrobras) and 1 (one) independent external member appointed by mutual agreement between Eletrobras and ENBPar, all duly paid for such services.
9 The separation of the functions of the current audit and risks committee, to create an audit committee and the risks committee, as well as the maintenance of the People, eligibility, succession and compensation committee (additionally to the COANGRA, referred to in the resolution 8 above).
10 Modification of the corporate name of the Company from “Eletrobras Termonuclear S.A. – Eletronuclear” to “Eletronuclear S.A.”.
11 Adjusting the wording and removing the provisions in the Company's bylaws that refer to the current majority shareholder Eletrobras and/or the rules which shall no longer apply due to the fact that the control of the Company shall no longer be held by Eletrobras, after the possible conclusion of the privatization process and the approval of the matters of the agenda herein described.
12 The inclusion of technical support activities for the plants in operation, as well as the constitution of subsidiaries, assumption of shareholding control and participation in the capital of companies, related to the corporate purpose, provided such is expressly authorized by law, among the activities authorized for the execution of the corporate purpose of the Company.
13 The inclusion of provisions related to the public interest that justified the creation of the Company, as well as the rules relating to the direction of the Company's activities by its controller due to such interest.
14 Definition of the reimbursement value in the cases of exercise of the right of withdrawal of shareholders of the Company, which will be the highest value will be the highest value between (i) the book value of the respective shares, and (ii) the economic value of the respective shares, according to the assessment report to be prepared by an independent third party, according to the discounted cash flow method, as of the exercise of the right of withdrawal.
15 In view of the resolutions in items 1 to 14 above, the complete reformulation of the Company’s bylaws, including the correction of clerical errors, wording adjustment and renumbering of sections, which new text is attached hereto as Schedule A.
16 The transfer, by Eletrobras to the Company, of the quotas of the decommissioning fund of nuclear power plants, provided for in Resolution No. 8 of September 17, 2002, of the National Council for Economic Policy - CNPE, currently held by Eletrobras. Since Eletrobras is a debtor of the Company due to the onlending, by the Company to Eletrobras, of the amounts invested in the referred fund and the updated amount of the debt corresponds to the fair value of the quotas of the referred fund, the payment of the quotas price shall be bade via setting-off of the amounts due by Eletrobras to the company to the referred onlending.
17 The condition of the effectiveness of the resolutions in items 1 to 16 above to the condition precedent of the implementation and settlement of the Offer. Nevertheless, even though the issuance of shares approved under item 1 of the agenda has its effectiveness suspended, the deadline for the exercise of the preemptive right shall start on the current date. The subscription of shares carried out before the implementation of the condition precedent is valid, irrevocable and irreversible and, according to subscription bulletins presented to the Company, its effects will be suspended until the implementation of the suspension condition, becoming automatically effective after its implementation.
18 Authorization for the Company's management to carry out all the necessary acts to implement what was approved by the shareholders.
C - Clarifications on the proposed resolutions
The proposed resolutions of the shareholders are related to the conditions imposed by the CPPI for the implementation of the Privatization. Consequently, the Management proposes, as described above, that the entry into force and/or the effectiveness of the resolutions is conditional upon the implementation and settlement of the Offer.
In case the proposed resolutions are approved and provided that ENBPar and Eletrobras subscribe, pay and request the conversion of shares in the exact terms of the CPPI Resolutions, ENBPAR will hold the majority of the voting capital stock and consequently the control of the Company. If no other shareholder exercises the pre-emptive right to subscribe shares and/or requests the conversion of shares, with the approval of the proposed resolutions, the interest in the capital stock of the Company shall be held as follows:
Shareholders | Common Shares | Preferred Shares | TOTAL | % Common Shares | % TOTAL |
Eletrobras | 79,488,849,747 | 221,396,242,535 | 300,885,092,282 | 35.90% | 67.95% |
Depto de Águas E.Elétrica Est.SP - DAEE | 5,960,026 | 7,405,548 | 13,365,574 | 0.00% | 0.00% |
LIGHT - Serviços de Eletricidade S.A. | 0 | 5,058,993 | 5,058,993 | 0.00% | 0.00% |
ENBPar | 141,916,224,437 | 0 | 141,916,224,437 | 64.10% | 32.05% |
Outros | 1,176,930 | 3,504,063 | 4,680,993 | 0.00% | 0.00% |
TOTAL | 221,412,211,140 | 221,412,211,139 | 442,824,422,279 | 100% | 100% |
It is relevant to present the following additional clarification on the proposed resolutions:
Issuance of Shares
The proposed capital increase, according to item 1 of the agenda, aims to (i) obtaining funding to enable the construction of Angra 3 and the payment of accumulated minimum dividends to the shareholders who hold preferred shares issued by the Company and (ii) converting into capital the amounts which have already been transferred by Eletrobras to the Company as advancements for future capital increases, to provide financing for its activities and reducing its liabilities.
The issuance price of common and preferred shares was calculated according to the criterion of the Company's profitability perspective, pursuant to art. 170, paragraph 1, item I, of the Corporations Law. The details of its calculation and justification of the corresponding economic aspects were contracted by BNDES with BR Partners Assessoria Financeira Ltda. (“BR Partners”) in the context of the Privatization process, and BR Partners has drafted an independent assessment report (“Report”) in which it concluded that the Company value amounts to R$ 3,468,000,000.00 (three billion, four hundred and sixty-eight million reais) on the reference date of March 31, 2021.
Since the settlement of the public offering of shares in the Privatization is a condition precedent to the corporate restructuring of Eletronuclear, and such offering is expected to occur in April, 2022, and the conclusion of the corporate acts and payment for issuance of shares, as well as the dividends shall have such date as reference, the fair value of the company used as parameter for the transaction was updated for such month. For this purpose, the reference used for the update of the fair value of the cost of equity capital for Eletronuclear calculated by BR Partners as 11.23% per year, in nominal terms, which, if applied on the value of the base-date of March, 2021, results in R$3,891,820,972.81 as the fair value of the Company in April, 2022. Subject to art. 170, paragraph 7, of the Corporations Law, the appraisal report in hereto attached as Annex B of this proposal.
Dividend distribution approval
The bylaws of the company sets forth that the preferred shares issued by the company grant the following rights:
(i) capital reimbursement priority, without premium;
(ii) priority minimum cumulative dividends of 10% per year and participation, in the same conditions as the common shares, in balance of profits after the payment of dividends equivalent to 12% to the common shares; and
(iii) voting rights in the resolutions of extraordinary general shareholders’ meetings regarding amendments of the bylaws of the Company.
Since fiscal year 2010 (inclusive), the cumulative minimum dividends described in item “ii” above have not been paid to holders of preferred shares, and therefore have been accumulated by their holders since then. In view of the capital raise proposed by management to the Meeting, management proposes to pay, on the date of settlement of the Offering, the said accrued dividends, using funds from the Company's capital reserve.
Modification of the rights granted by the preferred shares
If approved by the shareholders at an extraordinary general meeting, the effectiveness of the resolution contained in item 3 of the agenda will require the approval of holders of more than half of the preferred shares, at a special meeting, to be held on [date], at [time], pursuant to article 136, paragraph 1, of the Corporations Law.
Dissenting preferred shareholders, as well as those who abstain and those who do not attend the special meeting of preferred shareholders, will have the right to withdraw from the Company, pursuant to article 137, item I, of the Corporations Law.
The amount to be paid for the reimbursement of shares will be determined, pursuant to paragraph 1 of art. 45 of the Corporations Law, based on the value of shareholders' equity contained in the last balance sheet approved by the general shareholders’ meeting on [date], that is, R$ [●] per preferred share. It is important to note that the calculation method applicable to such reimbursement must be the one in effect prior to this meeting (i.e., disregarding the amendment proposed in item 14).
We emphasize that the management bodies may call a general shareholders’ meeting to reconsider the resolution that gives rise to the right of withdrawal, if they consider that the payment of the reimbursement price jeopardizes the financial stability of the Company, pursuant to article 137, paragraph 3, of the Corporations Law.
Optional conversion program
The program for the optional conversion of part of the Company's common shares into preferred shares, at the ratio of 1 (one) common share to 1 (one) preferred share, up to the limit provided for in paragraph 2 of article 15 of the Corporations Law, was created in order to ensure that the common shares subscribed by ENBPar are at least equivalent to more than 50% (fifty percent) of the common shares issued by the Company.
Corporate name
The Company's corporate name referred to the shareholder Eletrobras; however, after the possible conclusion of the Privatization process, the Company's control will pass from Eletrobras to ENBPar. Therefore, the Management understands that the corporate name must be changed, to exclude such reference.
Corporate purpose
In view of the possible conclusion of the Privatization process and the change of the Company's controlling shareholder, which shall thereafter be ENBPar, the change of the Company's corporate purpose is proposed, to include technical support activities to the operational power plants, as well as incorporation of subsidiaries, assumption of share control and participation in the capital stock of companies that are comprised in the Company's activities.
Public interest
The Company may have its activities, subject to its corporate purpose, guided by the controlling shareholder in order to contribute to the public interest that justified the foundation of the Company. The controlling shareholder may guide the Company to undertake obligations or responsibilities, including carrying out investment projects and undertaking specific operating costs/results, under conditions different from those applicable to any other private sector company operating in the same market, so that it contributes to the public interest.
Governance bodies
In view of the possible conclusion of the Privatization process and the change of the controlling shareholder of the Company, which shall be ENBPar, changes were proposed in the provisions of governance bodies to modify the composition, functioning, powers and duties of the board of officers, board of directors and fiscal council of the Company, so that the referred bodies are consistent with the corporate restructuring of the Company.
Audit committee, risk committee and people committee, eligibility, succession and compensation
The current audit and risk committee and people, eligibility, succession and compensation committees are Eletrobras’ committees, used by Eletrobras and its subsidiaries. In view of the possible conclusion of the Privatization process and the approval of the resolutions on the agenda, the Company's control will no longer be held by Eletrobras and will be held by ENBPar; therefore, the management understands that the Company will not use the Eletrobras committees, but will create its own committees.
COANGRA
COANGRA, whose creation is now proposed, will have the purpose of advising the Company's Board of Directors, including carrying out an analysis and issuing a preliminary opinion on the contracting of goods, services, construction works, financing and guarantees linked to the Angra 3 project.
As proposed by the Company's management, its operation must comply with the provisions of the Bylaws, as well as its internal regulations, to be approved by the Board of Directors.
The committee members will be elected and their total and individual compensation will be determined by the Company's Board of Directors.
Decommissioning Fund
Since 2008, the Company has transferred to Eletrobras funds to be invested in the Decommissioning Financial Fund (non-market long-term investment fund, maintained with Banco do Brasil), called BB Extramercado Exclusivo 30 Fundo de Investimento Multimercado Longo Prazo. The purpose of this fund is to fund the decommissioning activities of the Angra 1 and Angra 2 Thermonuclear Power Plants.
Therefore, the existence and allocation of funds to the decommissioning fund are exclusively related to the Company’s activities. For this reason, the management understands that the quotas of said fund must be transferred by Eletrobras to the Company, since the Company will be responsible for the costs of any decommissioning of the Thermonuclear Power Plants Angra 1 and Angra 2.
As Eletrobras has a debt before the Company due to the transfer, by the latter to the former, of the funds contributed in the referred Fund, and the updated value of such liability corresponds to the market value of the quotas of said fund, the payment for the fund's quotas would be made by offsetting the Eletrobras liabilities with the price to be paid by Eletronuclear.
Determination of the reimbursement price for shares in case of exercise of withdrawal right
The Company's bylaws currently do not provide for a specific amount for the reimbursement of shares held by shareholders who may eventually exercise their right of withdrawal, when permitted under Law No. 6,404/1976. Thus, the amount currently applicable to the reimbursement of shares is that provided for in paragraph 1 of art. 45 of the Corporations Law, that is, the value of the book value of the relevant shares as indicated in the last balance sheet approved by the Company's general shareholders meeting.
The purpose of setting a potentially higher reimbursement amount is to favor all of the Company's shareholders, and will allow, in the event of dissent on matters that give rise to the right of withdrawal, the relevant shareholder to be reimbursed at the highest of the book value (i.e. , the amount currently applicable) and the economic value of the respective equity interest, as determined by an independent appraisal.
The proposal presented to the Company's shareholders also includes the provision that the amendment of the article establishing the aforementioned reimbursement amount, in itself, gives rise to a right of withdrawal for dissenting shareholders, for the amount originally established in the amended article.
Finally, it should be clarified that the new share reimbursement value will not be applicable in case of exercise of the right of withdrawal by the Company's shareholders as a result of resolutions taken at this meeting, so that the new value will only apply to the following shareholders’ meetings.
D - FISCAL COUNCIN OPINION
The capital raise proposal has been subject to the fiscal council of the Company in the meeting held on [date], which has issued a favorable opinion to the capital raise as proposed by the management of the Company, which is attached hereto in Annex C of the Management Proposal.
E - AUDIT AND RISKS COMMITTEE OPINION
The transfer proposal of quotas of the decommissioning fund to the Company was subject to the audit and risks committee in the meeting held on [date], and the corresponding opinion is attached hereto as Annex D of this Management Proposal.
F - MANAGEMENT FINAL NOTES
In view of the foregoing, the Company’s Board of Directors, by unanimous vote of those present, approved the submission to the special shareholders' meeting, pursuant to the present management proposal, and recommends that the shareholders carefully read all documentation made available to them in relation to the proposed resolutions, as well as to approve them.
[date]
[signature]
Annex 12A
ELETROBRAS TERMONUCLEAR S.A.
Mixed Capital Company
CNPJ/ME nº 42.540.211/0001-67
MANAGEMENT PROPOSAL FOR THE SPECIAL SHAREHOLDERS MEETING FOR HOLDERS OF PREFERRED SHARES TO BE HELD ON [DATE] at [TIME]
To the Shareholders,
The management of Eletrobras Termonuclear S.A. (“Company”) hereby sends this management proposal (“Proposal”) regarding the Special Shareholder’s Meeting for Holders of Preferred Shares to be held on [date], at [time] (“Special Meeting”).
A - PRELIMINARY NOTES
On July 12th, 2021, Ordinary Law No. 14,182 (“Law 14,182”) was published, setting forth101856398.2 the main terms and conditions for the privatization of Centrais Elétricas Brasileiras S.A. (“Eletrobras” and “Privatization”).
Law 14,182 set forth that the Privatization will be implemented via a capital increase of Eletrobras, with the waiver of the subscription right of the Federal Government, and might be followed by the sale of shares issued by Eletrobras and held by the Federal Government, or an enterprise controlled by it, either directly or indirectly, via secondary public offering of shares (“Offer”).
Among the conditions of the Privatization, Law 14,182 set forth the implementation of a “corporate restructuring to maintain under the direct or indirect control of the Federal Government, enterprises, facilities and interest, held or managed by Eletrobras, specifically Eletrobras Termonuclear S.A. (Eletronuclear) and Itaipu Binacional” (free translation from the original.
Furthermore, the Management highlights that, as set forth in article 177 of the Brazilian Federal Constitution, the Federal Government holds the monopoly of the research, extraction, enrichment, reprocessing, industrialization and commerce of nuclear ore and minerals and their by-products, except for radioisotopes, the production, commercialization and use of which might be authorized under the permission regime.
Currently, the capital stock of the Company amounts to R$8,493,035,701.18 (eight billon, four hundred and ninety-three million, thirty-five thousand, seven hundred and one real and eighteen cents), divided into 37,658,166,491 (thirty-seven billion, six hundred and fifty-eight million, a hundred and sixty-six thousand, four hundred and ninety-one) common shares and 10,544,698,994 (ten billion, five hundred and forty-four million, six hundred and ninety-eight thousand, nine hundred and ninety-four) preferred shares, all of which are nominative and have no par value.
Eletrobras is currently the controlling shareholder of the Company and holds 37,651,029,535 (thirty-seven billion, six hundred and fifty-one million, twenty-nine thousand, five hundred and thirty-five) common shares and 10,528,730,390 (ten billion, five hundred and twenty-eight million, seven hundred and thirty thousand, three hundred and ninety) preferred shares, representative of 99.95% (ninety-nine point ninety-five percent) of the corporate capital of the Company.
Hence, it is a condition for the Privatization that the control of the Company ceases to be held by Eletrobras and is held either directly or indirectly by the Federal Government or by a company controlled by it.
The detailing of the operational form, adjustments and conditions of the Privatization, including the restructuring related to the Company, was approved by the Council of the Investment Partnerships Program, via the Resolution n. 203, of October 19, 2021, and Resolution 221, of December 29, 2021 (“CPPI Resolutions”).
The CPPI Resolutions approved the following adjustments and conditions related to the restructuring of the Company.
I – Capital contributions by Eletrobras in the Company in the amount of R$1,417,464,016.00 (one billion, four hundred and seventeen million, four hundred and sixty-four thousand and sixteen reais), as new advancements for future capital increases between October 2021 and January 2022, to be used to pay up a capital increase as referred to in subtitem “b” of item III below;
II – issuance by the Company of 308,443,302,951 (three hundred and eight billion, four hundred and forty-three million, three hundred and two thousand, nine hundred and fifty-one) new common shares, for the price of R$7,606,963,647.84 (seven billion, six hundred and six million, nine hundred and sixty-three thousand, six hundred and forty-seven reais and eighty-four cents) and 86,367,502,441 (eighty-six billion, three hundred and sixty-seven million, five hundred and two thousand, four hundred and forty-one) new preferred shares, for the total value of R$ 2,130,033,121.60 (two billion, one hundred and thirty million, thirty-three thousand, one hundred and twenty-one reais and sixty cents) (jointly referred to as “the New Shares”), provided that a part of the total issuance price, R$2,704,317,107.98 (two billion, seven hundred and four million, three hundred and seventeen thousand, one hundred and seven reais and ninety-eight cents) shall be allocated to the capital reserve to be used in the payment of the total accumulated amount of minimum dividends of the outstanding preferred shares issued by the Company, as set forth in item VI below, and the remaining value shall be allocated in the capital stock;
III – subscription, by Eletrobras, of a part of the New Shares: 166,379,229,311 (one hundred and sixty-six billion, three hundred and seventy-nine million, two hundred and twenty-nine thousand, three hundred and eleven) common shares and 86,326,103,046 (eighty-six billion, three hundred and twenty-six million, one hundred and three thousand and forty-six) preferred shares for the total issuance price of R$ 6,232,329,437.73 (six billion, two hundred and thirty-two million, three hundred and twenty-nine thousand, four hundred and thirty-seven reais and seventy-three cents) (jointly, the “New Eletrobras Shares”), the payment for which shall occur in the settlement of the Offer, as indicated below:
a) R$2,698,927,439.83 (two billion, six hundred and ninety-eight million, nine hundred and twenty-seven thousand, four hundred and thirty-nine reais and eighty-three cents), using primarily the credits relative to the accumulated priority dividends gainst the Company, as set forth in item VI below;
b) R$ 3,529,308,617.02 (three billion, five hundred and twenty-nine million, three hundred and eight thousand, six hundred and seventeen reais and two cents) primarily through the capitalization of advancements for future capital increase made by Eletrobras in the Company until January 2022; e
c) in national currency, for the remaining amount;
IV - assignment, by Eletrobras to Empresa Brasileira de Participações em Energia Nuclear e Binacional S.A. – ENBpar (“ENBPar”), free of charge, of the preemptive right to subscribe a part of the New Shares, in a volume equivalent to R$3,500,000,000.00 (three billion and five hundred million reais), corresponding to 141,916,224,437 (one hundred and forty-one billion, nine hundred and sixteen million, two hundred and twenty-four thousand, four hundred and thirty-seven) common shares ("New ENBPar Shares");
V - exercise, by ENBPar, of the right of the preemptive right to subscribe the New ENBPar Shares transferred to it pursuant to item IV above, and the payment must occur on the date of settlement of the Offer, in national currency;
VI - distribution by the Company of all the minimum dividends attributed to the preferred shares, to be paid with the capital reserve, accumulated until the amendment to the bylaws provided for in item VII below;
VII - modification of the rights of the preferred shares issued by the Company, extinguishing the right to cumulative minimum dividends and the right to vote in deliberations regarding the amendment of the Company's bylaws, and giving priority in the reimbursement of capital;
VIII - approval, by the Shareholders Meeting of the Company, of an optional conversion program of common shares of its issuance into preferred shares, at the rate of 1:1, respecting the limit provided for in §2 of Article 15 of Law No. 6,404 of 1976, and for such purpose the subscription of the New Shares shall be taken into account;
IX – Eletrobras’ adhesion to the optional conversion program referred to in item VIII above, covering the largest possible volume of common shares held by Eletrobras, respecting the applicable limit;
X - creation of a committee for matters related to the planning and execution of the Angra 3 Thermonuclear Power Plant, operated by the Company (“Angra 3”), denominated the Statutory Committee for Monitoring the Project of the Angra 3 Thermonuclear Power Plant ("COANGRA"), which will operate until the beginning of the commercial operation of Angra 3, with the purpose of advising the Company's Board of Directors, including conducting analysis and issuing prior opinion on contracts for goods, services, construction works, financing and collaterals linked to the project, which shall consist of five (5) members, provided ENBPar and Eletrobras may appoint the same number of members (up to 2 (two) members appointed by the Directors elected by ENBPar, up to 2 (two) members appointed by the Directors elected by Eletrobras) and 1 (one) independent external member appointed by mutual agreement beteween Eletrobras and ENBPar, all duly paid for such services;
XI - change the composition and organization of attributions of the Executive Board of Eletronuclear, to:
1. separate the functions of the Chief Administrative and Financial Officer between one Chief Administrative Officer and one Chief Financial Officer while the shareholders' agreement referred to in item XIV below is in force; and
2. provide for the existence, until the beginning of the commercial operation of Angra 3, of the position of Chief Angra 3 Officer, which will have the attribution of coordinating the activities to support the completion of the services contracted with BNDES and contracting the engineering services, contracting of financing and project management necessary for the completion of Angra 3;
XII – setting forth the reimbursement value in the cases of exercise of the right of withdrawal of shareholders of the Company so that such value will be the highest value between (i) the book value of the respective shares, and (ii) the economic value of the respective shares, according to the assessment report to be prepared by an independent third party, according to the discounted cash flow method, as of the exercise of the right of withdrawal;
XIII - execution, between Eletrobras and ENBPar, of an investment agreement providing, at least, for the obligations of the parties to:
a) participate in the raising of new financing for Angra 3, through the granting of collaterals, as well as through the transfer of loans in the form of new loans to the Company, in the total volume necessary for the completion of Angra 3, pursuant to the studies conducted by BNDES provided for in Decree No. 9,915 of July 16, 2019, and Law No. 14,120 of March 1, 2021, and in proportion to their interest in the voting capital stock of the Company, provided that the calculation of the proportion described above should disregard the collaterals, loans and equity support agreements existing between the Federal Government or Eletrobras and the Company on the date of execution of the investment agreement, which, in any case, shall be maintained after the execution of the agreement; and
b) perform all acts of their responsibility for the purpose of subscribing the new issuance of shares of the Company, in the form to be determined by the studies contracted by it with BNDES, in proportion to its interest in the capital stock of the Company;
XIV - execution, between Eletrobras and ENBPar, of a shareholders’ agreement of the Company's to regulate the governance of this company, providing for, at least:
a) the continuation of the operation of COANGRA, as defined in the Resolutions;
b) ENBPar's right of fist refusal over the sale of shares issued by the Company held by Eletrobras; and
c) right of appointment, by Eletrobras, of the Company's Chief Financial Officer; and
XV - transfer, by Eletrobras to the Company, of the ownership of the quotas of the decommissioning fund of nuclear power plants, provided for in Resolution No. 8 of September 17, 2002, of the National Council for Economic Policy - CNPE, with the compensation of the setting-off of transfer of related amounts due between companies.
B - AGENDA OF THE SPECIAL SHAREHOLDERS’ MEETING
In view of the above, a general extraordinary shareholders’ meeting shall be held on [date] at [time] (“General Meeting”), to resolve on the matters attributed to it. Pursuant to the provisions of Article 136, paragraph 1, of the Corporations Law, the Management of the Company hereby calls the Special Meeting, to resolve on the matters of the following agenda:
1 The confirmation of the resolution which approves the modification of the rights of the preferred shares issued by the Company, which will no longer grant the right to cumulative minimum dividends and voting rights in resolutions involving the amendment of the Company’s bylaws and the consequent modification of the sole paragraph of Article 11 of the Company’s bylaws, which shall henceforth have the following wording:
“Sole Paragraph. The preferred shares shall, as preference, confer priority in the reimbursement of capital, without premium”.
2 The confirmation of the resolution which approves the modification of the reimbursement value for shares held by shareholders which may exercise of the right of withdrawal under Law n. 6,404/1976, which will be the highest value between (i) the book value of the respective shares, and (ii) the economic value of the respective shares, according to the assessment report to be prepared by an independent third party, according to the discounted cash flow method, as of the exercise of the right of withdrawal; consequently, a new Article 67 shall be included in the Company’s bylaws, with the following wording:
“Art. 67. The reimbursement value of the shares held by shareholders that eventually exercise the right of withdrawal under the terms of Law No. 6,404, of 1976, will be the equivalent of the highest value between (i) the book value of the respective shares, and (ii) ) the economic value of the respective shares, according to the appraisal report to be prepared by an independent third party, using the discounted cash flow method, as of the exercise of the right of withdrawal.
Sole paragraph. The amendment to Article 67 will grant dissenting shareholders (including preferred shareholders) the right to reimburse their shares for the amount calculated based on the provisions of the Bylaws prior to the amendment then made”.
3 The effectiveness of the resolutions in items 1 to 2 above shall be subject to the condition precedent of the implementation and settlement of the public subscription (and transfer via public offering, if applicable) of common shares issued by Eletrobras, under Ordinary Law n. 14,182 and CPPI Resolution n. 203, dated October 19, 2021.
4 Authorization for the Company's management to carry out all the necessary acts to carry out what was approved by the shareholders.
C - CLARIFICATIONS ON THE PROPOSED RESOLUTIONS
The proposed resolutions of the shareholders are related to the conditions imposed by the CPPI for the implementation of the Privatization. Consequently, the Management proposes, as described above, that the entry into force and/or the effectiveness of the resolutions is conditional upon the implementation and settlement of the Offer.
In case the proposed resolutions are approved and provided that ENBPar and Eletrobras subscribe, pay and request the conversion of shares in the exact terms of the CPPI Resolutions, ENBPAR will hold the majority of the voting capital stock and consequently the control of the Company. If no other shareholder exercises the pre-emptive right to subscribe shares and/or requests the conversion of shares, with the approval of the proposed resolutions, the interest in the capital stock of the Company shall be held as follows:
Shareholders | Common Shares | Preferred Shares | TOTAL | % Common Shares | % TOTAL |
Eletrobras | 79,488,849,747 | 221,396,242,535 | 300,885,092,282 | 35.90% | 67.95% |
Depto de Águas E.Elétrica Est.SP - DAEE | 5,960,026 | 7,405,548 | 13,365,574 | 0.00% | 0.00% |
LIGHT - Serviços de Eletricidade S.A. | 0 | 5,058,993 | 5,058,993 | 0.00% | 0.00% |
ENBPar | 141,916,224,437 | 0 | 141,916,224,437 | 64.10% | 32.05% |
Outros | 1,176,930 | 3,504,063 | 4,680,993 | 0.00% | 0.00% |
TOTAL | 221,412,211,140 | 221,412,211,139 | 442,824,422,279 | 100% | 100% |
If approved by the shareholders at the General Meeting, the effectiveness of the resolutions contained in items 1 and 2 of the agenda will depend on the approval of holders of more than half of the preferred shares, at the Special Meeting.
Dissenting preferred shareholders, as well as those who abstain and those who do not attend the Special Meeting, will have the right to withdraw from the Company, pursuant to Article 137, item I, of the Corporations Law; the applicable reimbursement value in such case will be calculated prior to the implementation of the resolution in item 2 of the agenda.
The amount to be paid as reimbursement of shares will be determined, therefore, pursuant to paragraph 1 of Article 45 of the Corporations Law, based on the book value of equity in the last balance sheet approved by the general shareholders’ meeting on [date], that is, R$ [●] per preferred share.
We emphasize that the management bodies may call a general meeting to reconsider the resolution giving rise to the right of withdrawal, if they consider that the payment of the reimbursement price jeopardizes the financial stability of the Company, pursuant to article 137, paragraph 3, of the Corporations Law.
D - MANAGEMENT FINAL NOTES
In view of the foregoing, the Company’s Board of Directors, by unanimous vote of those present, approved the submission to the special shareholders' meeting, pursuant to the present management proposal, and recommends that the shareholders carefully read all documentation made available to them in relation to the proposed resolutions, as well as to approve them.
[date]
[signatures]
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Chapter I Corporate Name, Organization, Principal Place of Business, and Corporate Purpose | Chapter I Corporate Name, Organization, Principal Place of Business, and Corporate Purpose | Inclusion of wording. |
Article 1. Eletrobras Termonuclear S.A. – Eletronuclear is a public-private joint-stock company controlled by Centrais Elétricas Brasileiras S.A. – Eletrobras, established in accordance with the authorization contained in Decree No. 76,803 of December 16, 1975, with the specific purpose of exploiting, on behalf of the Federal Government, nuclear activities for electricity generation purposes, under the Decree of May 23, 1997. | Article 1. Eletronuclear S.A. is a public-private joint-stock company established in accordance with the authorization contained in Decree No. 76,803 of December 16, 1975, with the specific purpose of exploiting, on behalf of the Federal Government, nuclear activities for electricity generation purposes, under the Decree of May 23, 1997. | Amendment aiming to exclude the name Eletrobras from the corporate name of Eletronuclear, as a result of the capitalization process. OK |
Sole paragraph. Eletronuclear is controlled by Empresa Brasileira de Participações em Energia Nuclear e Binacional – ENBpar, organized as authorized in Decree No. 10,791 of September 10, 2021 and pursuant to Law No. 14,182 of July 12, 2021. | Inclusion to provide for the new controlling shareholder of Eletronuclear, due to Eletrobras capitalization process. | |
Article 2. Eletronuclear has its principal place of business in the City of Rio de Janeiro, was organized for an indefinite time, and it may open branches, affiliates, locations, and offices in Brazil and abroad. | Article 2. Eletronuclear has its principal place of business and jurisdiction in the City of Rio de Janeiro, was organized for an indefinite time, and it may open branches, affiliates, locations, and offices in Brazil and abroad. | Wording included Ok.
|
Article 3. Eletronuclear shall observe, where applicable, the general principles of Law No. 3,890-A of April 25, 1961, as amended, in addition to complying with the rules established by Eletrobras. | Article 3. Eletronuclear shall comply with Law No. 13,303 of 2016 and its regulations, as well as Law No. 6,404 of 1976. | |
Article 4. Eletronuclear's corporate purpose shall be the construction and operation of nuclear power plants, the generation, transmission, and trading of electricity resulting therefrom and the execution of engineering and related services, including: | Article 4. Eletronuclear's corporate purpose shall be the construction and operation of nuclear power plants, the generation, transmission, and trading of electricity resulting therefrom and the execution of engineering and related services, including: | No change |
I – obtaining all related technology, especially that related to the Nuclear Steam Generating System; | I – obtaining all related technology, especially that related to the Nuclear Steam Generating System; | No change |
1 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
II – development, in Brazil, of the design and engineering capacity of nuclear power plants, by subcontracting other Brazilian engineering companies to complete the Company's services; and | II – development, in Brazil, of the design and engineering capacity of nuclear power plants, by subcontracting other Brazilian engineering companies to complete the Company's services; and | No change |
III – promotion of the Brazilian industry for the manufacture of components for nuclear power plants. | III – promotion of the Brazilian industry for the manufacture of components for nuclear power plants. | No change |
Article 5. For the performance of the corporate purpose established in article 4, Eletronuclear shall: | Article 5. For the performance of the corporate purpose established in article 4, Eletronuclear shall: | No change |
I – enter into agreements which have as their object the performance of development, design, construction, installation, and commissioning works for nuclear power plants, as well as the performance of other services consistent with its object; and | I – enter into agreements which have as their object the performance of development, design, construction, installation, and commissioning works for nuclear power plants, as well as the performance of other services consistent with its object; and | No change |
II – organize subsidiaries, hold the controlling interest and/or participate in other companies’ capital, related to its corporate purpose, as long as expressly authorized by law; and | New wording. Ok | |
II – carry out any activities and take any measures related to its object. |
| No change New item III. |
Chapter II Public Interest
| New (follow the Bylaws model of Sest.) | |
Article 6. Eletronuclear may develop its activities, whenever according to its corporate purpose, guided by its controlling shareholder as to contribute to the public interest supporting its organization. | New wording | |
Sole paragraph. Eletronuclear shall exclusively base its actions and decisions on nuclear safety, and, therefore, it cannot be compromised for any reason, especially regarding the following: | New wording |
2 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
I – The company’s management shall be continuously committed to nuclear safety, the physical protection of its nuclear facilities, and compliance with international safeguards on the use of nuclear materials. | New wording | |
II – All members of the Board of Executive Officers, the Board of Directors, Fiscal Council, and other statutory agencies shall be trained on the Fundamentals of Nuclear Safety as soon as they are assigned to these positions. | New wording | |
Article 7. In the exercise of the powers referred to in Art. 6, the controlling shareholder may only instruct the Company to assume obligations or responsibilities, including to implement investment projects and assume specific operating costs/results under conditions different from those of any other company in the private sector operating in the same market, when: | New wording | |
I - provided by law or regulation, as well as provided for in a contract, partnership, or agreement executed with the public entity competent for doing so, with wide publicity of these instruments; and | New wording | |
II – its cost and revenues are detailed and disclosed transparently, including on an accounting basis. | New wording | |
Article 8. For purposes of compliance with Art. 7, item II, above, the management of Eletronuclear shall: | New wording | |
I - evidence the undertaken obligations or responsibilities in specific notes to the year-end accounting statements; and | New wording | |
II – describe them in a specific topic of the management’s report. | New wording | |
Chapter II Obligations
| Chapter III Obligations
| No change |
Article 6. Eletronuclear, pursuant to legal provisions prevailing, shall, among other obligations: | Article 9. Eletronuclear, pursuant to the current legal provisions, shall, among other obligations: | New article 9 |
I – guide its actions, seeking sustainability through economic, financial, social, and environmental balance in transactions and business opportunities; | I – guide its actions, seeking sustainability through economic, financial, social, and environmental balance in transactions and business opportunities; | No change |
3 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
II – observe and comply with the Compliance Program of the Eletrobras companies; | II – Observe and comply with the Compliance Program
| Wording removed |
III – observe and, when there are subsidiaries, cause them to observe the transparency requirements provided for in the prevailing laws and regulations; and
| III – observe and, when there are subsidiaries, cause them to observe the transparency requirements provided for in the prevailing laws and regulations; and
| No change |
IV – operated in full compliance with the Code of Ethics and Conduct of the Eletrobras Companies and with the United States Foreign Corrupt Practices Act of 1977, 15 U.S.C. ¶ 78-dd-1, et seq., as amended), and its subsequent amendments, hereinafter referred to as FCPA, and Law No. 12,846/2013, as well as any applicable anti-bribery and anti-corruption laws and regulations, or any other laws and regulations, rule or regulation of similar purpose and effect, refraining from performing in any conduct that may be prohibited to persons subject to the FCPA and the Brazilian anti-corruption laws and regulations. | IV – operated in full compliance with the Code of Ethics and Conduct | Wording removed |
Article 7. Eletronuclear shall take all applicable measures so that its managers, agents, employees, and any other persons acting on its behalf, and, if any, in its subsidiaries, managers, agents, employees, and any other persons acting on their behalf, proceed as provided for the provisions of the Code of Ethics and Conduct of Eletrobras Companies, the FCPA, and the Brazilian anti-corruption laws and regulations. | Article 10. Eletronuclear shall take all applicable measures so that its managers, agents, employees, and any other persons acting on its behalf, and, if any, in its subsidiaries, managers, agents, employees, and any other persons acting on their behalf, proceed as provided for the provisions of the Code of Ethics and Conduct | New art. 10 |
4 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Chapter III Capital Stock, Shares, and Shareholders |
Chapter IV Capital Stock, Shares, and Shareholders |
Change of chapter |
Article 8. The capital stock is eight billion, four hundred, ninety-three million, thirty-five thousand, seven hundred one Reais and eighteen cents (BRL8,493,035,701.18), divided into thirty-seven billion, six hundred fifty-eight million, one hundred sixty-six thousand, four hundred and ninety-one (37,658,166,491) common shares, voting, and ten billion, five hundred forty-four million, six hundred ninety-eight thousand, nine hundred and ninety-four (10.544,698,994) preferred shares without voting rights, all registered, and with no par value. | Article 11. The capital stock is eight billion, four hundred, ninety-three million, thirty-five thousand, seven hundred one Reais and eighteen cents (BRL8,493,035,701.18), divided into thirty-seven billion, six hundred fifty-eight million, one hundred sixty-six thousand, four hundred and ninety-one (37,658,166,491) common shares, voting, and ten billion, five hundred forty-four million, six hundred ninety-eight thousand, nine hundred and ninety-four (10.544,698,994) preferred shares without voting rights, all registered, and with no par value. | No change |
Sole paragraph. The preferred shares may not be translated into common shares and shall have the following preferences or advantages: | Sole paragraph. The holders of preferred shares shall have priority in the reimbursement of capital, without premium. | Amendment required as a result of the capitalization process (Shareholders’ Agreement) Eletrobras and ENBpar.
|
I – priority in capital reimbursement, with no premium rights; | Exclusion (Shareholders’/investment agreement) | |
II – priority dividend, a cumulative minimum of ten percent (10%) per annum, and interest, on an arms-length basis with the common shares in the remaining profits after payment of a dividend of twelve percent (12%) per annum on the common shares; and | Exclusion (Shareholders’/investiment agreement) | |
III – voting right in the Extraordinary General Meetings resolutions deliberations on the amendment to the Bylaws. | Exclusion (Shareholders’/investiment agreement) | |
Article 9. Eletronuclear’s capital stock increases shall be carried out by means of private subscription and/or development of reserves, according to the rules and conditions established among the types allowed by law. | Article 12. Eletronuclear’s capital stock increases shall be carried out by means of private subscription and/or development of reserves, according to the rules and conditions established among the types allowed by law. | No change New article 12.
|
5 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 1. The capital stock increase shall be forwarded to the Extraordinary General Meeting by the Board of Directors through a proposal of the Board of Executive Officers, accompanied by an opinion of the Fiscal Council. | Paragraph 1. The capital stock increase shall be forwarded to the Extraordinary General Meeting by the Board of Directors through a proposal of the Board of Executive Officers, accompanied by an opinion of the Fiscal Council. | No change |
Paragraph 2. The shareholder that does not make the payment in full according to the rules and conditions referred to in this article shall be in default by operation of law, being subject to inflation adjustment, interest at twelve percent (12%) per annum, and a fine of ten percent (10%) on the amount of the overdue installment. | Paragraph 2. The shareholder that does not make the payment in full according to the rules and conditions referred to in this article shall be in default by operation of law, being subject to inflation adjustment, interest at twelve percent (12%) per annum, and a fine of ten percent (10%) on the amount of the overdue installment. | No change |
Chapter IV General Meeting | Section V General Meeting
Section I – Definition
| Change of chapter
Wording included |
Article 10. The Annual General Meeting shall be held within the first four (4) months following the end of the fiscal year, on a date and time previously scheduled, at the Eletronuclear’s principal place of business, to: | Article 13. The Annual General Meeting shall be held within the first four (4) months following the end of the fiscal year, on a date and time previously scheduled, at the Eletronuclear’s principal place of business, to: | No change
New article 13 |
I – verify the management’s accounts, review, discuss, and vote the financial statements; | I – verify the management’s accounts, review, discuss, and vote the financial statements; | No change |
II – resolve upon the allocation of the net profit for the year and the distribution of dividends; and | II – resolve upon the allocation of the net profit for the year and the distribution of dividends; and | No change |
III – elect and remove the members of the Board of Directors and of the Fiscal Council and fix the compensation of the managers and members of the Fiscal Council, pursuant to the applicable laws and regulations. | III – elect and remove the members of the Board of Directors and of the Fiscal Council and fix the global and individual compensation of the managers and members of the Fiscal Council and committees, pursuant to the applicable laws and regulations.
| Wording included. |
Sole paragraph. The power to resolve upon calling the General Meeting is of the Board of Directors. The power is also of the Fiscal Council and the shareholders, in cases provided by law. | New wording |
6 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 1. The presiding board that will conduct the works of the General Meeting shall be composed of the Chairman of the Board of Directors, or in his/her absence or disqualification, by whoever the General Meeting chooses, and by a secretary, chosen among the participants. | Excluded
Moved to the new article 14
Ok. | |
Paragraph 2. The shareholder may be represented at General Meetings as provided by the Brazilian Corporation Law. | Proposed Exclusion
| |
Paragraph 3. The Board of Directors is responsible for resolving upon the call of the General Meeting. The Fiscal Council is also responsible therefor. | Proposed Exclusion Moved to the new article 15. | |
Section II – Composition
| New wording (follow the new Bylaws model of Sest) | |
Article 14. The General Meeting is composed of all shareholders of the Company, notwithstanding the voting right. The works of the General Meeting shall be supervised by the Chairman of the Board of Directors of the Company (or his/her alternate to be designated), who shall choose the secretary of the General Meeting. | New wording New article 14 | |
Section III – Call Notice
| ||
Article 15. Provided the exception in Law No. 6,404 of December 15, 1976, the General Shareholders’ Meetings shall be called by the Chairman of the Board of Directors or his/her alternate to be designated, pursuant to the terms provided in the laws and regulations. | New wording New article 15 | |
Article 16. Notwithstanding any formality provided for in these Bylaws and Law No. 6,404 of December 15, 1976, any General Meeting attended by all shareholders shall be deemed duly hold. | New wording New article 16 | |
Section IV – Holding the General Meeting and its Resolutions | ||
Article 17. Provided the exceptions by law, the General Meeting shall be held, on the first call, with the attendance of shareholders representing at least one-fourth (1/4) of the voting capital stock. | New wording New article 17 |
7 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 18. Pursuant to the identified quorum provided by law for the resolution of certain matters, the resolutions of the General Meeting shall be taken by the majority of the voting capital and shall be recorded in the book of minutes, which may be registered on a summary basis. | New wording New article 18 | |
Article 19. The General Meetings shall exclusively address the subject matter provided for in the notices, and no general matters may be discussed in the General Meeting.
| New wording New article 19 | |
Section V – Powers
| New wording | |
Article 11. The General Meeting shall be called especially to resolve upon: | Article 20. The General Meeting, in addition to the matters provided by Law No. 6,404 of December 15, 1976 and Decree No. 1,091 of March 21, 1994, shall meet to resolve upon: | Wording included. New article 20.
|
I – disposal, in whole or in part, of shares of its capital stock or its subsidiaries; going public procedures or change in the capital stock; sales of securities, if in the treasury; sales of debentures whatsoever a holder, of companies in which it holds interest and the issue of debentures convertible into shares; | I – disposal, in whole or in part, of shares of its capital stock or, when not incumbent upon the Board of Directors, its subsidiaries; going public procedures or change in the capital stock; sales of securities, if in the treasury; sales of debentures whatsoever a holder, of companies in which it holds interest and the issue of debentures convertible into shares; | Wording included.
|
II – company spin-off, consolidation, merger, winding-up, and liquidation transactions; | I – company spin-off, consolidation, merger, winding-up, and liquidation transactions; | No change |
III – exchange of shares or other securities; | III – exchange of shares or other securities; | No change |
IV – amendment to the Bylaws; | IV – amendment to the Bylaws; | No change |
V – authorization for the company to file a civil responsibility action against the managers for losses caused to its assets and properties; | V – authorization for the company to file a civil responsibility action against the managers for losses caused to its assets and properties; | No change |
VI – approval of the construction, operation, and decommissioning of nuclear power plants; | Wording included New item VI | |
VI – election and dismissal, at any time, of liquidators, assessing their accounts; | VII – election and dismissal, at any time, of liquidators, assessing their accounts; | No change
New item VII |
8 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
VII – evaluation of assets that the shareholder contributes to the capital stock; and | VIII – evaluation of assets that the shareholder contributes to the capital stock; and | No change New item VIII |
VIII – other matters proposed by the Board of Directors or the Fiscal Council. | IX – other matters proposed by the Board of Directors or the Fiscal Council. | No change
New item IX |
Paragraph 1. The General Meeting may only resolve upon businesses included in the agenda, in the relevant notice, and the approval of general businesses is prohibited. | Proposed Exclusion | |
Paragraph 2. The Call Notice may condition the representation of the shareholder at the General Meeting, in addition to the requirements provided for by law, upon the deposit, at the company’s principal place of business, of the proof issued by the financial institution acting as depositary for the shares in custody, seventy-two (72) hours before the day scheduled for the General Meeting. | Paragraph 1. The Call Notice may condition the representation of the shareholder at the General Meeting, in addition to the requirements provided for by law, upon the deposit, at the company’s principal place of business, of the proof issued by the financial institution acting as depositary for the shares in custody, seventy-two (72) hours before the day scheduled for the General Meeting. | No change.
New ¶ 1 |
Paragraph 3. The resolutions of the Meeting shall be registered in the book of minutes, and they may be summarized. | Paragraph 2. The resolutions of the Meeting shall be registered in the book of minutes, and they may be summarized. |
New ¶ 2 No change |
Section V Management
| Chapter VI Management
| Change of chapter |
Article 21. The Company shall have the General Meeting and the following statutory bodies: II – Board of Directors, II – Board of Executive Officers, III – Fiscal Council, IV – Audit and Risk Committee, V – Risk Committee, VI – People, Eligibility, Succession, and Compensation Committee, VII – COANGRA, VIII – Other advisory committees to the Board of Directors. | New wording (follow the new Bylaws model of Sest) |
9 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 12. Eletronuclear shall be managed by a Board of Directors, a collegiate body with deliberative duties, with assignments provided for in the law and these Bylaws, and a Board of Executive Officers.
| Article 22. Eletronuclear shall be managed by a Board of Directors, a collegiate body with deliberative duties, with assignments provided for in the law and these Bylaws, and a Board of Executive Officers.
| No change
New art.22 |
Sole paragraph. Eletronuclear’s Chief Executive Officer may not hold the position of Chairman of the Board of Directors. | ||
Sole paragraph. Pursuant to the legal rules related to indirect public administration, the managers shall guide the development of the Company’s activities pursuant to the principles and best practices adopted and prepared by national and international institutions and forums specialized in corporate governance. | New wording Ok. | |
Article 13. The members of the Board of Directors shall be Brazilians and the Executive Officers and of the Board of Directors’ Support Committees shall be Brazilians, resident and domiciled in the country. | Article 23. The members of the Board of Directors shall be Brazilians and the Executive Officers and of the Board of Directors’ Support Committees shall be Brazilians, resident and domiciled in the country. | New article 23 No change |
Paragraph 1. The minutes of the General Meeting or a meeting of the Board of Directors electing, respectively, Directors and officers of the Eletronuclear, shall include the identification of each of those elected and the term of office, and, when the laws require the satisfaction of certain conditions to hold the position, only those providing the supporting documents may be elected and invested in office, and a certified copy of these supporting documents shall be filed in Eletronuclear’s principal place of business.
| Paragraph 1. The minutes of the General Meeting or a meeting of the Board of Directors electing, respectively, Directors and officers of the Eletronuclear, shall include the identification of each of those elected and the term of office, and, when the laws require the satisfaction of certain conditions to hold the position, only those providing the supporting documents may be elected and invested in office, and a certified copy of these supporting documents shall be filed in Eletronuclear’s principal place of business.
| No change |
10 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 2. The requirements shall be documented, using all information included in the standard form approved by the Office for Coordination and Governance of State-Owned Companies.
| Paragraph 2. The requirements shall be documented, using all information included in the standard form approved by the Office for Coordination and Governance of State-Owned Companies.
| No change |
Article 14. the investiture in an Eletronuclear management office shall satisfy the conditions imposed by the applicable laws and regulations, as well as those provided for in the Appointment Policy of the Eletrobras companies. | Proposed exclusion.
Moved to the new article 24.
Ok. | |
Article 24. The managers of the company, including the directors representing the employees and minority shareholders, shall meet the mandatory requirements and observe the prohibitions to develop its activities provided by Law No. 6,404 of December 15, 1976, Law No. 13,303 of June 30, 2016, and Decree No. 8,945 of December 27, 2016, as well as those provided in specific laws and regulations. | New wording
Wording improved ok | |
Paragraph 1. In addition to the conditions for investiture referred to in the main section of this article, the person appointed as an Officer, including the Chairman, shall: | Paragraph 1. In addition to the conditions for investiture referred to in the main section of this article, the person appointed as an Officer, including the Chairman, shall have work experience of at least five (5) years in activities or offices directly related to the main duties of the Board of Executive Officers. | Wording included. |
I – have work experience of at least five (5) years in activities or offices directly related to the main duties of the Board of Executive Officers. | Proposed Exclusion Moved to paragraph 1.
Ok. | |
Paragraph 2. The maximum limit of the Director’s participation in the Board of Directors may not exceed five (5), considering the Eletronuclear's, observing the compensation limit. | Paragraph 2. The maximum limit of the Director’s participation in the Board of Directors may not exceed five (5), considering the Eletronuclear's, observing the compensation limit. | No change |
Paragraph 3. Members of the federal public administration, directly or indirectly, are forbidden to hold remunerated positions in more than two (2) state-owned company bodies, including the Board of Directors and Fiscal Council and the Audit Committee. | Proposed exclusion |
11 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 4. The managers elected shall participate, upon the investiture and on an annual basis, of specific training on corporate and capital market laws and regulations, disclosure of information, internal control, code of conduct, Law No. 12,846/2013, and other topics related to Eletronuclear’s activities. | Paragraph 4. The managers elected shall participate, upon the investiture and on an annual basis, of specific training on corporate and capital market laws and regulations, disclosure of information, internal control, code of conduct, Law No. 12,846/2013, and other topics related to Eletronuclear’s activities. | No change |
Paragraph 5. The manager failing to participate in any annual training provided by the company in the last two years may not be reelected. | Paragraph 5. The manager failing to participate in any annual training provided by the company in the last two years may not be reelected. | |
Paragraph 6. The requirements and prohibitions enforceable to the managers shall be met in all appointments and elections, including in case of reelection. | New wording New ¶ 6 | |
Paragraph 7. The requirements referred to in this Art. 24 shall be supported with documents, as required in the standard form, approved by the Office for Coordination and Governance of State-Owned Companies and available on its website. | New wording New ¶ 7 | |
Paragraph 8. The failure to provide the documents referred to in ¶ 6 shall entail rejection of the form by People, Eligibility, Succession, and Compensation Committee of Eletronuclear. | New wording New ¶ 8 | |
Paragraph 9. The People, Eligibility, Succession, and Compensation Committee shall verify if the requirements and prohibitions established in this Art. 24 are met, through analysis of the self-declaration presented by the person appointed and his/her relevant documentation, pursuant to Art.24. | New wording Inclusion of a new paragraph. New ¶ 9 |
12 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 25. Each member of the Board of Executive Officers shall, before discharging their duties, submit to the Company, which shall ensure legal privilege, an authorization to access the Annual Adjustment to the Individual Income Tax Return (DIRPF) and any amendments submitted to the Brazilian Federal Revenue Service – RFB, pursuant to the form made available by the Brazilian Government Accountability Office. The officers shall also submit a Confidential Information Statement – DCI to the Public Ethics Commission of the Presidency of the Republic – CEP/PR, pursuant to Law 6,728/79 and Law 12,813/13, art. 9, item I. | New wording New article 25
| |
Article 15. Each member of the management bodies shall, before taking office and when leaving the office, submit a statement of assets to the company, to the Public Ethics Commission of the Presidency of the Republic – CEP/PR and to the Brazilian Government Accountability Office. | Proposed Exclusion
| |
Article 16. The directors and officers shall be invested in their offices upon execution of the instrument of investiture in the Book of Minutes of the Board of Directors or Board of Executive Officers, as the case may be. | Article 26. The directors and officers shall be invested in their offices upon execution of an specific instrument
| Inclusion and exclusion of wording New article 26. |
Paragraph 1. If the instrument of investiture is not signed within the thirty (30) days following the election, this shall become void, except if a justification is accepted the management body for which the person was elected. | Paragraph 1. If the instrument of investiture is not signed within the thirty (30) days following the election, this shall become void, except if a justification is accepted the management body for which the person was elected. | No change |
13 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 2. The instrument of investiture shall include, under penalty of nullity: the indication of at least one domicile at which the manager shall be served process and notified under administrative and legal proceedings related to their management acts, which shall be deemed to be received upon delivery to the indicated domicile, which may only be changed upon written notice to Eletronuclear. | Paragraph 2. The instrument of investiture shall include, under penalty of nullity: the indication of at least one domicile at which the manager shall be served process and notified under administrative and legal proceedings related to their management acts, which shall be deemed to be received upon delivery to the indicated domicile, which may only be changed upon written notice to Eletronuclear. | No change. |
Article 27. In meetings of collegiate bodies, before the resolution, any member that is not independent with respect to the business transacted shall express their conflict of interest or personal interest, leaving the meeting. Paragraph 2 – If such member does not do so, any other person may express the conflict, if known, and the collegiate body shall resolve upon the conflict pursuant to its regulations and the applicable laws and regulations. | New Wording Ok. New article 27. | |
Article 17. The members of the Board of Directors and Board of Executive Officers shall be liable, to the terms of the prevailing laws and regulations, individually and jointly, for acts they practice and for losses resulting therefrom to Eletronuclear, unless the dissenting officer makes record in the minutes of the meeting of the respective management body his or her disagreement or, if this is not possible, makes it immediately known in writing to the management body, the fiscal council, or the shareholders’ meeting. | Article 28. The members of the Board of Directors and Board of Executive Officers shall be liable, to the terms of the prevailing laws and regulations, individually and jointly, for acts they practice and for losses resulting therefrom to Eletronuclear, unless the dissenting officer makes record in the minutes of the meeting of the respective management body his or her disagreement or, if this is not possible, makes it immediately known in writing to the management body, the fiscal council, or the shareholders’ meeting. | No change
New article 28 |
Article 18. The managers shall be liable, as provided by law, for losses or damage caused while discharging their duties. | Proposed Exclusion |
14 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 1. Eletronuclear shall ensure to the members and former members of the Board of Executive Officers and Boards of Directors defense in legal and administrative proceedings initiated against them for acts performed as a result of the office or duties, provided there is no incompatibility with the Company’s interests.
| Paragraph 1. Eletronuclear shall ensure to the members and former members of the Board of Executive Officers and Boards of Directors, and the Audit Committee and Risk Committee, defense in legal and administrative proceedings initiated against them for acts performed as a result of the office or duties, provided there is no incompatibility with the Company’s interests. | Wording included (Shareholders’ agreement). Ok |
Paragraph 2. The members and former members of the Board of Execute Officers, the Board of Directors, the Fiscal Council, the Audit Committee, and the Risk Committee are hereby entitled to know the information and documents included in the Company’s records or database, essential for administrative or legal defense, in actions filed by third parties, actions taken during their term of office, except if such availability is harmful to Eletronuclear’s interests. | New wording New ¶ 2 | |
Paragraph 2. The benefit provided in paragraph one of this article applies to holding and former holding of trustworthy duties and other employees and former employees duly vested with powers by a delegation from the managers.
| Paragraph 3. The benefit provided in paragraph one of this article applies to holding and former holding of trustworthy duties and other employees and former employees duly vested with powers by a delegation from the managers.
| No change New ¶ 3 |
Paragraph 3. The form of the benefit mentioned in ¶¶ 1 and 2 shall be defined by the Board of Directors after consultation with Eletronuclear legal department.
| Paragraph 4. The form of the benefit mentioned in ¶¶ 1 and 3 shall be defined by the Board of Directors after consultation with Eletronuclear legal department. | Wording rectified
New ¶ 4 |
Paragraph 4. If any of such persons holding the offices or discharging the duties mentioned in ¶¶ 1 and 2 is convicted by a final and unappealable court decision based on violation of the law or the Bylaws or resulting from an unintentional or intentional act, they shall reimburse Eletrobras for all costs and expenses arising from the defense referred to in ¶ 1, as well as for any damage caused.
| Paragraph 5. If any such persons holding the offices or discharging the duties mentioned in ¶¶ 1 and 3 is convicted by a final and unappealable court decision based on violation of the law or the Bylaws or resulting from an unintentional or intentional act, they shall reimburse Eletrobras for all costs and expenses arising from the defense referred to in ¶¶ 1 and 3, as well as for any damage caused. | Wording rectified
New ¶ 5 |
15 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 5. Eletronuclear may maintain, in such form and to such extent as established by the Board of Directors, a permanent insurance contract in favor of the holding the offices or discharging the duties mentioned in ¶ 1, to cover procedural expenses and attorneys’ fees in administrative or legal proceedings made against them related to their duties with Eletronuclear.
| Paragraph 6. Eletronuclear may maintain, in such form and to such extent as established by the Board of Directors, a permanent insurance contract in favor of the holding the offices or discharging the duties mentioned in
| No amendment to the wording
New ¶ 6 |
Paragraph 6. The managers of Eletronuclear that may create salary benefits not provided for or contrary to the provisions in the employment contracts, position and salary plan, collective bargaining agreement, internal rules, or the prevailing laws and regulations, shall be liable for the losses caused to the company, based on the main section of this article.
| Paragraph 7. The managers of Eletronuclear that may create salary benefits not provided for or contrary to the provisions in the employment contracts, position and salary plan, collective bargaining agreement, internal rules, or the prevailing laws and regulations, shall be liable for the losses caused to the company, based on the main section of this article.
| New ¶ 7 |
Article 19. The Board of Directors and Board of Executive Officers shall meet, with a quorum of an absolute majority, half of the elected members plus one, and shall resolve upon the vote of the majority of the members present.
| Article 29. The Board of Directors and Board of Executive Officers shall meet, with a quorum of an absolute majority, half of the elected members plus one, and shall resolve upon the vote of the majority of the members present.
| No change
New article 30 |
Paragraph 1. In the resolutions taken by the Board of Directors and the Board of Executive Officers, the respective Chairman shall have, in addition to their personal vote, the casting vote.
| Sole paragraph. In the resolutions taken by the Board of Directors and the Board of Executive Officers, the respective Chairman shall have, in addition to their personal vote, the casting vote.
| No change
Inclusion of sole paragraph. |
Paragraph 2. The decisions of the managers shall observe the corporate policies and strategic guidelines established by the parent company. | Proposed Exclusion | |
Paragraph 3. The manager is prohibited from resolving upon a matter that conflicts with their interests or related to third parties influenced thereby, pursuant to prevailing laws and regulations. In this case, they shall record the conflict in minutes and refrain from discussing the subject. | Proposed exclusion
| |
Chapter VI Board of Directors | Chapter VII Board of Directors |
16 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 20. The Board of Directors, the highest collegiate body of Eletronuclear, shall be composed of seven (7) members elected by the General Meeting for a unified term of office of two (2) years, being no more than three (3) consecutive reelections allowed. | Article 30. The Board of Directors, the highest collegiate body of Eletronuclear, shall be composed of seven (7) members elected by the General Meeting for a unified term of office of two (2) years, being no more than three (3) consecutive reelections allowed. | No change
|
Paragraph 1. For constituting the Board of Directors, ENBpar shall appoint the majority of members and there shall necessarily be at least: | New wording (Shareholders’ agreement). | |
I – one (1) director shall be appointed by the Minister of State of Planning, Development, and Management pursuant to the prevailing laws and regulations; | Proposed exclusion.
| |
II – one (1) member elected as an employee representative, chosen pursuant to the prevailing laws and regulations; | I – one (1) member elected as an employee representative, chosen pursuant to the prevailing laws and regulations; | No change New item I |
II – one (1) board member elected by the minority shareholders, if a greater number is not available to them by the multiple voting process provided by Law No. 6,404 of December 15, 1976. | New wording (Shareholders’ agreement) | |
III – one (1) director appointed by the controlling shareholder, which shall be elected Chief Executive Officer; and | Proposed exclusion
| |
IV – four (4) directors appointed by Eletrobras, among which two (2) shall be independent, under the applicable laws and regulations. | Proposed exclusion
| |
Paragraph 2. Among the board members appointed by ENBpar pursuant to ¶ 1 of this article, as controlling shareholder of the Company, one (1) board member shall be appointed by the supervising Ministry to which Eletronuclear is bound. |
New wording | |
Paragraph 2. The director representing the employees shall not participate in discussions and resolutions on matters involving union-related relations, compensation, benefits, and advantages, including private pension and welfare matters, hypotheses in which a conflict of interest is configured. | Paragraph 3. The director representing the employees shall not participate in discussions and resolutions on matters involving union-related relations, compensation, benefits, and advantages, including private pension and welfare matters, hypotheses in which a conflict of interest is configured. | No change New ¶ 3 |
17 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 3. The matters that configure a conflict of interest, as provided for in ¶ 2 above, shall be deliberate in a special meeting exclusively called without the presence of the director representing the employees, and they shall be ensured access to the minutes of the meeting and to the documents related to the resolutions, within thirty (30) days. | Paragraph 4. The matters that configure a conflict of interest, as provided for in ¶ 2 above, shall be deliberate in a special meeting exclusively called without the presence of the director representing the employees, and they shall be ensured access to the minutes of the meeting and to the documents related to the resolutions, within thirty (30) days. | No change
New ¶ 4 |
Paragraph 4. The Board of Directors shall be composed of at least twenty-five percent (25%) of independent members, as provided by Law No. 13,303/2016. | Paragraph 5. The Board of Directors shall be composed of at least twenty-five percent (25%) of independent members, as provided by Law No. 13,303/2016. | No change
New ¶ 5 |
Paragraph 6. The Board of Directors shall appoint, in a non-binding manner, new members to this collegial board and profiles for approval by the general meeting, always related to the results of evaluation process and the guidelines in the appointment policy and the succession plan. | New wording
Ok | |
Paragraph 5. Eletrobras shall appoint the independent members of the Board of Directors referred to in ¶ 4 this article if the other shareholders fail to do so. | Paragraph 7. ENBpar shall appoint the independent members of the Board of Directors referred to in ¶ 5 of this article if the other shareholders fail to do so.
| Wording supplementation |
Paragraph 6. In addition to the events provided by law, the office shall be vacated when the member of the Board of Directors unreasonably fails to attend two (2) consecutive meetings or three (3) alternated meetings over the last twelve (12) meetings. | Paragraph 8. In addition to the events provided by law, the office shall be vacated when the member of the Board of Directors unreasonably fails to attend two (2) consecutive meetings or three (3) alternated meetings over the last twelve (12) meetings. | Wording supplementation New ¶ 8 |
Paragraph 7. In case of vacancy in the duties of a Director, the Chairman of the collegiate body shall notify the body represented and the Board shall appoint an alternate by appointment of that body to complete the term of office of the previous director. |
Paragraph 9. In case of vacancy in the office of a Director, the Chairman of the collegiate body shall call the general meeting of shareholders to designate an alternate to complete the term of office of the previous director.
|
Wording supplementation
New ¶ 9 |
Paragraph 8. The term of office of the members of the Board of Directors shall be extended until the actual investiture of the new members. | Paragraph 10. The term of office of the members of the Board of Directors shall be extended until the actual investiture of the new members. | No change
New ¶ 10
|
18 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 9. The term of office provided for in the main section of this article includes any previous terms of office in the last two (2) years. | Paragraph 11. The term of office provided for in the main section of this article includes any previous terms of office in the last two (2) years. | No change
New ¶ 11
|
Paragraph 10. Upon reaching the maximum term of office provided for in the main section of this article, the Director may only return after a period equivalent to one term of office has elapsed. |
Paragraph 12. Upon reaching the maximum term of office provided for in the main section of this article, the Director may only return after a period equivalent to one term of office has elapsed. | No change
New ¶ 12
|
Paragraph 11. The Chairman of the Board of Directors and their alternate shall be appointed by Eletrobras from among their appointed provided for in item IV, ¶ 1 of this article. | Proposed exclusion | |
Paragraph 13. The term of office of the members of the Board of Directors shall be extended until the actual investiture of the new members. | New wording Ok New ¶ 13 | |
Article 21. The Board of Directors shall meet, on an ordinary basis, once in a month, and, on an extraordinary basis, whenever necessary. | Article 31. The Board of Directors shall meet, on an ordinary basis, once in a month, and, on an extraordinary basis, whenever necessary. | No change New article 32 |
Paragraph 1. The Board of Directors shall meet at least twice a year in the presence of external auditors. | New Wording New ¶ 1 | |
Paragraph 1. The Board of Directors shall be convened by their chairman and their meetings shall be recorded in minutes, to be signed by all members present, which, when containing resolutions intended to produce effects before third parties, shall be filed with the competent Commercial Registry and published. | Paragraph 2. The Board of Directors shall be convened by their chairman and their meetings shall be recorded in minutes, to be signed by all members present, which, when containing resolutions intended to produce effects before third parties, shall be filed with the competent Commercial Registry and published. |
No change New ¶ 2 |
Paragraph 3. The meetings of the Board of Directors shall, as a rule, be held in person, accepting, on an exceptional basis, virtual means, or through teleconference or videoconference, upon reason approved by the collegiate body. | New wording New ¶ 3 |
19 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 4. In case of a non-unanimous decision, the justification of the conflicting vote shall be registered, at the relevant member’s discretion, as long as the dissident director expressing their disagreement in the minutes of the meeting or, if not possible, express their awareness in writing to the Board of Directors, is not held accountable therefor. | New wording New ¶ 4 | |
Paragraph 2. The monthly compensation due to the members of the Board of Directors, fixed by a General Meeting, shall not exceed ten percent (10%) of the average monthly compensation of the officers, except for the amounts related to vacation bonus and benefits, and the payment of any kind of profit sharing is prohibited. | Paragraph 5. The monthly compensation due to the members of the Board of Directors, fixed by a General Meeting, shall not exceed ten percent (10%) of the average monthly compensation of the officers, except for the amounts related to vacation bonus and benefits, and the payment of any kind of profit sharing is prohibited. | No change New ¶ 5 |
Paragraph 3. The members of the Board of Directors shall have their expenses of transportation and accommodation reimbursed whenever residing out of the city where the meeting is held, and only their transportation expenses when they reside in the city. | Paragraph 6. The members of the Board of Directors shall have their expenses of transportation and accommodation reimbursed whenever residing out of the city where the meeting is held, and only their transportation expenses when they reside in the city. | No change New ¶ 6
|
Article 22. It is incumbent upon the Board of Directors the establishment of general guidelines for the business of Eletronuclear, the ultimate control over the programs approved, as well as the verification of the results obtained. While discharging their duties, the Board of Directors is also responsible, without prejudice to the powers under the prevailing laws and regulations, for: | Article 32. It is incumbent upon the Board of Directors the establishment of general guidelines for the business of Eletronuclear, the ultimate control over the programs approved, as well as the verification of the results obtained. While discharging their duties, the Board of Directors is also responsible, without prejudice to the powers under the prevailing laws and regulations, for: | No change New article 32 |
I – resolving upon matters within their power pursuant to Eletrobras companies’ authority policy in effect; | I – resolving upon matters within their power pursuant to the | Wording removed |
II – authorizing Eletronuclear to take out loans or credit facilities in Brazil or abroad pursuant to Eletrobras companies’ authority policy in effect; | II – authorizing Eletronuclear to take out loans or credit facilities in Brazil or abroad pursuant to the | Wording removed |
20 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
III – authorizing the provision of guarantees for loans or credit facilities, whether in Brazil or abroad, pursuant to Eletrobras companies’ authority policy in effect; | III – authorizing the provision of guarantees for loans or credit facilities, whether in Brazil or abroad, pursuant to the | Wording removed |
IV – authorizing the performance of business acts aiming at the acquisition of goods and the contracting of works and services, pursuant to Eletrobras companies’ authority policy in effect; | IV – authorizing the performance of business acts aiming at the acquisition of goods and the contracting of works and services, pursuant to the | Wording removed |
V – electing and removing officers of the company officers and inspecting their management; | V – electing and removing officers of the company officers and inspecting their management; | No change |
VI – implementing and supervising the risk management systems, internal controls, and compliance established for preventing and mitigating the main risks to which Eletronuclear is exposed, including the risks related to the integrity of accounting and financial information and those related to bribery and fraud; | VI – implementing and supervising the risk management systems, internal controls, and compliance established for preventing and mitigating the main risks to which Eletronuclear is exposed, including the risks related to the integrity of accounting and financial information and those related to bribery and fraud; | No change |
VII – analyzing, at least on a quarterly basis, the interim balance sheet and other financial statements, without prejudice to the actions of the Fiscal Council; | VII – analyzing, at least on a quarterly basis, the interim balance sheet and other financial statements, without prejudice to the actions of the Fiscal Council; | No change |
VIII – resolving upon the formation of business consortiums or shares in companies directly or indirectly intended for the performance of the corporate purpose of Eletronuclear, under the concession, authorization, or permission regime, upon authorization of Eletrobras’ Board of Directors; | VIII – resolving upon the formation of business consortiums or shares in companies directly or indirectly intended for the performance of the corporate purpose of Eletronuclear, under the concession, authorization, or permission regime | Wording removed |
IX – approving the appointment, made by the Board of Executive Officers, of members to compose the boards of directors and inspector of the companies in which they have an interest, including associations and foundations, subjecting their choice for approval by Eletrobras; | IX – approving the appointment, made by the Board of Executive Officers, of members to compose the boards of directors and inspector of the companies in which they have an interest, including associations and foundations, | Wording removed |
X – approving the organizational structure of Eletronuclear; | X – approving the organizational structure of Eletronuclear; | No change |
21 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
XI – monitoring the company’s management through a request for information or examination of books and documents, as well as by requesting information about agreements executed or about to be executed and about any other acts; | XI – monitoring the company’s management through a request for information or examination of books and documents, as well as by requesting information about agreements executed or about to be executed and about any other acts; | No change |
XII – approving the management and internal control reports, as well as the account held by the Board of Executive Officers; | XII – approving the management and internal control reports, as well as the account held by the Board of Executive Officers; | No change |
XIII – authorizing Eletronuclear to issue securities, through its resolution and favorable opinion of Eletrobras; | XIII – authorizing Eletronuclear to issue securities | Wording removed |
XIV – choosing and removing independent auditors pursuant to the guidelines approved by Eletrobras, pursuant to the applicable laws and regulations; | XIV – choosing and removing independent auditors | Wording removed |
XV – resolving upon the appointment and dismissal of the holding of the office of Internal Audit, after approval of the Ministry of Transparency and the Brazilian Office of the Comptroller General, and the Office of the Ombudsman; | XV – resolving upon the appointment and dismissal of the holding of the office of Internal Audit, after approval of the Ministry of Transparency and the Brazilian Office of the Comptroller General, and the Office of the Ombudsman; | No change |
XVI – resolving upon the duties and operation of the Internal Audit and the Office of the Ombudsman; | XVI – resolving upon the duties and operation of the Internal Audit and the Office of the Ombudsman; | No change |
XVII – resolving upon proposals for the implementation of corrective measures or improvement of procedures and routines, as a result of the analysis of the claims received by the Office of the Ombudsman; | XVII – resolving upon proposals for the implementation of corrective measures or improvement of procedures and routines, as a result of the analysis of the claims received by the Office of the Ombudsman; | No change |
XVIII – requesting a periodic internal audit of the activities of the closed private pension entity that manages the company’s benefit plan; | XVIII – requesting a periodic internal audit of the activities of the closed private pension entity that manages the company’s benefit plan; | No change |
XIX – prepare, amend, and approve its Rules of Procedures, pursuant to the rules on composition and competence established in these Bylaws and in the prevailing legal rules, as well as to approve the Eletronuclear’s Rules of Procedures; | XIX – prepare, amend, and approve its Rules of Procedures, pursuant to the rules on composition and competence established in these Bylaws and in the prevailing legal rules, as well as to approve the Eletronuclear’s Rules of Procedures; |
No change |
22 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
XX – resolve upon the revenues estimated, expenses and investments of Eletronuclear for each exercise, proposals by the Board of Executive Officers; | XX – resolve upon the revenues estimated, expenses and investments of Eletronuclear for each exercise, proposals by the Board of Executive Officers; | No change |
XXI – resolve upon the compensation to the stockholders, based on the intermediaries results assessed under the applicable laws and regulations; | XXI – resolve upon the compensation to the stockholders, based on the intermediaries results assessed under the applicable laws and regulations; | No change |
XXII – resolve upon making and accepting donations with or without charges, pursuant to the provisions in the Compliance Manual and the Code of Ethics and Conduct of Eletrobras Companies, as well as the Authority Policy; | XXII – resolve upon making and accepting donations with or without charges, pursuant to the provisions in the Compliance Manual and the Code of Ethics and Conduct | Wording removed. |
XXIII – resolve upon the purchase, disposal, or encumbrance of personal and real properties, not related to the performance of Eletronuclear’s corporate purpose, consistent with the prevailing Eletrobras companies’ authority policy, as provided for in applicable laws and regulations; | XXIII – resolve upon the purchase, disposal, or encumbrance of personal and real properties, not related to the performance of Eletronuclear’s corporate purpose, consistent with the prevailing | Wording removed. |
XXIV – authorize the disposal or acquisition of personal and real properties, directly related to the compliance with of Eletronuclear’s corporate purpose, consistent with the prevailing Eletrobras companies’ authority policy, pursuant to the applicable laws and regulations; | XXIV – authorize the disposal or acquisition of personal and real properties, directly related to the compliance with of Eletronuclear’s corporate purpose, consistent with the prevailing | Wording removed. |
XXV – call the General Meetings; | XXV – call the General Meetings; | No change |
XXVI – approve the opening of branches, subsidiaries, agencies, and offices in Brazil or abroad, upon authorization by the Eletrobras Board of Directors; | XXVI – approve the opening and closing of branches, subsidiaries, agencies, and offices in Brazil or abroad | Wording included and removed. |
XXVII – resolve upon the removal of directors when the period is for more than thirty (30) consecutive days; | XXVII – resolve upon the removal of directors when the period is for more than thirty (30) consecutive days; | No change |
23 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
XXVIII – meeting at least one (1) time per year, without the presence of the Eletronuclear Chief Executive Officer, including for the approval of the Annual Internal Audit Activities Plan (PAINT) and of the Annual Internal Audit Activities Report – RAINT; | XXVIII – meeting at least one (1) time per year, without the presence of the Eletronuclear Chief Executive Officer, including for the approval of the Annual Internal Audit Activities Plan (PAINT) and of the Annual Internal Audit Activities Report – RAINT; | No change |
XXIX – resolve upon the use or exploitation, for any security, by any person or entity, of equipment, facilities, properties, or any other assets of the company not related to the concession, in accordance with the prevailing Eletrobras companies' authority policy; | XXIX – resolve upon the use or exploitation, for any security, by any person or entity, of equipment, facilities, properties, or any other assets of the company not related to the concession, in accordance with the prevailing | Wording removed. |
XXX – approve the Business and Management Plan according to the Master Plan of Business and Management and Strategic Plan of the Eletrobras companies; | XXX - approve and amend the business and management plan of Eletronuclear; | Wording removed. |
XXXI – approving the Business Performance Goals Agreement (CMDE), whereby Eletronuclear undertakes to comply with the strategic guidelines established aiming at meet the goals and results established by the parent company; | Proposed exclusion
Ok. | |
XXXII – carry out the performance evaluation, individual and collective, of the managers, at least one (1) time a year, pursuant to prevailing laws and regulations, based on the guidelines established by Eletrobras; | XXXII – carry out the performance evaluation, individual and collective, of the managers, at least one (1) time a year, pursuant to prevailing laws and regulations | Proposed exclusion |
XXXIII – approving the related-party transaction policy, pursuant to the competitiveness, compliance, transparency, equity, and arm’s length requirements, which shall be revised at least every year; | XXXIII – approving the related-party transaction policy, pursuant to the competitiveness, compliance, transparency, equity, and arm’s length requirements, which shall be revised at least every year; | No change |
XXXIV – resolve upon the creation, operation, by means of rules of procedures, and dismissal of Supporting Committees to the Board of Directors for the deepening of strategic studies, as well as to elect and remove their members, provided the prevailing laws and regulations; | XXXIV – resolve upon the creation, operation, by means of rules of procedures, and dismissal of Supporting Committees to the Board of Directors for the deepening of strategic studies, as well as to elect and remove their members, provided the prevailing laws and regulations; | No change |
XXXV - grant optional vacation or license to the Chief Executive Officer; | XXXV - grant optional vacation or license to the Chief Executive Officer; | No change |
24 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
XXXVI – approve the personnel regulation and establishing the quantitative of positions of trust of the Eletronuclear top management, upon approval of the Eletrobras’s Board of Directors; | XXXV – approve the personnel regulation and establishing the quantitative of positions of trust of the Eletronuclear top management | Proposed exclusion | |
XXXVII – approve the maximum quantitative of staff and the performance of public sector recruitment examination of Eletronuclear, upon prior approval of Eletrobras’s Board of Directors; | XXXVI – approve the maximum quantitative of staff and the performance of public sector recruitment examination of Eletronuclear, | Proposed exclusion | |
XXXVIII – approving and inspecting the achievement of specific goals and results by the members of the Board of Executive Officers; | XXXVIII – approving and inspecting the achievement of specific goals and results by the members of the Board of Executive Officers; | No change | |
XXXIX – annually analyzing the achievement of goals and results in the implementation of the business and management plan, publishing their conclusions and informing the National Congress and the Brazilian Government Accountability Office about them, pursuant to the prevailing laws and regulations; | XXXIX – annually analyzing the achievement of goals and results in the implementation of the business and management plan, publishing their conclusions and informing the National Congress and the Brazilian Government Accountability Office about them, pursuant to the prevailing laws and regulations; | No change | |
XL – resolve upon agreements related to the electricity and fuel trading and to the transactions for engagement of financial and social security instruments accepted and required in order to ensure the legal proceedings and for the financial settlement of the operations conducted in the scope of the Electricity Trading Chamber – CCEE, as well as in the cases of export of energy, observing: | XXIX – resolve upon agreements related to the trading of electricity and fuel and to the transactions for engagement of financial and social security instruments accepted and required in order to guarantee legal proceedings and for the financial settlement of the transactions conducted in the scope of the Electricity Trading Chamber – CCEE, as well as in the cases of export of energy, observing the limits for approval of electricity purchase agreements and following acts linked to them, including engagement of the financial and social security instruments accepted and required as guarantee, consistent with the authorization policy in effect. | Proposed amendment to the wording, including sub-items “a” and “b” below.
| |
a) the policies and criteria established by Eletrobras; and | Proposed Exclusion Moved to XXIX | ||
25 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
b) the limits of approval for electricity purchase agreements and following acts linked to them, including engagement the financial and social security instruments accepted and required in order to ensure, consistent with the Authorization Policy of the Eletrobras companies. | Proposed Exclusion
Moved to XXIX | |
XLI – forward to the Eletrobras’ Board of Directors, or to whomever it delegates, upon request, a report on the results of the electricity trading, including the last accounting report available at CCEE; | XL – forward to the Board of Directors of ENBpar and to the individual holders of shares representing ten percent (10%) or more of the Company’s capital stock | Proposed Wording included |
XLII – discussing, approving, and monitoring decisions involving corporate governance practices, relationship with stakeholders, people management policy, and code of conduct of the agents, pursuant to the Eletrobras guidelines; | XLI – discussing, approving, and monitoring decisions involving corporate governance practices, relationship with stakeholders, people management policy, and code of conduct of the agents | Proposed wording exclusion |
XLIII – resolving upon the shareholders’ agreements to be executed by Eletronuclear, if any, and its subsidiaries, if any, prior to the execution, upon compliance with the prevailing laws and regulations; upon a favorable opinion of Eletrobras; | XLIII – resolving upon the shareholders’ agreements to be executed by Eletronuclear, if any, and its subsidiaries, if any, prior to the execution, upon compliance with the prevailing laws and regulations; | Proposed wording exclusion |
XLIV – express an opinion on the proposals to be submitted to the shareholders’ resolution at the general meeting. | XLIII – express an opinion on the proposals to be submitted to the shareholders’ resolution at the general meeting. | No change |
XLV – approving the Bidding Process Regulations; | XLIV – approving the Bidding Process Regulations; | No change |
XLVI – express on the report submitted by the Board of Executive Officers arising from the internal audit on the activities of the closed private pension fund; | XLV – express on the report submitted by the Board of Executive Officers arising from the internal audit on the activities of the closed private pension fund; | No change |
XLVII – express on the compensation of the members of the Executive Officers and participation in the company’s profits; | LVI – express (as an opinion only) on the compensation of the members of the Executive Officers and participation in the company’s profits; | Proposed wording included |
XLVIII – ratify the policies approved by the Eletrobras’ Board of Directors, when so established; | Proposed exclusion | |
XLIX – establishing a spokesperson policy aiming at eliminating the risk of contradiction between information from different areas and that provided by the executives of the company; and | XLVII – establishing a spokesperson policy aiming at eliminating the risk of contradiction between information from different areas and that provided by the executives of the company; and | No change
New XLVII |
26 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
L – decide the events not provided for in this Bylaws. | XLVIII – decide the events not provided for in this Bylaws. | No change
New XLVIII
|
Paragraph 1. The number of positions of trust in the top management of Eletronuclear and the maximum number of personnel approved by the Board of Directors under items XXXVI and XXXVII of this article, shall be subject, under law, to the approval of the Office for Coordination and Governance of State-Owned Companies – SEST. | Paragraph 1. The number of positions of trust in the top management of Eletronuclear and the maximum number of personnel approved by the Board of Directors under items XXXV and XXXVI | Wording rectified
|
Paragraph 2. The matters to be submitted to the Board of Directors for appreciation shall be supported by the Board Of Executive Officers. | Paragraph 2. The matters to be submitted to the Board of Directors for appreciation shall be supported by the Board Of Executive Officers. | No change
|
Paragraph 3. The disclosure obligation referred to in item XXXIX excludes strategic information which disclosure may prove to be harmful to the company's interests. | Paragraph 3. The disclosure obligation referred to in item XXXVIII excludes strategic information which disclosure may prove to be harmful to the company's interests. | Wording rectified
|
Paragraph 4. The Eletronuclear’s Board of Directors shall be advised by the Eletrobras Audit and Risk Committee and Management, Personnel and Eligibility Committee with regard to the duties of the Audit and Eligibility Committees provided for in Law No. 13,303/16 and its regulations. | Proposed exclusion
Moved to chapter VIII
Ok.
| |
Article 23. The Board of Directors shall submit to the Fiscal Council for evaluation, the annual management’s report and the respective financial statements for each fiscal year. | Article 33. The Board of Directors shall submit to the Fiscal Council for evaluation, the annual management’s report and the respective financial statements for each fiscal year. | No change
New article 33. |
27 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 24. The Board of Directors, every year, shall examine and submit to the Annual General Meeting, the Management Report and the financial statements prepared by the Board of Executive Officers according to the prevailing corporate laws and regulations, as well as the proposal for distribution of dividends and allocation of any surplus, attaching thereto the opinion of the Fiscal Council and the certificate of the independent auditors. | Article 34. The Board of Directors, every year, shall examine and submit to the Annual General Meeting, the Management Report and the financial statements prepared by the Board of Executive Officers according to the prevailing corporate laws and regulations, as well as the proposal for distribution of dividends and allocation of any surplus, attaching thereto the opinion of the Fiscal Council and the certificate of the independent auditors. | No change
New article 34. |
Chapter VIII Follow-up Committee of Angra 3 (COANGRA)
| Inclusion as a result of the Shareholders’ Agreement. | |
Article 35. The Follow-up Committee of Angra 3 (COANGRA), on a provisional basis, until start-up of Angra 3 Nuclear Power Plant, shall advice the Board of Directors of the Company, including perform analysis and issue a prior opinions on the contracting of goods, services, works, financing, and guarantees linked to the Angra 3 project. | New wording (Shareholders’ agreement).
New article 36 | |
Article 36. COANGRA shall be composed of five (5) effective members, and one of them shall mandatorily be an external and independent member, to be appointed by the Board of Directors for a three (3)-year term of office, re-election allowed. | New wording (Shareholders’ agreement).
New article 37 | |
Sole Paragraph. In case of vacancy in COANGRA, the Chairman of the Board of Directors shall call a meeting to elect a new member to hold office. | New wording (Shareholders’ agreement).
| |
Article 37. The investiture of the members of COANGRA shall observe the conditions imposed by the applicable laws and regulations, as well as those provided for in internal regulations. |
New wording (Shareholders’ agreement).
New article 37 | |
Paragraph 1. The members of COANGRA shall take office regardless of signing the instrument of investiture.
| New wording (Shareholders’ agreement). New ¶ 1 |
28 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 2. The monthly compensation due to the members of COANGRA, fixed by the General Meeting, shall not exceed [ten percent (10%)] of the average monthly compensation of the officers, except for the amounts related to vacation bonus and benefits, and the payment of profit sharing and compensation in an amount higher than that paid to the Directors is prohibited. | New wording (Shareholders’ agreement). New ¶ 2 | |
Paragraph 3. The defense and the take out of insurance pursuant to ¶¶ 1 and 6 of Art. 28 of these Bylaws apply to the members of COANGRA.
| New wording (Shareholders’ agreement). New ¶ 3 | |
Paragraph 4. The restrictions provided for in ¶ 2 of Art. 24 of these bylaws apply to the members of COANGRA. | New wording (Shareholders’ agreement). New ¶ 4 | |
Paragraph 5. COANGRA may request the Company to appoint qualified personnel to act as a secretary and provide technical support.
| New wording (Shareholders’ agreement). New ¶ 5 | |
Article 38. The Board of Directors shall count on the support of the Audit Committee, Risk Committee, and the People, Eligibility, Succession, and Compensation Committee.
| New article 38 | |
Paragraph 1. The committees mentioned in the main section of this article shall have their operating rules provided for in their relevant rules of procedure, as defined by Law No. 13,303/16 and other applicable laws and regulations. | New ¶ 1 | |
Paragraph 2. Without prejudice to the legal powers, the Eletronuclear’s Board of Directors may establish additional duties to the Audit Committee and the Risk Committee and extend its scope and operation to the subsidiaries of Eletronuclear. | New ¶ 2 |
29 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 3. The Audit Committee and the Risk Committee, on a permanent basis, shall each be composed of three active members of the Board of Directors (one of them being one of the independent directors) and two independent members, for terms of office not coincident and independent of the term of office in the Board of Directors, and shall further satisfy the conditions imposed by the applicable laws and regulations and internal regulations. | New ¶ 3 | |
Paragraph 4. The members of the Audit Committee and the Risk Committee must have work experience or education consistent with the position, preferably in the area of accounting, auditing, or in operating sector of the Company, and at least one (1) member of the Audit Committee must have work experience in corporate accounting matters. | New ¶ 4 | |
Paragraph 5. The members of the Audit Committee and the Risk Committee, in their first meeting, shall elect their Chairman, who shall be an independent member of the Board of Directors and responsible for enforcing the resolutions of the body, registered on the book of minutes. | New ¶ 5 | |
Paragraph 6. The People, Eligibility, Succession, and Compensation Committee shall express itself on the observance of the requirements and prohibitions to members. | New ¶ 6 |
30 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 7. The Audit Committee and the Risk Committee shall have operational autonomy and funds, annual or by project, within the allowable limits approved by the General Meeting, to conduct or determine the conduction of inquiries, assessments, and investigations within the scope of their activities, including hiring independent experts.
| New ¶ 7 | |
Paragraph 8. The compensation of the members of the Company’s Committees shall be fixed by the General Meeting at an amount not higher than the compensation of the fiscal counselors. | New ¶ 8 | |
Paragraph 9. The members of the Board of Directors holding an office in the Audit Committee or Risk Committee of the Company itself shall choose to be compensated as members of such committee. | New ¶ 9 | |
Paragraph 10. The term of office of the members of the Audit Committee and the Risk Committee shall be two (2) years, non-coincident for each member of the relevant Committee, and a single re-election is allowed.
| New ¶ 10 | |
Paragraph 11. In case of vacancy of a member of the Audit Committee or Risk Committee, the Board of Directors shall elect their successor to begin a new term of office. | New ¶ 11 | |
Paragraph 12. The office of a member of the Audit Committee and the Risk Committee is personal and accepts no temporary alternate. In case of absences or any disqualification of any member of the committee, it shall hold meetings with the remaining members, pursuant to the minimum quorum of three members. | New ¶ 12 | |
Paragraph 13. At least one of the members of the Audit Committee and the Risk Committee shall attend the meetings of the Board of Directors addressing the periodic accounting statements, retainment of an independent auditor, and the Annual Internal Audit Activity Plan (PAINT). | New ¶ 13 |
31 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 14. The Audit Committee and the Risk Committee are governed, regarding other matters, including its meetings and powers, by the provisions in Law 13,303/2016 and its regulatory decree.
| New ¶ 14 | |
Paragraph 15. Whenever there is a need to assess transactions with the Federal Government, its independent agencies and foundations, and federal state-owned companies, provided that outside the ordinary course of business of the Company and within the approval authority of the Board of Directors, the Audit Committee and the Risk Committee shall provide prior advice, issuing their opinion on the intended transaction. | New ¶ 15 | |
Paragraph 16. The People, Eligibility, Succession, and Compensation Committee is responsible for advising shareholders and the Board of Directors in the appointment, evaluation, succession, and compensation procedures related to the managers, fiscal counselors, in addition to other duties assigned thereto by the Board of Directors and included in its Rules of Procedures. | New ¶ 16 |
32 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 17. Without prejudice to the provisions in the preceding paragraph and other powers provided for in Decree 8,945/2016, the People, Eligibility, Succession, and Compensation Committee is responsible for: I – providing opinions as to assist the members of the Board of Directors in the appointment of Officers; II – assisting the Board of Directors in the preparation and monitoring of the manager succession plan; and III – assisting the Board of Directors in the evaluation of proposals related to the personnel policy and its monitoring. | New ¶ 17 | |
Paragraph 18. The committee’s opinion shall be forwarded to the Board of Directors, which shall include, in the management proposal for the General Meeting including the election of members of the Board of Directors and the Fiscal Council in the agenda, its opinion regarding the eligibility of those appointed concerning the legal, regulatory, and statutory requirements and prohibitions in light of the self-declaration and documents submitted by the person appointed and the committee’s opinion.
| New ¶ 18 | |
Paragraph 19. The same procedure described in the preceding paragraph shall be followed in the election of Officers, and the Committee’s opinion shall be included in the minutes of the meeting of the Board of Directors which agenda is the election of Executive Officers. | New ¶ 19 | |
Paragraph 20. The People, Eligibility, Succession, and Compensation Committee shall be composed of a total of three (3) to five (5) members, which shall be members of the Board of Directors, without additional compensation, and it may also count on up to two (2) external members compensated at a fixed amount defined by the General Meeting and subject to the duties and responsibilities referred to in Art. 165 of Law 6,404/76, to serve for a two(2)-year term.
| New ¶ 20 |
33 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 21. The minutes of the meetings of the People, Eligibility, Succession, and Compensation Committee addressing the eligibility of managers and/or fiscal counselors shall be disclosed on the Company’s website, and it may also be partially disclosed in case it also addresses other matters of miscellaneous and strategic nature for the Company. | New ¶ 21 | |
Paragraph 22. The restriction referred to in the preceding paragraph shall not be enforceable by the regulatory authorities, which shall have full and unrestricted access to the content of the minutes of the People, Eligibility, Succession, and Compensation Committee, pursuant to the transfer of confidentiality and the provisions in Law No. 13,709/2018 regarding the processing of personal data.
| New ¶ 22 | |
Chapter IX Board of Executive Officers
| Chapter IX Board of Executive Officers
| |
Article 25. The Board of Executive Officers is the executive management and representation body, and it is incumbent on it, pursuant to the guidance outlined by the General Meeting and by the Board of Directors, to ensure the Eletronuclear’s regular operation.
| Article 39. The Board of Executive Officers is the executive management and representation body, and it is incumbent on it, pursuant to the guidance outlined by the General Meeting and by the Board of Directors, to ensure the Eletronuclear’s regular operation.
| No change
New article 39 |
34 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Sole paragraph. The Chairman and the officers may not perform their management, administration, or consulting duties in private companies, electric utilities, or private law companies related in any way to Eletronuclear’s corporate purpose, except for the holding, subsidiaries, or affiliates, special purpose entities, and state-owned or private electric utilities in which the holding or the company have an ownership interest, where they may hold offices in the Board of Directors and the Fiscal Council, pursuant to the prevailing laws and regulations on compensation and prohibitions thereon. | Proposed Exclusion | |
Article 26. The Board of Executive Officers shall be composed of the Chairman and up to five (5) officers, observing the minimum of three (3) members, all elected by the Board of Directors, who shall work full time, with a unified two (2)-year term of office, being no more than three (3) consecutive reelections allowed. | Article 40. The Board of Executive Officers shall be composed of six (6) members, being the Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, Chief Operation and Trading Officer, Chief Technical Officer, and one Officer of Angra 3, all elected by the Board of Directors, who shall work full time, with a unified two (2)-year term of office, being no more than three (3) consecutive reelections allowed. | Wording included
(Shareholders’ agreement).
New article 40 |
Paragraph 1. The term of office of the Executive Officers shall be extended until the actual investiture of the new members. | Paragraph 1. The term of office of the Executive Officers shall be extended until the actual investiture of the new members. | No change |
Paragraph 2. The term of office provided for in the main section of this article includes any previous terms of office in the last two (2) years and the reassignment of the Officer to another Division. | Paragraph 2. The term of office provided for in the main section of this article includes any previous terms of office in the last two (2) years and the reassignment of the Officer to another Division. | No change |
Paragraph 3. Upon reaching the maximum term of office provided for in the main section of this article, the officer may only return after a period equivalent to one term of office has elapsed. | Paragraph 3. Upon reaching the maximum term of office provided for in the main section of this article, the officer may only return after a period equivalent to one term of office has elapsed. | No change |
35 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 4. The commitment to specific goals and results to the achieved, which shall be approved by the Board of Directors, is a condition for investiture in a management office.
| Paragraph 4. The commitment to specific goals and results to the achieved, which shall be approved by the Board of Directors, is a condition for investiture in a management office.
| No change |
Article 27. The members of the Board of Executive Officers may not leave office for more than thirty calendar days, except for vacation or medical leave, as well as if authorized by the Board of Directors under these Bylaws, under penalty of being removed from office. | Article 41. The members of the Board of Executive Officers may not leave office for more than thirty calendar days, except for vacation or medical leave, as well as if authorized by the Board of Directors under these Bylaws, under penalty of being removed from office. | No change
New article 41. |
Paragraph 1. The members of the Board of Executive Officers shall be entitled, on an annual basis, to [thirty (30)] days of paid leave, which may accumulate up to no more than two periods, and it is prohibited to exchange this leave for cash or compensation. | New wording
New paragraph ¶ 1 | |
Paragraph 1. The payment in double of the compensation related to vacations not taken during the concessionary period is forbidden. | Paragraph 2. The payment in double of the compensation related to vacations not taken during the concessionary period is forbidden. | No change New paragraph ¶ 2 |
Paragraph 2. In case of temporary disqualification, license, or vacation of any Executive Officers, the alternate shall be appointed among the other Executive Officers. | Paragraph 3. In case of temporary disqualification, license, or vacation of any Executive Officers, the alternate shall be appointed among the other Executive Officers. | No change
New paragraph ¶ 3 |
36 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 28. If an office in the Board of Executive Officers is permanently vacated, the same replacement criterion in ¶ 2 of art. 27 shall apply, until the meeting of the Board of Directors resolving upon the final replacement and investing the new officer in office is held, so occupying the vacant office for the remaining term of office of the replaced officer. | Article 42. If an office in the Board of Executive Officers is permanently vacated, the same replacement criterion in ¶ 2 of art. 27 shall apply, until the meeting of the Board of Directors resolving upon the final replacement and investing the new officer in office is held, so occupying the vacant office for the remaining term of office of the replaced officer. | No change
New article 42 |
Article 29. The members of the Board of Executive Officers are prohibited from developing activities representing a conflict of interest, as and for the term established in the applicable laws and regulations. | Article 43. The members of the Board of Executive Officers are prohibited from developing activities representing a conflict of interest, as and for the term established in the applicable laws and regulations. | No change
New article 43 |
Paragraph 1. After discharging their management duties, the former member of the Board of Executive Officers who is disqualified may receive an indemnification equivalent only to the fixed monthly compensation for the office they used to hold, pursuant to ¶¶ 2 and 3 of this article. | Paragraph 1. After discharging their management duties, the former member of the Board of Executive Officers who is disqualified may receive an indemnification equivalent only to the fixed monthly compensation for the office they used to hold, pursuant to ¶¶ 2 and 3 of this article. | No change |
Paragraph 2. The disqualification shall be previously verified by the Public Ethics Committee of the Presidency of the Republic. | Paragraph 2. The disqualification shall be previously verified by the Public Ethics Committee of the Presidency of the Republic. | No change |
Paragraph 3. A former member of the Board of Executive Officers returning, before the expiration of the disqualification term, to the office they used to hold in the public or private management before their investiture, as long as does not represent a conflict of interest, shall not be entitled to indemnification. | Paragraph 3. A former member of the Board of Executive Officers returning, before the expiration of the disqualification term, to the office they used to hold in the public or private management before their investiture, as long as does not represent a conflict of interest, shall not be entitled to indemnification. | No change |
37 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 30. In the performance of its duties, it is incumbent upon the Board of Executive Officers, with due respect to the guidelines and policies established by the Eletronuclear’s Board of Directors: | Article 44. In the performance of its duties, it is incumbent upon the Board of Executive Officers, with due respect to the guidelines and policies established by the Eletronuclear’s Board of Directors: | No change
New article 44 |
I – approve, in harmony with the fundamental guidelines established the Board of Directors, standards guiding Eletronuclear’s actions; | I – approve, in harmony with the fundamental guidelines established the Board of Directors, standards guiding Eletronuclear’s actions; | No change |
II – prepare issuance plans of securities to be submitted to the Board of Directors evaluation and subsequently to the General Meeting; | II – prepare issuance plans of securities to be submitted to the Board of Directors evaluation and subsequently to the General Meeting; | No change |
III – prepare and submit to the approval of the Board of Directors: | III – prepare and submit to the approval of the Board of Directors: | No change |
a) – the Eletronuclear Business and Management Plan to exercise the following year, consistent with the Business and Management Master Plan and the Strategic Plan of the Eletrobras companies, and the updated long-term strategy with a risk analysis and opportunities for at least the next five (05) years, by the last annual meeting of the Board of Directors of the previous year; | a) – the Eletronuclear Business and Management Plan to exercise the following year, | Wording removed |
b) – the Eletronuclear annual expenditures and investments programs with the corresponding projects; | b) – the Eletronuclear annual expenditures and investments programs with the corresponding projects; | No change |
c) – the Eletronuclear costing and investment budgets; and | c) – the Eletronuclear costing and investment budgets; and | No change |
d) – the evaluation of the performance results of the Eletronuclear’s activities; | d) – the evaluation of the performance results of the Eletronuclear’s activities; | No change |
IV – preparing, amending, and approving its Rules of Procedures; | IV – preparing, amending, and approving its Rules of Procedures; | No change |
38 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
V – decide on contracts for works, contractors, inspection, service rental, consulting services, supplies, and the like involving financial resources consistent with the prevailing Eletrobras companies’ authority policy; | V – decide on contracts for works, contractors, inspection, service rental, consulting services, supplies, and the like involving financial resources consistent with the prevailing | Wording removed |
VI – approve standards for the assignment of the use, rental or leasing of real properties owned by Eletronuclear; | VI – approve standards for the assignment of the use, rental or leasing of real properties owned by Eletronuclear; | No change |
VII – approve management, technical, financial, and accounting manuals and standards, and other regulatory acts required to operation’s instruction of Eletronuclear; | VII – approve management, technical, financial, and accounting manuals and standards, and other regulatory acts required to operation’s instruction of Eletronuclear; | No change |
VIII – submit to the approval of the Board of Directors a proposal on plans providing for the hiring, career, access, advantages, and regulatory regime for the Eletronuclear’s employees, subject to the provisions in the bylaws and in the Holding’s guidelines; | VIII – submit to the approval of the Board of Directors a proposal on plans providing for the hiring, career, access, advantages, and regulatory regime for the Eletronuclear’s employees | Wording removed |
IX – approve the names appointed by the executive officers to fill positions directly conditioned upon, subject to the provisions in the Bylaws and in the guidelines the Holdings; | IX – approve the names appointed by the executive officers to fill positions directly conditioned upon | Wording removed. |
X – delegating powers to the officers to separately resolve upon matters included in the powers of the Board of Executive Officers; | X – delegating powers to the officers to separately resolve upon matters included in the powers of the Board of Executive Officers; | No change |
XI – delegate powers to the Chief Executive Officer, officers, and employees for authorizing expenses, establishing limitations and conditions, consistent with the prevailing policy at Eletrobras companies; | XI – delegate powers to the Chief Executive Officer, officers, and employees for authorizing expenses, establishing limitations and conditions, consistent with the prevailing policy | Wording removed. |
39 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
XII – expressing themselves in cases of hiring, praising, punishment, reassignment, and dismissal of employees directly reporting to the officers; | XII – expressing themselves in cases of hiring, praising, punishment, reassignment, and dismissal of employees directly reporting to the officers; | No change |
XIII – promote and providing the internal organization, keeping it constantly updated; | XIII – promote and providing the internal organization, keeping it constantly updated; | No change |
XIV – forward to the Board of Directors requests aiming at the funding, taking out loans and financing, providing guarantees, and interesting in partnerships, in Brazil or abroad, consistent with Eletrobras companies’ Authority Policy; | XIV – forward to the Board of Directors requests aiming at the funding, taking out loans and financing, providing guarantees, and interesting in partnerships, in Brazil or abroad, consistent with | Wording removed. |
XV – propose judicial or out-of-court waivers or transactions to put an end to disputes or outstanding issues, submitting them for approval by the Board of Directors, except for those cases already regulated by law and provided to the limit established by prevailing laws and regulations; | XV – propose judicial or out-of-court waivers or transactions to put an end to disputes or outstanding issues, submitting them for approval by the Board of Directors, except for those cases already regulated by law and provided to the limit established by prevailing laws and regulations; | No change |
XVI – prepare, for each exercise, the financial statements as established by the prevailing corporate laws and regulations, submitting them for examination by independent auditors, as well as prepare the proposal for distribution of dividends and application of the exceeding amounts, to be submitted to the Board of Directors, the Fiscal Council, and the Eletrobras Audit and Risks Committee, and, for review and resolution to the General Meeting; | XVI – prepare, for each exercise, the financial statements as established by the prevailing corporate laws and regulations, submitting them for examination by independent auditors, as well as prepare the proposal for distribution of dividends and application of the exceeding amounts, to be submitted to the Board of Directors, the Fiscal Council, and the Eletrobras Audit and Risks Committee, and, for review and resolution to the General Meeting; | |
XVII – designate employees of Eletronuclear for missions abroad, with due regard for the approval procedures with the parent company; | XVII – designate employees of Eletronuclear for missions abroad, with due regard for the approval procedures with the parent company; | No change |
40 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
XVIII – manage Eletronuclear’s funds and formalizing obligations as a whole, upon execution of the Chief Executive Officer and of an officer on the corresponding obligation instruments, and it may to delegate this power to attorneys-in-fact or employees of Eletronuclear listed in specific Board of Executive Officers’ acts, consistent with the prevailing Eletrobras companies’ Authority Policy; | XVIII – manage Eletronuclear’s funds and formalizing obligations as a whole, upon execution of the Chief Executive Officer and of an officer on the corresponding obligation instruments, and it may to delegate this power to attorneys-in-fact or employees of Eletronuclear listed in specific Board of Executive Officers’ acts, consistent with the prevailing | Wording removed. |
XIX – authorize vacations or licenses for up to thirty (30) days for any of their executives, except for the chief executive officer, appointing the alternate pursuant to ¶ 2 of article 27 of these Bylaws; | XIX – authorize vacations or licenses for up to thirty (30) days for any of their executives, except for the chief executive officer, appointing the alternate pursuant to ¶ 2 of article 27 of these Bylaws; | No change |
XX – resolve upon the purchase, disposal, or encumbrance of personal and real properties consistent with the prevailing Policy of Authority of Eletrobras companies; | XX – resolve upon the purchase, disposal, or encumbrance of personal and real properties consistent with the prevailing Policy of Authority | Wording removed. |
XXI – inspecting and monitoring the limited liability companies, including the Special Purpose Entities – SPEs, in which they hold an ownership interest, regarding the governance practices, the results presented, and control, proportional to the relevance, materiality, and risks posed by the business; and | XXI – inspecting and monitoring the limited liability companies, including the Special Purpose Entities – SPEs, in which they hold an ownership interest, regarding the governance practices, the results presented, and control, proportional to the relevance, materiality, and risks posed by the business; and | No change |
XXII – approve voting instruction for Eletronuclear representatives at the Meetings of the companies in which it holds an equity interest, if any. | XXII – approve voting instruction for Eletronuclear representatives at the Meetings of the companies in which it holds an equity interest, if any. | No change |
41 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 31. The Board of Executive Officers shall meet, on an ordinary basis, once a week, with the majority of their executive officers and, on an extraordinary basis, by means of the Chief Executive Officer’ call and its meetings shall be recorded in minutes, which shall be signed by all members present. | Article 45. The Board of Executive Officers shall meet, on an ordinary basis, once a week, with the majority of their executive officers and, on an extraordinary basis, by means of the Chief Executive Officer’ call and its meetings shall be recorded in minutes, which shall be signed by all members present. | No change New article 45 |
Paragraph 1. The meetings of the Board of Directors shall, as a rule, be held in person, accepting, on an exceptional basis, virtual means, or through teleconference or videoconference, upon a reason approved by the collegiate body. | New wording Ok | |
Paragraph 2. In case of a non-unanimous decision, the justification of the conflicting vote shall be registered, at the relevant member’s discretion, as long as the dissident officer expressing their disagreement in the minutes of the meeting or, if not possible, express their awareness in writing to the Board of Executive Officers, is not held accountable therefor. | New wording Ok | |
Chapter VIII Duties of the Chief Executive Officer and the Officers
|
Chapter X Duties of the Chief Executive Officer and the Officers | New chapter X |
Article 32. Without prejudice to the other duties of the Board of Executive Officers, it is incumbent on the Chief Executive Officer, in addition to the direction of the administrative policy and the representation of Eletronuclear: | Article 46. Without prejudice to the other duties of the Board of Executive Officers, it is incumbent on the Chief Executive Officer, in addition to the direction of the administrative policy and the representation of Eletronuclear: | No change
New article 46 |
I – supervise Eletronuclear businesses; | I – supervise Eletronuclear businesses; | No change |
42 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
II – coordinate, by means of the actions of the Boards of Executive Officers, the Eletronuclear’s activities, and, directly, those related to the Legal Superintendent’s Office, Social Communication, Governance, Risk and Compliance Management, Nuclear Safety, and Business Planning; | II – coordinate, by means of the actions of the Boards of Executive Officers, the Eletronuclear’s activities, and, directly, those related to the Legal Superintendent’s Office, Social Communication, Governance, Risk and Compliance Management, Nuclear Safety, and Business Planning; | No change |
III – request Eletronuclear, judicially or extrajudicially, or even before other companies, shareholders, or the general public, and inspection and control agencies, and it may to delegate such powers to any Officer, as well as appointing representatives, attorneys, agents or attorneys-in-fact; | III – request Eletronuclear, judicially or extrajudicially, or even before other companies, shareholders, or the general public, and inspection and control agencies, and it may to delegate such powers to any Officer, as well as appointing representatives, attorneys, agents or attorneys-in-fact; | No change |
IV – hire and dismiss employees; | IV – hire and dismiss employees; | No change |
V – formalizing the appointments approved by the Board of Executive Officers; | V – formalizing the appointments approved by the Board of Executive Officers; | No change |
VI – designating an electoral commission aiming at organizing the election of a representative for the employees in the Board of Directors, also being responsible for announcing the winning candidate and communicating the result to the controlling partner for the adoption of the measures required for the appointment of the employees’ representative in the Board of Directors; | VI – designating an electoral commission aiming at organizing the election of a representative for the employees in the Board of Directors, also being responsible for announcing the winning candidate and communicating the result to the controlling partner for the adoption of the measures required for the appointment of the employees’ representative in the Board of Directors; | No change |
VII – discharging other duties that may be established by the Board of Directors. | VII – discharging other duties that may be established by the Board of Directors. | No change |
Article 33. The other Officers are responsible, without prejudice to other activities assigned thereto by the Board of Directors, for: | Article 47. The other Officers are responsible, without prejudice to other activities assigned thereto by the Board of Directors, for: | No change New Art. 47. |
43 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 1. The Chief Financial Officer is responsible for planning, coordinating, and proposing guidelines, plans, and goals for the Financial Planning and Budget activities covering: economic and financial analyses, tariff studies, budgets, establishing contacts and understandings with clients, business, banking, and/or government authorities; as well as promoting, through the area responsible for the bidding and management of purchase agreements, and supply of goods and services in the Company, following an approved schedule.
| New wording (Shareholders’ agreement). | |
Paragraph 2. The Chief Administrative Officer is responsible for: | New wording (Shareholders’ agreement). | |
I. preparing the Company’s People Management Policy and guide its implementation, focusing on the valorization and development, health and safety of human beings; emphasis in obtaining engagement and materializing results; effectiveness in training the staff in the management, technical, and administrative areas; as well as conducting activities related to Labor and Union Relations; and
| New wording | |
II. planning, coordinating, supervising, and managing the activities and services related to information technology, including: development, maintenance of systems and apps, support for computer equipment and corporate telecommunications in the Company, together with the other areas involved. | New wording | |
Paragraph 3. The Chief Operating Officer is responsible for: | Paragraph 3 – The Chief Operating Officer is responsible for: | No change |
I. promoting the implementation of policies, guidelines, and rules to be adopted in Angra nuclear power plants’ operational activities, as well as in the trading of electricity generated in these plants; | I. promoting the implementation of policies, guidelines, and rules to be adopted in Angra nuclear power plants’ operational activities, as well as in the trading of electricity generated in these plants; | No change |
44 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
II. assessing and recommending new trading alternatives for energy production, resulting from electric power or economic and financial studies conducted under his/her initiative and jurisdiction; and | II. assessing and recommending new trading alternatives for energy production, resulting from electric power or economic and financial studies conducted under his/her initiative and jurisdiction; and | No change |
III. promoting the operation and maintenance of the Plants, ensuring that the following activities are developed by the own agencies under his/her jurisdiction: | III. promoting the operation and maintenance of the Plants, ensuring that the following activities are developed by the own agencies under his/her jurisdiction: | No change |
a) assessment of nuclear safety and operational performance of the Plant's systems, components, facilities, and equipment, carrying out studies and corrective actions, ensuring that safety limits and operational capacity are respected and maintaining reliability with the energy system; | a) assessment of nuclear safety and operational performance of the Plant's systems, components, facilities, and equipment, carrying out studies and corrective actions, ensuring that safety limits and operational capacity are respected and maintaining reliability with the energy system; | No change |
b) monitoring the Plants’ activities with the systematic evaluation of results and the identification of needs for improvements; | b) monitoring the Plants’ activities with the systematic evaluation of results and the identification of needs for improvements; | No change |
c) continuous promotion of a high standard of performance and reliability for the operation of the Plants; and | c) continuous promotion of a high standard of performance and reliability for the operation of the Plants; and | No change |
d) supervision of compliance with legal and regulatory rules and performance of obligations required in the Plant’s Operating License, and carrying out the activities necessary for the licensing of operators; as well as promoting the planning and coordination of activities related to radiological protection, preservation and monitoring of the environment, and occupational safety;
| d) supervision of compliance with legal and regulatory rules and performance of obligations required in the Plant’s Operating License, and carrying out the activities necessary for the licensing of operators; as well as promoting the planning and coordination of activities related to radiological protection, preservation and monitoring of the environment, and occupational safety;
|
45 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 1. The Management and Finance Officer is responsible for: | Proposed Exclusion Provision divided
| |
I. preparing the Company’s Human Resources Policy and guiding its implementation, based on the appreciation of the human being and focused on achieving results, emphasizing the effective managerial, technical, and administrative training of its staff; as well as carrying out the activities related to the Union Relationship and the Company’s Regional Insertion Policy; | Proposed Exclusion
Provision divided
| |
II. planning, coordinating, and proposing guidelines, plans, and goals for the Financial Planning and Budget activities covering: economic and financial analyses, tariff studies, budgets, establishing contacts and understandings with clients, business, banking, and/or government authorities; as well as promoting, through the area responsible for the bidding and management of purchase agreements, and supply of goods and services in the Company, following an approved schedule; and | Proposed Exclusion
Provision divided | |
III. planning, coordinating, supervising, and managing the activities and services related to information technology, including: development, maintenance of systems and apps, support for computer equipment and corporate telecommunications in the Company, together with the other areas involved. | Proposed Exclusion
Provision divided |
46 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 3. The Technical Officer is responsible for: | Paragraph 4. The Technical Officer is responsible for: | No change |
I. promoting the implementation of policies, guidelines, and rules to be adopted in the company for activities like Project and Operation Support Engineering, Management, Construction, Assembly and Commissioning of Undertakings, Specification and Acquisition of Nuclear Fuel, Quality Assurance, Analysis of Nuclear Safety, Environmental Management and Licensing, as well as directing the development of these activities, in addition to coordinating actions related to Research, Development, and Technological Innovation; |
I. promoting the implementation of policies, guidelines, and rules to be adopted in the company for activities like Project and Operation Support Engineering, Management, Construction, Assembly and Commissioning of Undertakings, Specification and Acquisition of Nuclear Fuel, Quality Assurance, Analysis of Nuclear Safety, Environmental Management and Licensing, as well as directing the development of these activities, in addition to coordinating actions related to Research, Development, and Technological Innovation; |
No change |
II. promoting the preparation and approval of the general physical and economic planning of the projects under its responsibility, pursuant to the guidelines and goals proposed and approved; enabling its implementation, managing project activities, supplies, civil works, assembly and commissioning, in order to ensure compliance with the deadlines, costs, and quality goals established in the general planning, as well as coordinating the formulation of the principles and criteria of the Policy and of Quality Management; and | II. promoting the preparation and approval of the general physical and economic planning of the projects under its responsibility, pursuant to the guidelines and goals proposed and approved; enabling its implementation, managing project activities, supplies, civil works, assembly and commissioning, in order to ensure compliance with the deadlines, costs, and quality goals established in the general planning, as well as coordinating the formulation of the principles and criteria of the Policy and of Quality Management; and | No change |
47 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
III. promoting nuclear scientific and technological knowledge management, accompanying the development of the sector, with the objective of providing engineering services for the plants in operation and for the development and implementation of new undertakings, and coordinating activities related to the licensing processes of activities and projects in operation and under implementation, working with regulatory bodies and contracted companies; as well as coordinating the formulation of the principles and criteria for the Environmental Policy and Management. | III. promoting nuclear scientific and technological knowledge management, accompanying the development of the sector, with the objective of providing engineering services for the plants in operation and for the development and implementation of new undertakings, and coordinating activities related to the licensing processes of activities and projects in operation and under implementation, working with regulatory bodies and contracted companies; as well as coordinating the formulation of the principles and criteria for the Environmental Policy and Management. | No change |
Paragraph 5. The Officer of Angra 3 is responsible for promoting feasibility, development, and start-up of Angra 3 Nuclear Power Plant, including for the following activities: | New wording Shareholders’ agreement New ¶ 5 | |
I. coordinating Eletronuclear’s activities to support the completion of the services contracted with BNDES; and | New wording Shareholders’ agreement New item I
| |
II. coordinating Eletronuclear’s activities for contracting engineering services, taking out financing, and management of projects required to complete Angra 3 Plant; | New wording Shareholders’ agreement New item II
| |
Paragraph 6. The Officer of Angra 3 shall have evidenced experience in project management and long-term funding. | New wording Shareholders’ agreement New ¶ 6 |
48 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 7. Upon start-up of Angra 3 Plant, the existence of an Officer with a specific designation described in ¶ 4 will no longer be mandatory.
| New wording
Shareholders’ agreement New ¶ 7
| |
Chapter IX Fiscal Council
|
Chapter XI Fiscal Council
| No change |
Article 34. The Fiscal Council, of a permanent nature, shall be composed of three (3) effective members and their respective alternates, not calculated those elected by the minority common shares and by the preferred shares, when applicable, elected by the General Meeting, all Brazilians domiciled in the country, shareholders or not, with a term of acting two (2) years, with a maximum of two (2) consecutive renewals permitted, composed as follows: |
Article 49. The Fiscal Council, of a permanent nature, shall be composed of five (5) effective members and their respective alternates, elected by the General Meeting, all Brazilians domiciled in the country, shareholders or not, with a term of office of two (2) years, with a maximum of two (2) consecutive reelections allowed, composed as follows: | Wording included |
I. I - two (2) members and respective alternates appointed by ENBpar; II.
| New wording
New item I | |
III. II - one (1) member and the respective alternate appointed by the minority shareholders; and
| New Wording New item II | |
IV. III – one (1) member and the respective alternate appointed by the preferred shareholders; and
| New Wording New item III | |
I. one (01) member and the respective alternate appointed by the Ministry of Finance, as the representative of the National Treasury, who shall be a government employee with a permanent employment bond with the federal public administration; | IV. one (01) member and the respective alternate appointed by the Ministry of Finance, as the representative of the National Treasury, who shall be a government employee with a permanent employment bond with the federal public administration; | No change New item IV |
II. one (1) member and his corresponding alternate appointed by the Ministry of Mines and Energy; and | Proposed exclusion.
|
49 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
III. one (1) member and his/her corresponding alternate appointed by the Holding company. | Proposed Exclusion | |
Paragraph 1. The term of office provided for in the main section of this article includes any prior terms of office in the last two (2) years. | Paragraph 1. The term of office provided for in the main section of this article includes any prior terms of office in the last two (2) years. | No change |
Paragraph 2. When reaching the maximum term of office provided for in the main section of this article, the member of the Fiscal Council may only return after a period equivalent to one term of office has elapsed. | Paragraph 2. When reaching the maximum term of office provided for in the main section of this article, the member of the Fiscal Council may only return after a period equivalent to one term of office has elapsed. | No change |
Paragraph 3. The members of the Fiscal Council shall meet the mandatory requirements and observe the prohibitions on the exercise of their activities determined by Law No. 13,303 of June 30, 2016, by Decree No. 8,945 of December 27, 2016, and by other rules on the matter. | New wording | |
Paragraph 4. The People, Eligibility, Succession, and Compensation Committee shall express itself on the observance of the requirements and prohibitions for investiture of members. | New wording | |
Article 35. The investiture in the position of Eletronuclear Fiscal Counselor shall meet the conditions imposed by the applicable laws and regulations, as well as those provided for in the Appointment Policy of Eletrobras companies. | Article 49. The investiture in the office of Fiscal Counselor of Eletronuclear shall meet the conditions imposed by the applicable laws and regulations, as well as those provided for in a specific rule. | Proposed inclusion and exclusion of wording. |
Paragraph 1. The members of the Fiscal Council shall take office regardless of signing the instrument of investiture, upon their respective election. | Paragraph 1. The members of the Fiscal Council shall take office regardless of signing the instrument of investiture, upon their respective election, with due regard for the conditions imposed by the applicable laws and regulations, specially the provisions of Art. 26 of Law 13,303/2016, and Art. 41 of Decree 8,945/2016, as well as those provided for in the internal regulations defined by Eletrobras governing appointments for positions in governance bodies, and shall always be preceded by an opinion issued by the Eligibility Committee. | Wording included
|
50 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 2. The member of the Audit Committee shall, before holding office and when leaving, present a declaration of assets to the company, the Public Ethics Commission of the Presidency of the Republic – CEP/PR, and the Brazilian Government Accountability Office. | Proposed exclusion.
| |
Paragraph 2. In the first meeting after the election, the members of the Fiscal Council shall sign the standard form contract for the Code of Ethical Conduct and Integrity of Eletronuclear and the prevailing internal rules defined by the Company, as well as shall elect its Chairman, who shall inform Eletrobras, for evaluation, about the opinions and recommendations of the body, together with the book of minutes and Opinions of the Fiscal Council.
| New wording
New ¶ 2 | |
Paragraph 3. In case of vacancy, resignation, disqualification, or non-excused absence in two consecutive or three alternated meetings, over the last twelve (12) meetings, the member of the Fiscal Council shall be replaced up to the expiration of the term of office for the respective alternate, being he/she entitled to the corresponding compensation, until the effective election of the new member. | New wording New ¶ 3 |
51 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 3. The monthly compensation due to the members of the Fiscal Council, fixed by the General Meeting, shall not exceed ten percent (10%) of the average monthly compensation of the officers, except for the amounts related to vacation bonus and benefits, and the payment of profit sharing and compensation in an amount higher than that paid to the members of the Board of Directors is prohibited. | Paragraph 4. The monthly compensation due to the members of the Fiscal Council, fixed by the General Meeting, shall not exceed ten percent (10%) of the average monthly compensation of the officers, except for the amounts related to vacation bonus and benefits, and the payment of profit sharing and compensation in an amount higher than that paid to the members of the Board of Directors is prohibited. |
No change New ¶ 4 |
Paragraph 4. The fiscal counselors elected shall participate, upon their investiture and on an annual basis, of specific training on corporate and capital market laws and regulations, disclosure of information, internal control, code of conduct, Law No. 12,846/2013, and other topics related to Eletronuclear’s activities. | Paragraph 5. The fiscal counselors elected shall participate, upon their investiture and on an annual basis, of specific training on corporate and capital market laws and regulations, disclosure of information, internal control, code of conduct, Law No. 12,846/2013, and other topics related to Eletronuclear’s activities. | No change
New ¶ 5 |
Paragraph 5. Any member of the Fiscal Council failing to participate in all annual trainings provided by the company during the last two years may not be reelected. | Paragraph 6. Any member of the Fiscal Council failing to participate in all annual trainings provided by the company during the last two years may not be reelected. | No change
New ¶ 6 |
Paragraph 6. The take out of insurance pursuant to paragraphs 1 and 5 of art. 18 of these Bylaws apply to the members of the Fiscal Council. | Paragraph 7. The provisions in ¶¶ 1 to 6 of Art. 28 of these Bylaws apply to the members of the Fiscal Council. | Wording rectified
New ¶ 7 |
Paragraph 7. The limitations provided for in paragraphs 2 and 3 of Art. 14 of these Bylaws apply to the members of the Fiscal Council. | Paragraph 8. The limitations provided for in paragraphs 2 and 3 of Art. 14 of these Bylaws apply to the members of the Fiscal Council. | No change New ¶ 8 |
Article 36. The members of the Fiscal Council shall elect, in its first meeting, its Chairman, who shall be responsible for forwarding, to the company, for compliance purposes, the resolutions taken by the body, recorded on the book of minutes and opinions of the Fiscal Council. | Article 50. The members of the Fiscal Council shall elect, in its first meeting, its Chairman, who shall be responsible for forwarding, to the company, for compliance purposes, the resolutions taken by the body, recorded on the book of minutes and opinions of the Fiscal Council. | No change New article 50 |
Paragraph 1. In case of vacancy, resignation, disqualification, or non-excused absence in two (2) consecutive or three (3) alternated meetings, over the last twelve (12) meetings, the member of the Fiscal Council shall be replaced by the respective alternate until the election of the new member. | Paragraph 1. In case of vacancy, resignation, disqualification, or non-excused absence in two (2) consecutive or three (3) alternated meetings, over the last twelve (12) meetings, the member of the Fiscal Council shall be replaced by the respective alternate until the election of the new member. | No change |
52 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 2. The members of the Fiscal Council shall have their expenses of transportation and accommodation reimbursed whenever residing out of the city where the meeting is held, and only their transportation expenses when they reside in the city. | Paragraph 2. The members of the Fiscal Council shall have their expenses of transportation and accommodation reimbursed whenever residing out of the city where the meeting is held, and only their transportation expenses when they reside in the city. | No change |
Article 37. The resolutions of the Fiscal Council shall be taken by majority of votes and recorded on the “Book of Minutes and Opinions of the Fiscal Council”, and the Chairman has the casting vote, in addition to the regular vote. | Article 51. The resolutions of the Fiscal Council shall be taken by majority of votes and recorded on the “Book of Minutes and Opinions of the Fiscal Council”, and the Chairman has the casting vote, in addition to the regular vote. | No change New article 51 |
Sole paragraph. The Fiscal Council shall request Eletronuclear to designate a qualified personnel to act as its secretary and provide technical support. | Sole paragraph. The Fiscal Council shall request Eletronuclear to designate a qualified personnel to act as its secretary and provide technical support. | No change |
Article 38. At its members’ request, the Fiscal Council may request clarification or information and the investigation of specific facts to the independent auditors. | Article 52. At its members’ request, the Fiscal Council may request clarification or information and the investigation of specific facts to the independent auditors. | No change
New article 52 |
53 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 39. The Fiscal Council may, in order to investigate a fact whose clarification is necessary for the performance of its duties, prepare, with justification, questions to be answered by an expert and request the Board of Executive Officers to appoint, within a maximum period of thirty days, three experts, who may be individuals or legal entities, with widely known knowledge in such area, among whom the Fiscal Council will choose one, whose fees shall be paid by Eletronuclear.
| Article 53. The Fiscal Council may, in order to investigate a fact whose clarification is necessary for the performance of its duties, prepare, with justification, questions to be answered by an expert and request the Board of Executive Officers to appoint, within a maximum period of thirty days, three experts, who may be individuals or legal entities, with widely known knowledge in such area, among whom the Fiscal Council will choose one, whose fees shall be paid by Eletronuclear.
| No change
New article 53 |
Article 40. The Fiscal Council, not excluding other cases provided by law, is responsible for: | Article 54. The Fiscal Council, not excluding other cases provided by law, is responsible for: | No change New article 53 |
I – expressing itself on matters submitted thereto by the Board of Directors or the Board of Executive Officers; | I – expressing itself on matters submitted thereto by the Board of Directors or the Board of Executive Officers; | No change |
II – monitoring the equity, financial, and budget execution, being able to examine books and any other documents and request information; | II – monitoring the equity, financial, and budget execution, being able to examine books and any other documents and request information; | No change |
III – preparing, amending, and approving its Internal Regulation; | III – preparing, amending, and approving its Internal Regulation; | No change |
IV – inspecting, by any of its members, the acts taken by the managers and confirm compliance of their legal and statutory duties; | IV – inspecting, by any of its members, the acts taken by the managers and confirm compliance of their legal and statutory duties; | No change |
V – providing opinion on the management’s annual report, including in its opinion the additional information they deem necessary or useful for the resolution by the General Meeting; | V – providing opinion on the management’s annual report, including in its opinion the additional information they deem necessary or useful for the resolution by the General Meeting; | No change |
VI – providing opinion on the proposals of the management bodies, to be submitted to the General Meeting, regarding the change in the capital stock, issuance of securities, investment plans or capital budgets, distribution of dividends, transformation, consolidation, merger, or spin-off of Eletronuclear; |
VI – providing opinion on the proposals of the management bodies, to be submitted to the General Meeting, regarding the change in the capital stock, issuance of securities, investment plans or capital budgets, distribution of dividends, transformation, consolidation, merger, or spin-off of Eletronuclear; |
No change |
54 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
VII – reporting, through any of its members, to the management bodies and, if these fail to take the necessary measures to protect Eletronuclear’s interests, to the General Meeting, any mistakes, frauds, or crimes verified and suggest the applicable measures; | VII – reporting, through any of its members, to the management bodies and, if these fail to take the necessary measures to protect Eletronuclear’s interests, to the General Meeting, any mistakes, frauds, or crimes verified and suggest the applicable measures; | No change |
VIII – calling the Annual General Meeting, if the management bodies delay this call notice for more than one month, and the Extraordinary General Meeting whenever serious or urgent reasons occur, including the matters they deem necessary in the agenda of the Meetings; | VIII – calling the Annual General Meeting, if the management bodies delay this call notice for more than one month, and the Extraordinary General Meeting whenever serious or urgent reasons occur, including the matters they deem necessary in the agenda of the Meetings; | No change |
IX – reviewing, at least on a quarterly basis, the balance sheet and other financial statements periodically prepared by the Board Of Executive Officers; | IX – reviewing, at least on a quarterly basis, the balance sheet and other financial statements periodically prepared by the Board Of Executive Officers; | No change |
X – reviewing the financial statements for the fiscal year and provide an opinion on them; | X – reviewing the financial statements for the fiscal year and provide an opinion on them; | No change |
XI – exercising the duties provided for in this article, when applicable, during any settlement of Eletronuclear; | XI – exercising the duties provided for in this article, when applicable, during any settlement of Eletronuclear; | No change |
XII – mandatorily participate in the meetings of the Board of Directors or the Board of Executive Officers, resolving upon matters requiring its opinion, related to items V, VI, and X of this article; | XII – mandatorily participate in the meetings of the Board of Directors or the Board of Executive Officers, resolving upon matters requiring its opinion, related to items V, VI, and X of this article; | No change |
XIII – providing, whenever requested, information on matters within its powers to the shareholder, or group of shareholders, representing at least five percent (5%) of the capital stock; | XIII – providing, whenever requested, information on matters within its powers to the shareholder, or group of shareholders, representing at least five percent (5%) of the capital stock; | No change |
XIV – reviewing the Annual Internal Audit Activity Report – RAINT and the Annual Internal Audit Activity Plan – PAINT; | XIV – reviewing the Annual Internal Audit Activity Report – RAINT and the Annual Internal Audit Activity Plan – PAINT; | No change |
XV – assessing the performance of its members and of the Fiscal Council as a collegiate body, at least once a year, pursuant to the prevailing laws and regulations; | XV – assessing the performance of its members and of the Fiscal Council as a collegiate body, at least once a year, pursuant to the prevailing laws and regulations; | No change |
55 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
XVI – monitoring the equity, financial, and budget execution, being able to examine books and any other documents and request information; and | XVI – monitoring the equity, financial, and budget execution, being able to examine books and any other documents and request information; and | No change |
XVII – inspecting compliance with the limit of Eletronuclear’s share in the cost of health care and private pension benefits. | XVII – inspecting compliance with the limit of Eletronuclear’s share in the cost of health care and private pension benefits. | No change |
Article 41. The management bodies are required, through written communication, to make available to the active members of the Fiscal Council, within ten (10) days, copies of the minutes of their meetings and, within fifteen (15) days of their receipt, copies of the trial balance sheets and other financial statements prepared from time to time and the budget reports. | Article 55. The management bodies are required, through written communication, to make available to the active members of the Fiscal Council, within ten (10) days, copies of the minutes of their meetings and, within fifteen (15) days of their receipt, copies of the trial balance sheets and other financial statements prepared from time to time and the budget reports. | No change
Art.55 |
Article 42. The Fiscal Council shall meet, on an ordinary basis, one (1) time per month, and, on an extraordinary basis, whenever called by the Chairman of the Collegial Board, and their meetings shall be registered in minutes, which shall be signed by all the members present. | Article 56. The Fiscal Council shall meet, on an ordinary basis, one (1) time per month, and, on an extraordinary basis, whenever called by the Chairman of the Collegial Board, and their meetings shall be registered in minutes, which shall be signed by all the members present. | No change
Art.56 |
Paragraph 1. The meetings of the Fiscal Council shall, as a rule, be held in person, accepting, on an exceptional basis, virtual means, or through teleconference or videoconference, upon a reason approved by the collegiate body. | New wording
| |
Paragraph 2. In case of a non-unanimous decision, the justification of the conflicting vote shall be registered, at the relevant member’s discretion, as long as the dissident councilor expressing their disagreement in the minutes of the meeting or, if not possible, express their awareness in writing to the Fiscal Council, is not hold accountable therefor. | New wording Ok |
56 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Chapter X Fiscal Year And Financial Statements
|
Chapter X Fiscal Year And Financial Statements
|
No change
No change |
Article 43. The fiscal year will coincide with the calendar year, starting on January 1st and ending on December 31st of each year, and follow, regarding the financial statements, the provisions in the laws and regulations on joint-stock companies, and these Bylaws. | Article 57. The fiscal year will coincide with the calendar year, starting on January 1st and ending on December 31st of each year, and follow, regarding the financial statements, the provisions in the laws and regulations on joint-stock companies, and these Bylaws. | No change |
Paragraph 1. The distribution, at every year, of at least twenty-five percent (25%) of the adjusted net profit shall be mandatory, pursuant to the prevailing laws and regulations. | Paragraph 1. The distribution, at every year, of at least twenty-five percent (25%) of the adjusted net profit shall be mandatory, pursuant to the prevailing laws and regulations. | No change |
Paragraph 2. The remuneration paid to the shareholders will be subject to financial charges from the end of the fiscal year until the actual payment, without prejudice to the application of interest in arrears, when such payment is not verified on the date established by the General Meeting. | Paragraph 2. The remuneration paid to the shareholders will be subject to financial charges from the end of the fiscal year until the actual payment, without prejudice to the application of interest in arrears, when such payment is not verified on the date established by the General Meeting. | No change |
Article 44. The lawsuit seeking dividends, which, if not timely claimed, shall inure to the benefit of Eletronuclear, prescribes within the legal term. | Article 58. The lawsuit seeking dividends, which, if not timely claimed, shall inure to the benefit of Eletronuclear, prescribes within the legal term. | No change
New Art. 58 |
Article 45. Eletronuclear, under the responsibility of its Financial Board, undertakes to: | Article 59. Eletronuclear, under the responsibility of its Financial Board, undertakes to: | No change New Art. 59 |
I – submit its annual and quarterly financial statements, internal controls, and fiscal and tax procedures to independent auditors;
| I – submit its annual and quarterly financial statements, internal controls, and fiscal and tax procedures to independent auditors;
| No change |
57 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
II – remit, on a monthly basis, to Eletrobras, pursuant to the schedule defined by the Holding, thee financial statements prepared, except in the cases provide for in item III; | II – remitting, on a monthly basis, to ENBpar and the shareholders individually holding shares representing 10% of more of the Company’s capital stock, pursuant to the schedule defined by ENBpar, the financial statements prepared, except for the cases provided for in item III; | Wording included |
III – remit, on a quarterly basis, to Eletrobras, pursuant to the schedule defined by the Holding, its financial statements prepared respectively on March 31, June 30, and September 30 of that year, audited by an independent audit firm, as well as ancillary accounting statements, if so required, reviewed by its independent auditors; | III – remitting, on a quarterly basis, to ENBpar and the shareholders individually holding shares representing 10% or more of the Company’s capital stock, pursuant to the schedule defined by ENBpar, its financial statements prepared respectively on March 31, June 30, and September 30 of that year, as well as ancillary accounting statements, if so required, reviewed by its independent auditors; | Wording included |
IV - remitting, on an annual basis, to Eletrobras, pursuant to the schedule defined by ENBpar, its financial statements prepared on December 31 of the previous year, comprising the previous twelve (12) months, as well ancillary accounting statements, if so required, accompanied by an Audit Report issued by its independent auditors. Alternatively, upon prior request of Eletrobras, the financial statements may be accompanied by a Comfort Letter issued by its independent auditors; | IV – remitting, on an annual basis, to ENBpar and the shareholders individually holding shares representing 10% or more of the Company’s capital stock, pursuant to the schedule defined by ENBpar, its financial statements prepared on December 31 of the previous year, comprising the previous twelve (12) months, as well ancillary accounting statements, if so required, accompanied by an Audit Report issued by its independent auditors. Alternatively, upon prior request of ENBpar, the financial statements may be accompanied by a Comfort Letter issued by its independent auditors; | Wording included |
V – remit, on an annual basis, to Eletrobras, a report reviewing its internal controls, issued by its independent audit firm; | V – remitting, on an annual basis, to ENBpar and the shareholders individually holding shares representing 10% or more of the Company’s capital stock a report reviewing its internal controls, issued by its independent audit firm; | Wording included |
VI – granting to the independent auditors of Eletrobras free access to the working documents of its independent auditors and/or authorizing the adoption of additional audit procedures; | VI – granting the independent auditors of ENBpar and the shareholders individually holding shares representing 10% or more of the Company’s capital stock free access to the working documents of its independent auditors and/or authorizing the adoption of additional audit procedures; | Wording included |
58 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
VII – providing accounting, financial, tax, legal tax, and technical and operation (engineering) clarification and information with diligence to the technical team of Eletrobras; | VII – providing accounting, financial, tax, legal tax, and technical and operation (engineering) clarification and information with diligence to the technical team of ENBpar and the shareholders individually holding shares representing 10% or more of the Company’s capital stock; | Wording included |
VIII – adopting the International Accounting Standards for the preparation and disclosure of Financial Statements; | Proposed exclusion.
Ok. | |
IX – implementing, testing, and certifying, on an annual basis, the internal controls pursuant to the Sarbanes-Oxley Act; | Proposed exclusion, | |
VIII – implementing and testing, on an annual basis, the internal controls through the Management Tests, under the responsibility of the Internal Audit; | New wording
| |
X – also provide the following documents to | IX – further providing the following documents to ENBpar and the shareholders individually holding shares representing 10% or more of the Company’s capital stock: | Wording included |
a) annually, as soon as it is prepared, the Recommendation Letter from the independent auditors; | a) annually, as soon as it is prepared, the Recommendation Letter from the independent auditors; | No change |
b) annually, according to a schedule defined by the Holding Company, the complete Financial Statements, accompanied by management reports, independent auditor’s report, and of the Fiscal Council, without prejudice to the provided for in item IV of this article; and | b) annually, according to a schedule defined by ENBpar, the complete Financial Statements, accompanied by management reports, independent auditor’s report, and of the Fiscal Council, without prejudice to the provided for in item IV of this article; and | Wording included Replacement of controlling shareholder |
c) special accounting statements to be raised at any time, whenever requested by Eletrobras. | c) special accounting statements to be raised at any time, whenever requested by ENBpar. | Wording included
Replacement of controlling shareholder |
59 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
XI – remit to Eletrobras on a monthly basis, according to the schedule defined by the Holding Company, the preliminary monitoring report on the Business Performance Goals Agreement (CMDE), with the respective analyses and comments about the company’s performance, except in the cases provided for in item XII; and | Proposed exclusion
| |
XII – remit to Eletrobras on a quarterly basis, according to the schedule defined by the Holding Company, the quarterly monitoring report on the Business Performance Goals Agreement (CMDE), with the respective analyses and comments on the company’s performance. | Proposed exclusion
| |
Article 46. If noncompliance with the commitments provided for in the preceding article generates or provably contributes to the imposition of fines or any penalties on Eletrobras or its managers, due to a delay in the submission of any of its periodic accounting information, whether by regulatory or surveillance authorities, national or international, Eletronuclear shall be responsible for reimbursing Eletrobras for the losses in the respective amount which has contributed in the consolidated accounts to the imposition of the respective fine. | Article 60. If noncompliance with the commitments provided for in the preceding article generates or provably contributes to the imposition of fines or any penalties on Eletrobras or its managers, due to a delay in the submission of any of its periodic accounting information, whether by regulatory or surveillance authorities, national or international, Eletronuclear shall be responsible for reimbursing Eletrobras for the losses in the respective amount which has contributed in the consolidated accounts to the imposition of the respective fine. | No change New article 60 |
Chapter XI Employees
|
Chapter XI Employees
| |
Article 47. The positions of holder of the Internal Audit and of the Office of the Ombudsman shall be held by employees on the permanent career staff of Eletronuclear or of Eletrobras companies, and they shall be directly linked to the Board of Directors. | Article 61. The positions of holder of the Internal Audit and of the Office of the Ombudsman shall be held by employees on the permanent career staff of Eletronuclear, and they shall be directly linked to the Board of Directors. | Wording amended New article 61 |
Article 48. The employees of Eletronuclear are subject to labor laws and regulations and to its internal regulations, provided the remaining applicable legal rules. | Article 62. The employees of Eletronuclear are subject to labor laws and regulations and to its internal regulations, provided the remaining applicable legal rules. | No change
New article 62 |
60 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 49. The hiring of employees by Eletronuclear shall respect a public sector recruitment examination, under terms approved by the Eletrobras Board of Directors, pursuant to the prevailing laws and regulations. | Article 63. The hiring of employees by Eletronuclear shall respect a public sector recruitment examination | Wording removed
New article 63 |
Paragraph 1. The employees may be transferred to any location where the company operates. | Paragraph 1. The employees may be transferred to any location where the company operates. | No change |
Paragraph 2. The quantitative of positions of trust of top management of Eletronuclear shall be submitted for resolution by the Eletronuclear Board of Directors, upon approval by the Eletrobras Board of Directors, pursuant to article 22, item XXXVI and ¶ 1. | Paragraph 2. The quantitative of positions of trust of top management of Eletronuclear shall be submitted for resolution by the Eletronuclear Board of Directors | Wording removed |
Paragraph 3. Those holding positions of trust and taking management acts generating salary advantages not provided for or contrary to the provisions in the employment contracts, position and salary plan, collective bargaining agreement, or the prevailing laws and regulations, shall be liable for the losses caused to the company, without prejudice to the penalties provided for in the Code of Ethics and Conduct of the Eletrobras Companies. | Paragraph 3. Those holding positions of trust and taking management acts generating salary advantages not provided for or contrary to the provisions in the employment contracts, position and salary plan, collective bargaining agreement, or the prevailing laws and regulations, shall be liable for the losses caused to the company, without prejudice to the penalties provided for in the Code of Ethics and Conduct of Eletronuclear. |
Exclusion and Inclusion of wording
|
Article 50. Without prejudice to the requirements provided for in the laws and regulations, the assignment of Eletronuclear employees shall depend on specific authorization by the Board of Executive Officers and shall be made upon reimbursement of the corresponding costs, in compliance with the prevailing laws and regulations. | Article 64. Without prejudice to the requirements provided for in the laws and regulations, the assignment of Eletronuclear employees shall depend on specific authorization by the Board of Executive Officers and shall be made upon reimbursement of the corresponding costs, in compliance with the prevailing laws and regulations. | No change New article 64 |
61 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 51. After the end of each financial year of Eletronuclear, and once the accrued losses have been deducted and a provision for charges is made, the employees will be entitled to profit sharing, subject to the prevailing laws and regulations, the guidelines established by the Office for Coordination and Governance of State-Owned Companies, and the rules of collective bargaining agreements executed thereby. | Article 65. After the end of each financial year of Eletronuclear, and once the accrued losses have been deducted and a provision for charges is made, the employees will be entitled to profit sharing, subject to the prevailing laws and regulations, the guidelines established by the Office for Coordination and Governance of State-Owned Companies, and the rules of collective bargaining agreements executed thereby. | No change New article 65 |
Article 52. Eletronuclear shall provide social assistance to its employees. | Proposed exclusion | |
Chapter XII Miscellaneous
| Chapter XIV Miscellaneous
| No change |
Article 53. The Governance, Risk and Compliance Management area shall have as their main duties: | Article 66. The Governance, Risk and Compliance Management area shall have as their main duties: | No change
New article 66 |
I – the compliance management in regard to adjustment to laws, rules, and ethical act;
| I – the compliance management in regard to adjustment to laws, rules, and ethical act;
| No change |
II – the corporate risk management; and | II – the corporate risk management; and | No change |
III – the environment management of internal controls. | III – the environment management of internal controls. | No change |
Paragraph 1. In situations in which the Chief Executive Officer is suspected to be involved in irregularities, or in which he fails to take the required measures in relation to the situation reported to him, the Governance, Risk and Compliance Management area may report directly to the Board of Directors. | Paragraph 1. In situations in which the Chief Executive Officer is suspected to be involved in irregularities, or in which he fails to take the required measures in relation to the situation reported to him, the Governance, Risk and Compliance Management area may report directly to the Board of Directors. | No change |
62 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Paragraph 2. In the events mentioned in the preceding paragraph, the subject shall be discussed without the presence of the company’s Chief Executive Officer. | Paragraph 2. In the events mentioned in the preceding paragraph, the subject shall be discussed without the presence of the company’s Chief Executive Officer. | No change |
Article 67. The amount of reimbursement for the shares held by shareholders that may eventually exercise the right of withdrawn as provided by Law No. 6,404/1976 shall be equivalent to the higher of (i) the net book value of the relevant shares and (ii) the economic value of the relevant shares, pursuant to the appraisal report to be prepared by an independent third party, through the discounted cash flow method, upon exercise of the right of withdrawn. | New Wording | |
Sole paragraph. The amendment to Art. 67 shall grant the dissenting shareholders (including those holding preferred rights) the right to be reimbursed for his/her shares at the amount calculated based on the provisions in the Bylaws prior to such amendment. | New Wording | |
Chapter XIII Transitional Provisions | Chapter XIII Transitional Provisions | |
Article 54. The Eletronuclear’s Board of Directors shall be composed of up to six (06) members until the Ordinary General Meeting of 2018 or later General Meeting held by June 30, 2018. | Proposed Exclusion | |
Article 68. Payment of the cumulative priority dividends to which the preferred shares were entitled until the date of implementation of the conditions defined in art. 11 of CPPI Resolution No. 203 of October 19, 2021, as amended by CPPI Resolution No. [=] of [date], related to years prior to that date, may be made to the capital reserves, pursuant to Law No. 6,404 of December 15, 1976. | New wording
|
63 |
CURRENT BYLAWS OF ELETRONUCLEAR | MODEL OF BYLAWS SUBMITTED THE BNDES 31-DEC-2021 | COMMENTS – ELETRONUCLEAR |
Article 69. The conversion of preferred shares into common shares pursuant to the terms, conditions, and limitations established in CPPI Resolution No. 203 of October 19, 2021 is hereby authorized on an exceptional basis, as amended by CPPI Resolution No. [=] of [date], e approved upon resolution in the General Meeting of Eletrobras.
| New wording
|
64 |
BRAZILIAN SECURITIES AND EXCHANGE COMMISSION
Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro, RJ – CEP: 20050-901 – Brazil – Phone: +55 21 3554-8686
Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo, SP – CEP: 01333-010 – Brazil – Phone: +55 11 2146-2000
SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4º Andar, Brasília, DF – CEP: 70712-900 – Brazil – Phone: +55 61 3327-2030/2031
www.cvm.gov.br
Official Letter No. 125/2021/CVM/SIN
Rio de Janeiro, December 9, 2021.
To Eletrobras – Centrais Elétricas Brasileiras S.A.
Rua da Quitanda, 196 – 24º 20091-005 – Rio de Janeiro, RJ
Email: pr@eletrobras.com; jose.barros@eletrobras.com
Subject: Consultation about the possibility to transfer the ownership of quotas in open investment funds – Proceeding 19957.010124/2021-65
Dear Sir,
We refer to the consultation filed on December 8, 2021, about the requesting party’s possibility, as provided by Law No. 14,182 of July 12, 2021, to transfer the quotas from the exclusive fund BB Extramercado Exclusivo 30, a Long Term Multimarket Investment Fund (then referred to as “decommissioning fund”), of which it is the sole quotaholder, to Eletronuclear S.A.
By the way, the interpretation by this technical area of the applicable regulation, especially article 13 of CVM Instruction No. 555, is that, as the requested transfer of quotas results from a regulatory order provided for in Resolution No. 203 of October 19, 2021, which was issued to regulate art. 3, ¶ 1 of Law 14,182, we understand that the any restriction on CVM regulation may not be claimed as an obstacle for the execution of such transaction.
On the other hand, even if it were not so, we understand that this hypothesis could fall in the more general concept of “universal succession” provided for in CVM regulatory act, given that the fund’s purpose is to promote the decommissioning of the plants managed by Eletronuclear, and the new governing law referred to in the consultation assigns such role expressly to Eletrobras, and, as a conceptual consequence, the responsibility and ownership over the extra market investment fund originated to fund such purpose.
Therefore, we agree with the interpretation explained in the consultation that it is legally feasible to transfer the quotas from such open investment fund based on such law and independent of CVM prior authorization.
Very truly yours,
Document signed electronically by Daniel Walter Maeda Bernardo, Superintendent, on December 9, 2021, at 09:46, pursuant to art. 6 of Decree No. 8,539 of October 8, 2015. | ||
[QR Code] | The authenticity of this document may be verified at https://sei.cvm.gov.br/conferir_autenticidade, and providing Verification Code 1405833 and CRC Code 8728B509. | |
Reference: Proceeding No. 19957.010124/2021-65 | Electronic Information System (SEI) Record No. 1405833 | |
Annex 14
Description of the transfer of quotas of the decommissioning fund
I – name and qualification of the interested related party;
Eletrobras Termonuclear S.A. – Eletronuclear
II – nature of the relationship of the interested related party with the company;
Eletronuclear is currently controlled by Eletrobras and, indirectly, by the Federal Government.
III – number of shares and other securities issued by the company held directly or indirectly by the interested related party;
None.
IV – any existing balances, payable and receivable, between the parties involved;
DESCRIPTION | AMOUNT IN BRL |
Loans and financing/Global Reversal Reserve (RGR) (current) | 63,873,843.57 |
Loans and financing/ RGR (non-current) | 594,867,845.24 |
Advance for Future Capital Increase (AFAC) | 2,111,123,872.45 |
Decommissioning Fund (non-current) | 1,958,863,088.89 |
Other Liabilities (Income Taxes on Decommissioning Fund) | 89,006,647.56 |
Source: Eletrobras Quarterly Information (September 30, 2021)
V – detailed description of the nature and extent of such interest;
The transaction consists of the transfer by Eletrobras of quotas of the decommissioning fund to Eletronuclear.
VI – management’s recommendation about the proposal, highlighting the advantages and disadvantages of the transaction for the company; and
The Management recommends this proposal, as it is a condition for the privatization process as provided by Law No. 14,182/2021, according to NT DC-001/2022.
VII – if the matter submitted for approval of the general meeting is an agreement subject to the rules of art. 245 of Law No. 6,404 of 1976:
a) detailed demonstration, prepared by the managers, that the agreement meets arm’s length conditions, or provides for proper compensatory payment; and
The price to be paid by Eletronuclear shall correspond to the market value of the quotas of the decommissioning fund when the transfer occurs.
b) analysis of the terms and conditions of the agreements given the terms and conditions prevailing in the market.
See item VII(a) above.
14/01/2022
IT DFP-004/22 |
Technical Information Report
Classification: Confidential
Title | Analysis of the Eletronuclear Corporate Restructuring Model Proposed by BNDES |
Subject | Valuation; Generation. |
Authors | Marcos Barreto de Faria Pinho – DFPA Leonardo Michelsem Monteiro de Barros – DFPA Bruno Vieira Martins – DFPA |
Company | Eletronuclear, Eletrobras. |
Category | Technical Information Report. |
Keywords | Capitalization, restructuring, valuation, Angra 3, Eletrobras |
Page 1 of 68 |
14/01/2022
IT DFP-004/22 |
Table of Contents
DISCLAIMER | 4 |
1. INTRODUCTION | 4 |
2. CONTEXTUALIZATION | 5 |
2.1 Overview of Eletronuclear | 5 |
2.2 Background<0} | 6 |
3. Restructuring of Electronuclear | 7 |
3.1 Justification | 7 |
3.2 Proposal for Corporate Restructuring | 8 |
3.2.1 Capital Contributions and Issuance of New Shares | 8 |
3.3 Risks related to Angra 3 – BNDES Perspective | 16 |
3.4 Other Modeling Aspects | 17 |
CHAPTER II – CONTRIBUTIONS, FUNDING, AND GUARANTEE | 18 |
3.5 Considerations on the BNDES Proposal | 22 |
4. ECONOMIC AND FINANCIAL assessment | 25 |
4.1 Rationale and Scope of the assessment | 25 |
4.2 Assessment Methodology<0} | 27 |
4.3 Assessment Assumptions | 28 |
4.3.1 General Assumptions | 28 |
4.3.2 Macroeconomic Assumptions | 28 |
4.3.3 Nuclear power Generation Assets | 29 |
4.3.4 Revenue Projection | 31 |
4.3.5 Costs and Expenses | 40 |
4.3.6 PIS/COFINS credit | 42 |
4.3.7 Investments | 43 |
4.3.8 Financing | 45 |
4.3.9 Depreciation | 46 |
4.3.10 Working Capital | 47 |
4.3.11 Income Tax/Social Contribution on Net Profits – CSLL | 47 |
4.3.12 Discount Rate | 47 |
4.4 Results | 48 |
Page 2 of 68 |
14/01/2022
IT DFP-004/22 |
4.4.1 Operating Assets | 48 |
4.4.2 Non-Operating Assets – Angra 3 | 51 |
4.5 BNDES/BR Partners Assessment<0} | 56 |
4.5.1 Results | 57 |
4.5.2 Considerations | 61 |
4.6 Analysis of Multiples | 62 |
4.7 Points of Attention of Economic and Financial Assessment | 64 |
4.7.1 Methods | 64 |
4.7.2 Angra 3 Model | 65 |
4.7.3 Tariff | 65 |
4.7.4 Schedule and CapEx to Complete | 65 |
4.7.5 Completion of the Critical Path | 66 |
4.7.6 Funding and Guarantees | 66 |
5. FINAL CONSIDERATIONS | 67 |
Page 3 of 68 |
14/01/2022
IT DFP-004/22 |
DISCLAIMER
This analysis is based on the following documents:
- CPPI Resolution No. 203/21;
- CPPI Resolution No. 221/21;
- Detailed Report on the Model, of October 18, 2021;
- Addendum to the legal mapping report and detailed report on the model, of December 22, 2021;
- Second addendum to the legal mapping report and detailed report on the model, of December 27, 2021; and
- Investment Agreement and Other Covenants, final version received from BNDES on January 11, 2022;
- Eletronuclear Shareholders’ Agreement, final version received from BNDES on January 11, 2022
1. | INTRODUCTION |
This Technical Information Report (“TIR”) aims at analyzing the economic and financial aspects related to the model proposed by BNDES for the corporate restructuring of Eletronuclear (“ETN”), which, pursuant to Law 14,182/2021, is a precondition for the privatization of Eletrobras.
For this, this TIR is structured as follows:
1. | Analysis of the process to transfer the controlling interest in Eletronuclear; |
2. | Result of the economic and financial assessment of Eletronuclear (DFPA); and |
3. | Comparative analysis of the internal and external valuations. |
Page 4 of 68 |
14/01/2022
IT DFP-004/22 |
It should be noted that the analysis performed below, regarding the Eletronuclear corporate restructuring process, is based on information present in the abovementioned Reports and Addenda sent to Eletrobras by BNDES.
The analyzes in this TIR have the sole and exclusive purpose of internalizing the studies by BNDES related to the corporate restructuring of Eletronuclear under the Eletrobras capitalization process.
In this sense, considering that the Detailed Report on the Model and their respective Addenda have multidisciplinary content, the analyzes in this TIR cannot, in any way, be considered thorough and final regarding Eletrobras, requiring specific assessments, including, without limitation, by the legal, accounting, tax, risk, and governance areas, as well as by other applicable areas of Eletrobras.
2. | CONTEXTUALIZATION |
2.1 | Overview of Eletronuclear |
Eletrobras Termonuclear S.A. – Eletronuclear is a public-private joint-stock company controlled by Eletrobras, resulting from the merger, in May 1997, of the former Diretoria Nuclear de Furnas into Nuclen Engenharia e Serviços S.A. In December of the same year, by a presidential decree, the new bylaws were approved, maintaining the mission of exploring, on behalf of the Federal Government, nuclear activities for electricity generation purposes.
The Company's headquarters are located in the city of Rio de Janeiro and their two nuclear power plants in operation, Angra 1 and Angra 2, are located in the city of Angra dos Reis, in the state of Rio de Janeiro. The Angra 1 and Angra 2 Nuclear Power Plants have an installed capacity of 640 MW and 1,350 MW, respectively, for a total of 1,990 MW. With the completion of the Angra 3 nuclear power plant, which is currently under development, the generation complex may be expanded by another 1,405 MW.
The Federal Government, through Eletrobras, is the majority shareholder of the company, holding 99.98% of the common shares and 99.85% of the preferred shares. The table below shows the company’s capital stock on September 30, 2021:
Page 5 of 68 |
14/01/2022
IT DFP-004/22 |
Table 1 – Corporate Structure of Eletronuclear
SHAREHOLDER | COMMON SHARES | PREFERRED SHARES | TOTAL | % |
Eletrobras | 37,651,029,535 | 10,528,730,390 | 48,179,759,925 | 99.95 |
DAEE* | 5,960,026 | 7,405,548 | 13,365,574 | 0.03 |
LIGHT | - | 5,058,993 | 5,058,993 | 0.01 |
Others | 1,176,930 | 3,504,063 | 4,680,993 | 0.01 |
Total | 37,658,166,491 | 10,544,698,994 | 48,202,865,485 | 100.00 |
* Department of Water and Power of the State of São Paulo
The company’s capital stock, in monetary terms, according to the financial statements as of June 2021, is BRL8,493,035,701.18.
Table 2 – Eletronuclear’s Net Equity
BRL thousand
NET EQUITY | 30-Jun-2021 | 31-Dec-2020 |
Capital stock | 8,493,036 | 8,493,036 |
Accrued losses | (4,382,551) | (4,109,009) |
Comprehensive results | (881,619) | (881,619) |
Total | 3,228,866 | 3,502,408 |
2.2 | Background<0} |
As mentioned above, Law 14,182, which passed the National Congress on July 14, 2021, establishes the feasibility requirements for the privatization of Eletrobras, among these the corporate restructuring of the subsidiaries Eletronuclear and Itaipu Binacional, to keep them under the control of the Federal Government.[1] Pursuant to Chapter II, item I of article 3 of Law 14,182/2021:
It is worth emphasizing that the reported requirements, especially regarding Eletrobras and Eletronuclear, is in line with the 1988 Constitution of the Federative Republic of Brazil, which, in its article 21, item XXIII:
[1] Eletrobras has 50% of capital stock from Itaipu Binacional, sharing control with the Paraguayan state-owned ANDE.
Page 6 of 68 |
14/01/2022
IT DFP-004/22 |
“Article 21. It is incumbent upon the Federal Government:
XXIII – to commercially exploit nuclear services and facilities of any kind and hold the monopoly on research, mining, enrichment and reprocessing, industrialization, and trade of nuclear ores and their by-products, according to the following principles and conditions: (...)”
As provided for in Law 14,182/21, BNDES is the agent responsible for the execution and monitoring of the privatization process of Eletrobras, at the bank may engage specialized technical services as necessary for the process.
Thus, in July 2021, BNDES contracted BR Partners to prepare an independent economic and financial analysis of Eletronuclear (valuation) to support the Eletrobras privatization transaction, including the corporate reorganization of this company.
On October 18, 2021, BNDES provided the Eletrobras teams with a version of the Detailed Report on the Model, and annexes thereto, which addresses the aspects related to the Eletrobras privatization transaction. Thereafter, the Addenda to Detailed Legal Report and Detailed Report on the Model and on January 11, 2022, the final version of “Investment Agreement” and “Shareholders' Agreement” were forwarded to them, documents which in the Report.
3. | Restructuring of Electronuclear |
3.1 | Justification |
As already reported, the transfer of the controlling interest held by this company in Eletronuclear is a necessary condition for the privatization of Eletrobras, as the operation of nuclear facilities for electricity generation by private agents is unconstitutional. Nonetheless, it is emphasized that the private sector may hold interest in the capital stock, as it is possible to verify according to information in Table 1.
Therefore, the restructuring aims at keeping Eletronuclear under government control after the privatization of Eletrobras. Another effect of that transaction shall be to raise the necessary funds for Eletronuclear to complete the works to implement the nuclear power plant (NPP) Angra 3.
The following sections of this TIR will first present the proposal of BNDES for transferring Eletronuclear controlling interest according to the Bank’s Detailed Report on the Model and Addenda. Next, the comments by the Economic and Financial Analysis Department – DFPA on the intended transaction shall be discussed.
Page 7 of 68 |
14/01/2022
IT DFP-004/22 |
Below, shall be shown the result of the valuation prepared by the DFPA technical team comparing it to the numbers obtained by BNDES.
3.2 | Proposal for Corporate Restructuring |
The intended restructuring transaction results in the transfer of the controlling interest of Eletronuclear to a new state-owned company, ENBpar, and Eletrobras would still remain with relevant interest in the capital of the company.
The creation of this new state-owned company is provided for in Law 14,182/2021 and was materialized with the issuance of Decree 10,791/2021 of September 13, 2021.
To achieve the new composition of the capital stock proposed in the corporate restructuring model suggested by BNDES, internal approvals of the top management of Eletronuclear and Eletrobras shall be obtained, as well as of their respective shareholders’ meetings, depending on the matter, based on corporate acts. It is worth stressing that some of these acts also shall be validated and/or discussed by external agencies, such as the Brazilian Electricity Regulatory Agency – ANEEL, the Brazilian Government Accountability Office – TCU, and the Brazilian Office of the Comptroller General – CGU, and this TIR does not intend to issue any opinion about this matter.
Such corporate acts, which also involve amendments to the bylaws of Eletronuclear and, consequently, approval by the general meeting of shareholders, according to the documents by BNDES, shall be approved by an Extraordinary General Meeting – EGM of Eletrobras and Eletronuclear. The presentation of each of these acts, which is related to the restructuring transaction at stake, shall be individually addressed in following sections of this TIR for a better understanding of the steps related to the transfer of the controlling interest of Eletronuclear. Emphasizing that all these acts shall be approved simultaneously by the respective shareholders’ meetings of both companies.
3.2.1 | Capital Contributions and Issuance of New Shares |
Referring to Eletronuclear’s Bylaws and the Legal Mapping Report, the BNDES’ Detailed Report on the Model mentions that Eletronuclear has an obligation to pay regular dividends to its preferred shareholders at least 10% per annum. Pursuant to the Report, the basis for the calculation of such compensation is not clearly specified on the Eletronuclear’s Bylaws. Given this doubt, BNDES assumed that these dividends should be calculated by using, as a benchmark, the share of the capital stock allocated to the preferred shares. Thus, the Bank assumed that the amount of BRL8,493,035,701.18 of the capital stock, on June 2021, shall be equally divided between common and preferred shares, following the proportions of each of them in the company’s capital. Therefore, the basis for calculating the minimum mandatory dividends used was BRL1,857,908,232.77.
Page 8 of 68 |
14/01/2022
IT DFP-004/22 |
Table 3 – Capital Stock
TYPE | QUANTITY | PERCENTAGE (%) | CAPITAL STOCK (BRL) |
COMMON | 37,658,166,491 | 78.12 | 6,635,127,377.41 |
PREFERRED | 10,544,698,994 | 21.88 | 1,857,908,323.77 |
TOTAL | 48,202,865,485 | 100.00 | 8,493,035,701.18 |
As Eletronuclear does not distribute dividends since 2010, the preferred shareholders of the company started to have a voting right in the general shareholders’ meeting, which, as provided below, may render the transfer of the controlling interest to ENBpar unfeasible. To remedy this matter, BNDES proposes that such debts are paid off and the right to receive mandatory dividends to be taken off from the preferred shareholders through an amendment to Eletronuclear’s bylaws.
The total dividends due, adjusted for inflation, including for 2021, is BRL2,703,020,820.70. The date set for payment of these dividends is April 2022, as it is the estimated date of the restructuring transaction at stake, being required to project the Selic rate for the period from December 2021 to April 2022, as explained in the addendum to the Detailed Legal Report and Detailed Report on the Model, given that dividends shall, by law, be adjusted by the SELIC rate at the moment of declaration until their effective payment.
Table 4 – Dividends payable
Year | Original Dividend (historical amount) | SELIC Accrued until April 2022 | Amount Adjusted by the SELIC |
2010 | BRL72,320,262.84 | 158.29% | BRL 186,792,553.62 |
2011 | BRL144,664,705.19 | 131.41% | BRL 334,762,721.44 |
2012 | BRL144,664,705.23 | 113.31% | BRL 308,587,499.88 |
2013 | BRL144,664,705.27 | 97.13% | BRL 285,170,385.18 |
2014 | BRL144,664,705.30 | 77.74% | BRL 257,121,684.75 |
2015 | BRL144,664,705.34 | 56.89% | BRL 226,969,622.28 |
2016 | BRL144,664,705.37 | 37.59% | BRL 199,050,086.53 |
2017 | BRL144,664,705.41 | 25.14% | BRL 181,029,306.44 |
2018 | BRL144,664,705.45 | 17.59% | BRL 170,104,421.82 |
2019 | BRL144,664,705.48 | 10.99% | BRL 160,556,684.77 |
2020 | BRL185,790,832.38 | 8.01% | BRL 200,672,278.95 |
2021 | BRL185,790,832.38 | 3.45% | BRL 192,203,575.04 |
Total | BRL1,745,884,275.63 | - | BRL 2,703,020,820.70 |
Page 9 of 68 |
14/01/2022
IT DFP-004/22 |
Regarding the Advance for Future Capital Increase (AFACs), the amount contributed until September 2021, already adjusted for inflation, is BRL2,111,844,601.02. BRL1,417,464,016.00 of the total scheduled to contemplate the Critical Path Acceleration Plan for NPP Angra 3 has still to be contributed until the date of the transaction with ENBpar. In this regard, it is worth mentioning that all funds were remitted to Eletronuclear after the issuance of the BNDES Report, which was not updated in the Addenda to the Report.
The table below, prepared by DFPA with the information provided by the Department of Corporate Finance – DFF, shows the schedule of disbursements made after October 13, 2021.
Table 5 – Contributions Made to Eletronuclear
BRL | |
1. AFAC balance to be released beginning in October 2021 | 1,417,464,016.00 |
2. Released on 01-Oct-2021 | 300,000,000 |
3. Balance on 10-Nov-2021 | 1,117,464,016.00 |
4. Released on 11-Nov-2021 | 265,000,000 |
5. Balance on 13-Dec-2021 | 852,464,016 |
7. Released on 14-Dec-2021 | 189,100,000 |
8. Balance on 15-Dec-2021 | 663,364,016 |
9. Released on 30-Dec-2021 | 663,364,016 |
8. Balance on 31-Dec-2021 | 0 |
The transaction proposed by the Bank to generate the funds necessary to settle the mandatory and unpaid minimum dividends is the capitalization of Eletronuclear through the issuance of new shares. Such funds are also intended to provide the company with the financial conditions necessary for the completion of the work on the Angra 3 plant, with the proposed total of BRL9,736,996,769.44. We highlight that this amount to be capitalized was defined by BNDES and is fixed, being a portion to Eletrobras and portion to ENBpar, as presented below.
Page 10 of 68 |
14/01/2022
IT DFP-004/22 |
The “first step” of the restructuring consists in the issuance of preferred and common shares in the same proportion to the existing capital stock in June 2021, shown in table 3, in the amount of BRL9,736,996,769.44, previously presented.
In this capitalization, ENBpar shall participate in the list of Eletronuclear’s shareholders after capitalization in the amount of BRL3,500,000,000.00, exclusively in common shares through an assignment of subscription right of Eletrobras, free of charge, as proposed by BNDE and accepted by CPPI in its Resolution No. 221. Eletrobras shall be responsible for the capitalization of BRL6,232,329,437.73 in common and preferred shares, being the difference a total of BRL9,736,996,769.44, the installment that applies to minority shareholders.
The amount of BRL9,736,996,769.44 of this capitalization results from: (i) the sum of the minimum mandatory dividends due and unpaid to Eletrobras and the minority shareholders, of BRL2,698,927,439.83 and BRL4,093,380.87, respectively; (ii) the AFACs contributed of BRL3,529,308,617.02; (iii) the contribution to be made by ENBpar, of BRL3,500,000,000.00; and (iv) the preemptive right of the minority shareholders, of BRL4,667,331.72.
It is important to emphasize that, in the Detailed Report on the Model, page 100, the Bank states that:
“Eletronuclear’s contribution, as indicated in the supporting documentation provided to the Board of the Investment Partnership Program – CPPI for issuance of resolution No. 139/2020, aims at, in addition to simply take up Eletrobras’ control over ETN, allowing privatization, also solving the ETN’s capital structure. As informed by BNDES, it is estimated that the contributions by Eletrobras, related to this contribution by ENBpar, is sufficient, given the current assumptions, i.e., even without the conclusive studies developed by BNDES under the agreement signed with ETN, to allow the leverage of funds for the completion of Angra 3, pursuant to with Decree 9,915/2019.
The allocation of the funds resulting from the issuance shall be (i) the Capital Stock account, in the amount up to BRL7,032,679,661.46; and (ii) the Capital Reserve account, in up to BRL2,704,317,107.98. It is highlighted that the creation of this last account for Eletronuclear’s shareholders’ equity is included in the list of corporate acts. The Bank’s proposal consists in paying off the unpaid dividends with the funds exactly from the Capital Reserve line item, even though there is still an Accrued Losses account, referring this possibility to a provision in the Brazilian Corporation Law.
Page 11 of 68 |
14/01/2022
IT DFP-004/22 |
For the implementation of this capital increase, the share price was calculated at BRL0.024662437 based on the Eletronuclear’s fair value. Of the amount of BRL3,891,820,972.81 (base date of April 2022), the accrued and not paid dividends in the amount of BRL2,703,020,820.70 were subtracted pursuant to the documents issued by BNDES. At this point, it should be noted that, for the calculation of Eletronuclear’s fair value, there is the assumption that Angra 3 will have a NPV equal to zero. On page 111 of such Detailed Report on the Model:
“As explained in item III.1.10 of this Report, it was necessary, for this privatization model, to estimate Eletronuclear’s fair value without knowing the investment value and tariff of Angra 3 project. At first, this should render the calculation of the company's valuation unfeasible, given that 2 essential assumptions are not known. Nevertheless, considering the own definition in Law No. 14,120/2021 and the previously presented interpretation, the tariff to be proposed by BNDES shall be exactly that makes the NPV of Angra 3 equal to zero.”
Thus, the evaluation of Eletronuclear presented by BNDES supports this assumption. If there is a difference in the valuation of the Angra 3 when setting the electricity sale tariff for the development, there will be, as a consequence, a change in the Eletronuclear’s value. Risks related to the definition of the electricity tariff for this plant were called by BNDES as “tariff risks”, since, as stated in the Detailed Report on the Model, it will not be possible to complete the feasibility studies and set the development’s tariff before the restructuring. This point shall be further addressed in section 3.3 of this TIR.
Furthermore, in the Addendum to the Detailed Legal Report and Detailed Report on the Model, the Bank explains that the share price of BRL0.024662437 was obtained already taking into account a new context in which the preferred shares shall not be entitled to minimum mandatory dividends, which entails identical prices for common and preferred shares of Eletronuclear.
Based on this price/share, new shares shall be issued in a total of 401,867,613,354, divided into 313,956,387,006 common shares and 87,911,226,348 preferred shares.
The number of shares to be issued results from the division of the amount of BRL9,664,363,399.80 to be capitalized by the unit price of BRL0.024662437, maintaining the proportion of common and preferred shares currently in force: 78.12% e 21.88%, respectively. The table below presents the number of shares to be subscribed by Eletrobras and ENBpar:
Page 12 of 68 |
14/01/2022
IT DFP-004/22 |
Table 6 – Subscription of New Shares
NEW SHARES | COMMON | PREFERRED | Total shares |
Price/share | BRL0.024662437 | BRL0.024662437 | - |
ENBpar amount | 141,916,224,437 | - | 141,916,224,437 |
Eletrobras amount | 166,379,229,311 | 86,326,103,046 | 252,705,332,357 |
Total amount | 308,295,453,748 | 86,326,103,046 | 394,621,556,794 |
After this “first step”, Eletronuclear’s capital stock shall become to be composed as shown in table 7, assuming that the minority shareholders shall not exercise their right to subscribe for shares assigned thereto, and these shares shall be cancelled.
Table 7 – Post-Subscription Capital Stock
SHAREHOLDER | COMMON SHARES | PREFERRED SHARES | TOTAL | % TOTAL | % COMMON |
Eletrobras | 204,030,258,846 | 96,854,833,436 | 300,885,092,282 | 67.95 | 58.98 |
DAEE* | 5,960,026 | 7,405,548 | 13,365,574 | 0.00 | 0.00 |
LIGHT | - | 5,058,993 | 5,058,993 | 0.00 | 0.00 |
ENBpar | 141,916,224,437 | - | 141,916,224,437 | 32.05 | 41.02 |
Others | 1,176,930 | 3,504,063 | 4,680,993 | 0.00 | 0.00 |
Total | 345,953,620,239 | 96,870,802,040 | 442,824,422,279 | 100.00 | 100.00 |
In summary, this new capital stock results from (i) the contribution of ENBpar in the amount of BRL3,500,000,000.00 only in common shares, now holding 141,916,224,437 shares, and (ii) the subscription by Eletrobras of the remaining common shares, 166,379,229,311, as well as all preferred shares, 86,326,103,046.
For Eletrobras to purchase this number of common and preferred shares, totaling 252,705,332,357, at BRL0.024662437, it shall be necessary BRL6,232,329,437.73
Considering that Eletrobras holds a relevant portion of the not paid minimum dividends and has AFACs yet fully paid, facts already mentioned in this TIR, such amounts shall be deducted from this total of BRL6,232,329,437.73 required to subscribe new shares. As may be seen in table 8 below, in the Eletronuclear’s capital increase transaction, Eletrobras shall contribute, in cash, the necessary for paying the minority shareholders’ dividends. It should be noted that, in the BNDES model, it is established that the monetary updates of the AFACs made by Eletrobras after October 2021 shall not be fully paid, and shall return to the company in cash.
Page 13 of 68 |
14/01/2022
IT DFP-004/22 |
Table 8 – Capitalization of Eletrobras
Amounts in BRL | |
Total AFACs (1) | 3,529,308,617.02 |
AFAC Balance – 30-Jun-2021 | 1,920,063,433.83 |
Inflation adjustment until 30-Sep-2021* | 11,781,167.19 |
AFAC 13-Sep-2021 | 180,000,000.00 |
To be released beginning in October 2021** | 1,417,464,016.00 |
Dividends not paid | 2,703,020,820.70 |
Eletrobras (2) | 2,698,927,439.83 |
Minority Shareholders | 4,093,380.87 |
Total funds Eletrobras (1) + (2) = (3) | 6,228,236,056.85 |
Contribution Eletrobras capital increase (4) | 6,232,329,437.77 |
Eletrobras Difference (4) – (3) | 4,093,380.87 |
*The inflation adjustment of the AFACs from that date shall be paid to Eletrobras and not fully paid/capitalized.
** Amounts contributed as shown in table 5.
The “second stage” of the transaction consists in the payment of the mandatory minimum dividends with the funds of the newly created “Capital Reserve” shareholders’ equity account, and the part to which Eletrobras is entitled shall be used to pay the capital of BRL2.7 billion in full.
After the payment of these dividends, Eletronuclear’s Capital Reserve account shall be extinguished and there will be no more mandatory dividends owed to the shareholders of the company. Additionally, a measure to deprive the preferred shareholders from the right to mandatory minimum dividends is included in the agenda of shareholders’ meetings, and, thus, prevent them from being once again entitled to voting rights in the event of failure to pay such dividends, pursuant to paragraph 1 of article 111 of the Brazilian Corporation Law.
For ENBpar to take over the control of Eletronuclear, it shall be necessary to acquire interest in the voting shares (common shares) above 50%. It is possible to note that, pursuant to the information shown in table 6, ENBpar’ interest in these shares, upon the capital increase, is 32.05%, not grating control over the company.
Page 14 of 68 |
14/01/2022
IT DFP-004/22 |
Therefore, BNDES proposes the approval of an optional conversion program for common shares into preferred shares in the proportion of 1:1, “third” and the last step of the restructuring. In this step, Eletrobras shall join the program and convert 124,541,409,099 of common shares into preferred shares, which will result in a significant decrease in its interest in this type of shares and consequent increased number of other shareholders. As a result, ENBpar shall hold the majority of the voting capital, taking over the controlling interest of Eletronuclear. At this point, it should be noted that this conversion suggested by BNDES reaches the maximum limit of 50% of preferred shares that an entity may hold, pursuant to article 15, ¶ 2 of the Brazilian Corporation Law.
Table 9 shows the final corporate structure after the restructuring presented in BNDES documents, again assuming the failure by the minority shareholders to join, and table 10, the company’s fair value, of BRL10,921,129,589.83, at the end of the corporate restructuring transaction as defined by the Bank.
Table 9 – Corporate Structure after the Restructuring
SHAREHOLDER | COMMON SHARES | PREFERRED SHARES | TOTAL | % COMMON | % TOTAL |
Eletrobras | 79,488,849,747 | 221,396,242,535 | 300,885,092,282 | 35.90 | 67.95 |
DAEE | 5,960,026 | 7,405,548 | 13,365,574 | 0.00 | 0.00 |
LIGHT | - | 5,058,993 | 5,058,993 | 0.00 | 0.00 |
ENBpar | 141,916,224,437 | - | 141,916,224,437 | 64.10 | 32.05 |
Others | 1,176,930 | 3,504,063 | 4,680,993 | 0.00 | 0.00 |
Total | 221,412,211,140 | 221,412,211,139 | 442,824,422,279 | 100.00 | 100.00 |
Table 10 – Eletronuclear Value After the Restructuring
Acts | ETN Equity (BRL MM) |
Pre-money amount (April 2022) | 3,891.82 |
Eletrobras: Subscription with dividend credits | 2,698.93 |
Eletrobras: Subscription in cash | 4.09 |
Eletronuclear: Payment of accrued dividends | - 2,703.02 |
Eletrobras: New contributions | 1,417.46 |
Eletrobras: Conversion of AFACs already incurred | 2,111.84 |
ENBpar: New contribution | 3,500.00 |
Eletrobras: Conversion of Common Shares into Preferred Shares | |
Final | 10,921.13 |
Page 15 of 68 |
14/01/2022
IT DFP-004/22 |
It is important to emphasize that, as presented in BNDES’ Report, the thesis of failure by the minority shareholders to join the restructuring transaction does not hinder the Bank’s proposal, since they have an immaterial interest in the company.
3.3 | Risks related to Angra 3 – BNDES Perspective |
This TIR does not provide on the risks posed by the transaction proposed by BNDES, which shall be established by Eletrobras’ corporate risk department. Nonetheless, as such corporate restructuring depends on Eletronuclear’s valuation, which is directly affected by the economic and financial assessment of Angra 3, we understand that addressing this specific transactional matter is relevant for purposes of this TIR.
First, in section “III.4.5. Financial and Legal analyses of the risks related to Eletronuclear’s restructuring” of the Detailed Report on the Model, the Bank provides that, so that the corporate restructuring materializes as suggested, the following situations, still uncertain, shall happen as follows:
(i) the studies requested by Eletronuclear to BNDES shall confirm the feasibility of the project for resuming and completing the Angra 3 works;
(ii) Eletronuclear shall be able to finally hire the EPC Contractors and fund the completion of Angra 3;
(iii) CNPE shall consider that the price of electricity covering all costs meets with the principles of reasonability and lower tariffs;
(iv) TCU shall issue a favorable decision on the compliance with the provisions in article 10 of Law No. 14,120/2021 in the determination of the price of electricity and on the decision to complete Angra 3, pursuant to article 3, paragraph 2 of Decree No. 9,915 of July 16, 2019; and
Page 16 of 68 |
14/01/2022
IT DFP-004/22 |
(v) the competent bodies shall not opt for the decommissioning of Angra 3.
In other words, Angra 3 shall be developed as provided for by BNDES, a hypothesis adopted in the construction of the corporate restructuring model. Any events that may pose “tariff risks” affect the valuation of the new plant. The modeling of the proposed restructuring has zero NPV in the valuation of the plan Angra 3, on the base date of June 2020, as one of its basic assumptions.
Regarding this topic, BNDES establishes, as one of the main factors that may lead to the materialization of the “tariff risk”, the determination, by CNPE, of a tariff for the sale of electricity from Angra 3 lower than the break-even one, causing a negative NPV for this project on the mentioned base date.
In this regard, the Bank weights the impact of the negative NPV on the transaction. As exposed in the Detailed Report on the Model, preliminary studies indicate that the cost for not finishing the work was estimated at BRL14 billion, which creates a gap for the NPV between zero and -BRL14 billion for not discontinuing the work. Thus, one of the events that may lead to the materialization of the “tariff risk”, the worksite decommissioning, is mitigated.
Another implication for the restructuring in case Eletronuclear’s value is different from zero, according to the BNDES Report:
“As the valuation was prepared, ENBpar shall pay a transaction amount that assumes that NPV of Angra 3 is equal to zero on the base date of June 2020. Nevertheless, as exposed, there is a risk of a negative NPV, more precisely between BRL14 billion and zero. Thus, if any of the tariff risks materialize, ENBpar shall have paid a value greater than fair to undertake control of Eletronuclear.”
3.4 | Other Modeling Aspects |
In addition to the economic and financial modeling topics, presented in the previous sections of this TIR, there are also other actions suggested by BNDES to effect the transaction.
Among them, the execution of an “Investment Agreement” between the parties involved in the transaction: Eletrobras and ENBpar.
The terms suggested for this Agreement are present in the Detailed Report on the Model of October 18, 2021, which were ratified by CPPI Resolution No. 203 of October 19, 2021. However, as informed by the Bank, after discussions between several stakeholders engaged in the Eletrobras privatization process, in the Second Addendum to Detailed Legal Report and Detailed Report on the Model, is proposed that a new CPPI Resolution should be enacted changing the writing of article 11, item XII, as follows:
Page 17 of 68 |
14/01/2022
IT DFP-004/22 |
XII – execution, between ELETROBRAS and ENBpar, of an investment agreement setting forth, at least, the obligations of the parties to:
a) participate in the process to increase funding for Angra 3, through the concession of personal guarantees, as well as through on-lendings as loans for Eletronuclear, in the total volume necessary for the completion of the Nuclear Power Plant Angra 3, under the studies carried out by BNDES as provided for in Decree No. 9,915 of July 16, 2019 and Law No. 14,120 of March 1, 2021 and ratably to their shares in the voting capital stock of Eletronuclear, and, for purposes of the proportion calculation, shall be disregarded guarantees, loans, and support contractual obligations existing between the Federal Government or Eletrobras and Eletronuclear, it being understood that these guarantees, loans, and support contractual obligations shall be maintained; and
b) perform all acts of its jurisdiction in order to subscribe for new issuances of shares of Eletronuclear, in such form to be determined by the studies contracted hereby with BNDES, in the proportion of its shares in the voting capital stock of Eletronuclear;
Published on December 30, 2021, Resolution CPPI No. 221 has this new wording in its Art.1, in line with what was suggested by BNDES.
Another point to highlight refers to terms for providing guarantees by partners upon obtaining new credit facilities by Eletronuclear.
According to the Investment Agreement sent by the Bank to Eletrobras:
CHAPTER II – CONTRIBUTIONS, FUNDING, AND GUARANTEE
2.6 Secured Funding. In cases of Secured Funding, ENBpar and/or Eletrobras, as the case may be, shall grant concessions of personal guarantees necessary for obtaining such Secured Funding, under the following terms:
Page 18 of 68 |
14/01/2022
IT DFP-004/22 |
(i) The contractual instruments executed as a result of the Secured Funding may (a) establish a vicarious or joint liability between one Party and Eletronuclear, by the secured amount for such Party, but there shall have no vicarious or joint obligation between the Parties by the secured amounts for each one of them and (b) establish a waiver by the Parties of their rights as provided for in arts. 827 and 835 of the Brazilian Civil Code;
(ii) The Parties shall not be obligated to grant collaterals under this Agreement, nor personal guarantees under terms different from as listed in the Funding Proposal or this Agreement; and
(iii) In case of granting a guarantee for an indefinite term, the Parties agree that the right provided for in art. 835 of the Brazilian Civil Code shall not be exercised, except upon agreement between the Parties.
Finally, it is important to highlight that the abovementioned Agreement shall be previously submitted to the General Shareholders’ Meeting of Eletronuclear approving the restructuring, and its efficacy is bound to such approval and the effective privatization of Eletrobras.
Another point that deserves attention concerns the “Decommissioning Financial Fund” for Angra 1 and Angra 2. These funds have been deposited by Eletronuclear in Banco do Brasil since 2008 in the fund BB Extramercado Exclusivo 30 Fundo de Investimento Multimercado Longo Termo. Their purpose is to fund the decommissioning activities in these plants at the end of the authorization period, with an indefinite term.
Eletrobras owns this Fund, and, as informed in BNDES’ Detailed Report on the Model, it may not be transferred or granted, except for the following situations, pursuant to the applicable CVM regulation:
I. | court decision or arbitration award; |
II. | fiduciary assignment; |
III. | execution of guarantee; |
IV. | universal succession; |
V. | dissolution of marriage or domestic partnership through court or public deed providing for the distribution of property; and |
Page 19 of 68 |
14/01/2022
IT DFP-004/22 |
VI. | transfer of management or portability of pension plans. |
The Bank suggests that, considering the context of privatization and the legal determination of transfer, a prior consultation to be made with CVM to find out if it is possible to include, in any of the above exceptions, the transfer of shares from the Eletrobras Fund to Eletronuclear, mentioning that exception IV would be the most likely. BNDES states in its Report that the parties have good grounds for supporting such request.
CVM was consulted and has already agreed to the transfer of the decommissioning fund.
Regarding the cost of this transaction, BNDES’ Report states that:
“According to information provided by Eletrobras, as Eletrobras has a liability to Eletronuclear due to the transfer, by it, of the resources contributed to the Fund, and the updated value of such liability corresponds to the fair value of the Fund’s quotas, the payment for the quotas of the Fund would be made by offsetting Eletrobras’ liabilities as a price to be paid by Eletronuclear. “
It is important to emphasize that this transfer is listed in theInvestment Agreement sent by BNDES, as one of the conditions precedent of the actions required to settle the offering of shares and, moreover, to the own validity of the Investment Agreement. All conditions precedent are duly listed in section III of the Investment Agreement forwarded by BNDES, attached to this TIR.
Despite the economic and financial aspects of Eletronuclear restructuring modeling, it is worth emphasizing that this transaction is classified as a related-party transaction, according to Eletrobras’ Related-Party Transaction Policy (Policy).
Accordingly, Eletrobras’ Policy establishes in item 4.1.7 that the Federal Government, controlled companies, associated companies, and entities related to it are characterized as parties related to Eletrobras, and in item 4.1.8 that when the Federal Government has significant influence over the decision-making of a certain company, the transaction with this company shall be considered an Eletrobras related-party transaction.
Page 20 of 68 |
14/01/2022
IT DFP-004/22 |
The Policy also defines that transactions with related parties shall be carried out on a commutative basis, mutually beneficial, and negotiated under market conditions, or, furthermore, shall offer adequate compensation. Furthermore, they shall be reasonable, justified, and balanced, that is, contracted on a fair basis and under market conditions, without exclusively benefiting any of the parties. The negotiation and decision-making processes concerning related-party transactions shall be effective, independent, and capable of providing adequate compensation payment. It is possible to verify these conditions through the performance of tests for (i) comparison of the deal with similar ones already carried out in the market (“Fairness Test”); or (ii) comparison with another, hypothetical deal, if it were concluded with an independent third party, that is, verifying the transaction would be carried out under the same terms with a third party other than the related party (“Arms-length Bargain Comparison”).
Thus, related-party transactions shall be analyzed in an informed, thoughtful, and disinterested manner compared to the market alternatives, and the decision shall be made in the company’s interests.
Item 4.2.12 of the aforementioned policy defines that, in case of doubts in performing the aforementioned tests or in the case of complex transactions such as corporate restructuring, the analysis shall be performed by a specialized independent institution that is not linked to the companies involved in the related parties transaction.
Eletrobras’ related-party transaction policy establishes that such transactions shall not result from the influence of the related party in the formation of the shall of the corporate body. They shall result from the effective negotiation between independent parties and the reasoned and reflected deliberation of the collegiate body, in the best interest of the company.
For the structuring and approval of the matter, the mentioned policy defines in item 4.3.20 in addition to the usual instruction documents of the matter, the following information shall be included in the referred documents to be approved: (i) amount involved in the transaction with related parties; (ii) existing balances; (iii) terms and conditions; (iv) nature of the remuneration to be paid; (v) information on guarantees given or received; (vi) provision for doubtful debt collection and expenses with losses recognized in the period; (vii) remuneration of key management personnel; (viii) participation of the parent company and the subsidiary in a defined benefit plan with shared risks between company entities, if applicable; (ix) information regarding the performance of fairness tests or arms-length bargain comparison tests, their description and result, or, as the case may be, description of the appropriate compensatory payment; and (x) information required by CVM Instruction and applicable legislation, for disclosure to the market.
Page 21 of 68 |
14/01/2022
IT DFP-004/22 |
In addition, the matter shall be submitted for review and approval to the Audit and Statutory Risks Committee – CAE and the Eletrobras Board of Directors – BD.
For the transfer of Eletronuclear to ENBpar, the transaction is inserted in a broader context, which is the capitalization of Eletrobras, i.e., the transfer shall not occur in isolation, but only if Eletrobras is capitalized.
Thus, the analysis of the arm’s length conditions shall be seen from the global point of view of the transaction, and not only from the individual point of view of this transfer, and shall be subject to appreciation in a specific Technical Note on the subject.
3.5 | Considerations on the BNDES Proposal |
This section of the TIR presents DFPA’s notes regarding the BNDES proposal for restructuring Eletronuclear described in the Detailed Modeling Report.
1. Value of NPP Angra 3. The BNDES modeling assumes that the new plant, Angra 3, shall have NPV=0 on the base date of June 2020. However, in the Bank’s report, it is stated that the restructuring transaction shall be completed without knowing the sales tariff for the energy from this enterprise and, as a consequence, without knowing the exact value of Eletronuclear. It should be noted that the energy sales tariff for the project is a CNPE assignment and that its lack of definition brings uncertainties to the intended transaction. This uncertainty refers to the possibility of ENBpar paying Eletronuclear more than its fair value. This risk could lead TCU to refuse to accept ENBpar’s participation in Eletronuclear, thus slowing down the capitalization process of Eletrobras. Another risk associated with the lack of definition of the tariff is that Eletrobras would have to contribute with more resources for the project because it would not be able to obtain all the financing necessary for its conclusion.
2. Structure of guarantees. The ability of ENBpar to provide the necessary guarantees is a point of concern, since today it is not able to do so. If the Federal Government does not offer the guarantees, without requiring counter-guarantees from ENBpar, the Angra 3 project may not achieve the necessary funding structure for its conclusion, and consequently lead to the demobilization of the project, with an estimated cost of BRL14 billion, virtually all attributed to Eletrobras. Another point to be noted is that even though Eletronuclear is no longer controlled by Eletrobras, 100% of its indebtedness shall continue to have an impact on the Eletrobras balance sheet since it shall be included in the guarantees given for unconsolidated debts.
Page 22 of 68 |
14/01/2022
IT DFP-004/22 |
3. Allocation of guarantees to the project. The Investment Agreement proposed by BNDES states that the guarantees provided by Eletrobras in previous funding related to the Angra 3 project shall not be considered in the calculation of the Guaranteed Payment under the Investment Agreement. In other words, Eletrobras and ENBpar shall guarantee the new funding in the proportion of their voting capital, disregarding what Eletrobras has previously done. As such, the partners’ participation in the total funding guarantees for the construction of the NPP Angra 3 is disproportionate to their participation in the Eletronuclear’s voting capital. Thus, Eletrobras shall take a higher risk than its participation in the voting capital.
4. Risk of an assessment by the Federal Revenue Service regarding the understanding on the correction of the balance of dividends due (~BRL2.6 billion). Despite the understanding that the balance corrected by Selic shall be registered as a closed amount (without opening the composition), due to the amount and the singularity of the proposition, the transaction may be scrutinized by the Federal Revenue Service.
5. Entry of financial expenses in Eletronuclear’s results. Regarding dividends to be paid, according to a BNDES report, approximately BRL1 billion derives from the SELIC correction of historical dividends payable. Accordingly, this amount shall be entered as a financial expense by Eletronuclear, which affects the company’s result.
6. Obligation of Eletrobras to raise funds to pass on to Eletronuclear via a loan. It is understood that the obligation to raise funds for the Angra 3 project belongs to Eletronuclear, with the guarantee from the partners (Eletrobras and ENBpar). Eletrobras should not be obligated to commit to fundraising for Angra 3, which shall compete with fundraising for expansion in other more profitable projects, since the Angra 3 tariff assumption is to maintain NPV = 0.
7. Assignment of the preemptive right of subscription in shares with voting rights for free. The market generally prices this right, i.e. subscription rights to shares have value. In this case, the BNDES modeling defines this subscription right as a “call at price” which by definition has zero value. Thus, Eletrobras shall lose control of Eletronuclear without any compensation/return. This transaction is a TPR and the way it is structured (free assignment) does not meet the arm’s length requirement.
8. Creation of the Capital Reserve account. BNDES proposes the creation of the equity account “Capital Reserve,” in the amount of up to BRL2,704,317,107.98, which shall be used to pay the dividends due. This amount shall be realized if all the minority shareholders participate in the subscription of the new shares. However, the amount of these same dividends, updated for April 2022, presented in the BNDES Report, totals BRL2,703,020,820.70. There is a difference of BRL1,296,287.28, which may remain in the Capital Reserve account in case the dividends paid are less than those allocated for their payment and, once again, if all the shareholders participate in the transaction.
Page 23 of 68 |
14/01/2022
IT DFP-004/22 |
9. Conversion from common to preferred shares. In this case there are two points of attention: i) for the conversion ratio of 1:1, BNDES did not present any financial rationale for the equal conversion of shares. In general, the pricing of common and preferred shares are different, due to the preference rights of the latter over the former; and ii) Eletrobras is going to give up voting shares for shares with preference in the receipt of dividends, since the obligatory dividends which are currently included in the Eletronuclear bylaws shall be extinguished and Eletronuclear’s distribution forecast is only for the long term, after Angra 3 comes into operation. Therefore, there is no financial or corporate justification for Eletrobras to adhere to this conversion. It is worth noting that BNDES recognizes in its report that the loss of the right to preferred dividends for preferred shares, also proposed in the transaction, shall confer withdrawal rights to shareholders holding this type of share precisely because of the loss of a right that has value. Also, that Eletrobras shall be responsible for the cost of compensating the shareholders who opt for this withdrawal right.
10. The economic impact of the transaction on Eletrobras’ results. In the income statement for the year 2021 there shall be a recognition of a negative adjustment in the value of Eletrobras’ investment in Eletronuclear, after the restructuring and consequent reversal of the impairment of Angra 3. The difference shall be accounted for as a write-off in the Investments in Assets account against a loss in the Income Statement because the fair value of Eletronuclear calculated by BNDES will be lower than that recorded in Eletrobras’ Balance Sheet after reversal of the impairment of Angra 3.
11. Consent of Creditors. The Eletronuclear’s creditors have to consent to the proposed corporate change. The two main creditors of Eletronuclear are CEF and BNDES.
12. Share price. The same price is assigned to the common and preferred shares for the issuance of new shares, even if they have different statutory rights. The Bank determines the removal of the preferred shares’ right to the cumulative minimum dividends as an act that shall be performed in the Shareholder’s Meeting, which shall also approve the terms of the restructuring transaction and capital increase. It is worth stressing that up to the moment the EGM is held such shares are entitled to receive such compensation, which causes the difference in value between the company’s common and preferred shares.
Page 24 of 68 |
14/01/2022
IT DFP-004/22 |
13. Waiver for Civil Code rights. The Investment Agreement states that Eletrobras may be jointly and severally liable to Eletronuclear regarding the financing for the construction of the Angra 3 plant, as the guaranteeing party of operation, waiving the rights defined in articles 827 and 835 of the Civil Code. It should be noted that the guarantee contracts signed by Eletrobras do not provide for the case of joint liability, and the acceptance of the waiver of the rights set out in art. 827 is a practice not adopted by Eletrobras.
14. Transfer of the decommissioning fund to Eletronuclear. It should be clear that Eletrobras should be compensated for any loss resulting from this transfer. Here we see the tax issue.
4. | ECONOMIC AND FINANCIAL assessment |
4.1 | Rationale and Scope of the assessment |
As mentioned above, the economic and financial valuation of Eletronuclear comprises a key step in the privatization process of Eletrobras, in view of the need for corporate restructuring to maintain state control over Eletronuclear.
In order to implement the corporate restructuring of Eletronuclear under the terms of Law 14,182/21, it is therefore necessary to perform an economic and financial assessment of the Company in order to measure the value of the company and its respective operating assets (Angra 1 and Angra 2), as well as the projects underway (Angra 3).
It should be noted that the conditions necessary to make the conclusion of the NPP Angra 3 feasible are the object of analysis by BNDES and the responsibility of CNPE, whose timetable for the definition of the main premises transcends the present study.
Despite the advances observed in the definition of parameters about the feasibility of the Angra 3 project, especially in relation to Law 14,120/21 and CNPE Resolution 23/2021, until the conclusion of this assessment, there are still uncertainties about variables such as the schedule and CapEx for completion and, mainly, break-even tariff of the enterprise.
Below is a summary of the main boundary conditions defined over 2021 for the completion of the Angra 3 project.
Page 25 of 68 |
14/01/2022
IT DFP-004/22 |
Figure 1 – Parameters for Angra 3 completion
It is important to note that the economic and financial balance established to define the tariff to be calculated by BNDES for the Angra 3 Project contemplates the concept of zero NPV (NPV Angra 3 = 0) so that it should recompose the expenditures as of the base date of June 30, 2020, considering:
· | Investments for the implementation of Angra 3; |
· | Amortization and interest of pre-existing debt; |
· | Conversion into the capital of loans and AFACs in the equity on the base date. |
Break-even tariff to be defined shall be that which recomposes costs and expenditures realized and projected in the scope of the Angra 3 Project valued at the base date at the real cost of capital of the shareholder of 8.88% per year, according to CNPE Resolution 23/2021.
Figure 2 – Angra 3 Assessment Scheme
In view of the above, with the objective of encompassing the concept and the provisions of the regulations that deal with the feasibility of the Angra 3 enterprise, as well as the lack of definition of the main assumptions for projection of this asset, the present study considers that the economic and financial valuation of Eletronuclear results from the projection of the Operational Assets (Angra 1 and Angra 2) segregated from the Angra 3 Project.
Page 26 of 68 |
14/01/2022
IT DFP-004/22 |
Thus, Eletronuclear’s Valuation results from the economic and financial valuation of Angra 1 and Angra 2 operating assets according to DFPA’s methodology and internal guidelines added to the valuation methodology for the Angra 3 project.
Figure 3 – ETN Valuation Concept
Legend:
Operating Assets
Forecast of Cash flows related to assets Angra 1 and Angra 2.
NPV
Assets Adjustment
Liabilities Adjustment
Contingents
Non-Operating Assets
Angra 3 Assessment under Zero NPV concept and project regulatory conditions.
Debt Costs A3
Investments A3
Conversion AFAC/Loans A3
4.2 | Assessment Methodology<0} |
According to DFPI Working Instruction – IT – EFI-100-001, the SPE assessment – valuation – performed by Eletrobras should preferably use the discounted cash flow methodology. This methodology is based on the assumption that the value of a project depends on its ability to generate wealth in the future. Revenues, costs, expenses, investments, and other working capital needs are estimated, in addition to all items that affect the project’s cash flow variation for a given period.
Page 27 of 68 |
14/01/2022
IT DFP-004/22 |
Since the cash flows generated occur in different periods, they shall be added up and compared at the same moment in time (present value). Thus, the net balances for each period are discounted to present value at a discount rate that reflects the risks inherent in the business plus the opportunity cost of risk-averse investors, i.e., at a rate of attractiveness that reflects the opportunity cost of the business’s capital providers.
Not exhaustively, the Net Present Value of the Shareholder’s Cash Flow (NPV) should be estimated. Besides this, sensitivity analyses may also be performed, as needed, in relation to the main variables impacting the result, in order to provide a better perception of the risks and the potential value of the project.
Thus, the assessments performed by the DFPA technical team took into account the application of the discounted cash flow methodology for the shareholder (Free Cash Flow of the Shareholder).
4.3 | Assessment Assumptions |
4.3.1 | General Assumptions |
The main assumptions used for preparing Eletronuclear’s assessment are summarized as follows.
Assumptions | Source |
Base date: December 2020 | - |
Financial Statements as of 2018, 2020, and 2020 | Eletronuclear – ETN |
Discount rate (Rolling Ke) | Memo DFPP-012/2021 |
Forecast period | ETN / CNPE Resolution 23/2021 |
Macroeconomic indicators | DFPP, July 2021 |
Funding agreements | Eletronuclear – ETN |
Transaction Information | ANEEL/Eletronuclear – ETN |
PMSO/Capex Information | Eletronuclear – ETN |
Nuclear Fuel | Eletronuclear – ETN |
4.3.2 | Macroeconomic Assumptions |
As already mentioned, for the projection of the macroeconomic indexes, the Long Term Macroeconomic Scenarios Report of July 2021, prepared by DFPP, was used. The following graphic shows the projection of these indicators, highlighting that after 2031 the projections are constant.
Page 28 of 68 |
14/01/2022
IT DFP-004/22 |
Graph 1 – Macroeconomic Indicators
Legend:
Inflation - % p.a.
Foreign Exchange Rates
Interest Rates
Extended National Consumer Price Index (IPCA)
United States Consumer Price Index (CPIUS)
Europe Consumer Price Index (CPIEUR)
AVERAGE EURO
AVERAGE DOLLAR
Selic
CPIEUR
4.3.3 | Nuclear power Generation Assets |
Eletronuclear, controlled by Eletrobras, has as its main activity the construction and operation of nuclear power plants, the generation of electric energy resulting therefrom, and the performance of engineering and related services.
Currently, the Company is the concessionaire of the nuclear power generation assets in operation, Angra 1 and Angra 2, which total 1,990 MW of installed capacity, as well as of the NPP Angra 3, in the construction phase, with a capacity of 1,405 MW.
Graph 2 – FTN Installed Capacity – MW
Page 29 of 68 |
14/01/2022
IT DFP-004/22 |
Legend:
Total Operation
Potential Operation
Angra 1 and Angra 2
UTN Almirante Álvaro Alberto – Unit I (the NPP Angra 1) was commissioned in 1957, and transferred to Eletronuclear in the late 1990s. The plant is located in the municipality of Angra dos Reis, in the state of Rio de Janeiro. With 640 MW of installed capacity, it started its commercial operation in 1985.
The Almirante Álvaro Alberto Unit II (the NPP Angra 2) was commissioned in 1962 and transferred to Eletronuclear in late 1990s. The plant is located in the same complex as the NPP Angra 1. With 1,350 MW of installed capacity, it started its commercial operation in 2001.
Table 9 – ETN Generation Assets
Legend:
NPP
Status
% ETN
Institutional Capital
Authorization
Extension
MW
Start
End
Transaction
Construction
Jan
Sep
Oct
Dec
Aug
N/A
Since January 2013, as established by Law 12,111 (December 09, 2009), the energy generated by Angra 1 and Angra 2 plants is commercialized with all energy distributors in the National Interconnected System (SIN) on a quota-parts basis with assured energy quantity and fixed revenue defined by ANEEL. Eletronuclear’s tariff is, therefore, now annual and apportioned among the distribution concessionaires, licensees, or authorized distributors in the SIN.
Page 30 of 68 |
14/01/2022
IT DFP-004/22 |
Eletronuclear holds 100% ownership of its nuclear power assets. Regarding the original authorization deadlines, Angra 1 and Angra 2 plants cease operations in Dec/24 and Aug/40, respectively.
However, since 2019, Eletronuclear has started the process of extending the operating license of Angra 1 for another 20 years with CNEN. It is worth noting that the extension of the working life of nuclear power plants presents a significant number of occurrences in the international experience.
In this sense, the company’s current understanding is that the extension of the working life of the NPP Angra 2 shall also occur at the end of the operating authorization in 2040.
Angra 3
Originally, the energy to be generated by the Angra 3 plant would be commercialized through the reserve energy regime (CER), with a reference tariff of BRL480/MWh (July 2018) as established by the National Energy Policy Council – CNPE through Resolution No. 014/2018 of October 09, 2018.
Nevertheless, in September 2020, Provisional Measure no. 998/20 (DOU of September 02, 2020), transformed into law in March 2021 (Law 14,120/2021) established parameters related to the Plant concession, noting the termination of the existing CER and, above all, the agreement of a new agreement with an energy price to be defined by the studies in progress conducted by BNDES.
As noted earlier, both the schedule and the CapEx for the conclusion of the Angra 3 project are under assessment by Tractebel, contracted by BNDES for this purpose, whose forecast for completion of the preliminary version of these studies is December 2021.
4.3.4 | Revenue Projection |
Operating Revenue
Law 12,111/2009 establishes that the revenue from the NPPs Angra 1 and Angra 2 is shared among all the utilities, licensees, or authorized distribution public service providers in the National Interconnected System (SIN). These plants operate under a quota system in which the contracted volume is equivalent to the effective generation.
Page 31 of 68 |
14/01/2022
IT DFP-004/22 |
The table below summarizes the generation characteristics of the Angra 1 and Angra 2 assets in the tariff adjustment process for the year 2021, according to ANEEL Resolution No. 2,821 of December 15, 2020.
Table 10 – Technical Characteristics – MW
Legend:
Installed Capacity
Maintenance Stops
Guaranteed Power Output
Internal Consumption
Losses
Assured Electricity
The generation revenue from the Eletronuclear’s operating the NPPs is equivalent to the fixed annual revenue defined by ANEEL in a specific tariff process,2 divided into Periodic Review and Annual Readjustment.
The periodic reviews are carried out every five years, considering the economic and financial balance of the generating plants, while the Annual Readjustment has the purpose of maintaining the economic and financial balance of the revenue established in the review process.
Since the NPPs Angra 1 and Angra 2 operate under a quota system in which the contracted volume is equivalent to the effective generation (= physical guarantee – losses), therefore, unavailabilities additional to those reflected in the Review process were not considered. Thus, no generation surplus/deficit was projected for the projection horizon.
Periodic Review
As mentioned, the Periodic Review occurs at five-year intervals, with the last one for the NPPS Angra 1 and Angra 2 taking place in 2018. The next reviews shall occur in 2023, 2028, 2033, 2038, and 2043.
Page 32 of 68 |
14/01/2022
IT DFP-004/22 |
The revenue calculation is composed of Installments A, B, and Adjustment, as follows.
Figure 5 – Angra 1 and Angra 2 Revenue Composition
Legend:
Installment
Comprises the unmanageable costs by Eletronuclear
Sector Charges
Transportation Cost
Nuclear Fuel
Decommissioning Fund
Comprises activity costs manageable by Eletronuclear
Management, Operation, and Maintenance – CAOM
Capital Remuneration – RC
Regulatory Reinstatement Quota – QRR
Adjustment Installment
Comprises the adjustments of Installments A and B in the subsequent cycle
Annual Adjustment
The Annual Adjustment procedure occurs every calendar year so that Installment A follows the projection of its respective components, while Installment B is corrected by the IPCA until the next Periodic Review.
The resulting value of the annual adjustment process at the end of 2020 [fiscal year 2021] for each revenue component may be seen in the sequence.
Page 33 of 68 |
14/01/2022
IT DFP-004/22 |
Table 11 – Angra 1 and 2 Revenue – ANEEL REH No. 2,821/2020
Legend:
BRL/MWh
INSTALLMENT
Electricity Services Inspection Fee (TFSEE)
National Electric System Operator – ONS
Global Reversal Reserve (RGR)
Transportation Cost
Fuel Cost
Decommissioning Fund
Operating Costs
Capital Remuneration
Reinstatement Quota
Regulatory Reinstatement Quota
Installment A + Installment B
Adjustment Installment
Adjustment Installment – Transportation, RGR, and TFSEE
Adjustment Installment – Fuel
Adjustment Installment –2020 resource
Adjustment Installment – others
Social Integration Program (PIS)/Social Security Financing Contribution (COFINS)
FIXED REVENUE
Estimated Tariff
Page 34 of 68 |
14/01/2022
IT DFP-004/22 |
Installment A
Sectorial Charges
The sectorial charges that compose Installment A of the operating revenue are:
· | RGR: The amount defined for RGR in the year 2021 was BRL104,430 thousand, applying IPCA updating throughout the projection. |
· | ONS Contributions: The Associative Contribution to ONS is calculated based on an annual budget estimated by ONS. The projection assumption considers the amount of BRL258.9 thousand/year in 2021 corrected by the IPCA throughout the projection horizon. |
· | TFSEE: All generation developments, regardless of their operating regime shall pay TFSEE, except for CGHs. Eletronuclear’s calculation is the value of the estimated annual Installment B multiplied by 0.4%. |
Transportation Costs
The transportation costs are related to the costs of connection and use of the energy transmission and distribution structures.
The projection of the transmission costs considers the parameters used for defining the operating revenue of Angra 1 and Angra 2 the NPP during the Annual Readjustment process for the year 2021.
Figure 6 – Transportation Costs
Legend:
Connection Charges
Transmitter
Amount
Furnas
Transmission System Use Charge
Power Plant
Total
Amount for the Use of the Transmission System (MUST) (MW)
Tariff (BRL/KW)
Annual Charge for the Use of the Transmission System (EUST)
Charges for the Use of the Distribution System
Tariff Sub-Group
A4 (Green)
Page 35 of 68 |
14/01/2022
IT DFP-004/22 |
A2 (Blue)
Amount for the Use of the Distribution System (MUSD) (KW)
Tariff (BRL/KW)
Peak Energy (MWh)
Peak Tariff (BRL/MWh)
Off-Peak Energy (MWh)
Off-Peak Tariff (BRL/MWh)
Annual Charge for the Use of the Distribution System (EUSD)
Nuclear Fuel
According to ANEEL regulations for annual adjustment in the scope of nuclear power plants, Eletronuclear shall inform the regulator of the estimated cost of nuclear fuel for the fiscal year of application of the adjustment considering the values and events contractually scheduled with Indústrias Nucleares do Brasil – INB in the reload schedule.
In this regard, the estimate submitted by the company within the scope of the adjustment procedure for 2021 totaled BRL827,670,000.00.
The projection of fuel costs considered the rationale of the agreements entered into between Eletronuclear and INB, as used in previous modeling carried out by Alvarez & Marsal, a contractor of Eletronuclear.
The nuclear fuel supplies arise from the need to substitute the incinerated fuel elements of the reactor after their loss of energy potential. The Eletronuclear’s assumption considers a replacement cycle of one third of the elements contained in the reactor with a periodicity of 13 months (which implies days of stoppage for the execution of the substitution and maintenance).
Figure 7 – Nuclear Fuel Exchange Cycle
Source: Alvarez&Marsal
Page 36 of 68 |
14/01/2022
IT DFP-004/22 |
Legend:
13 months
36 months burn time for each fuel refill
The fuel element acquisition process may be divided into four steps: 1. Uranium concentrate acquisition; 2. Uranium oxide conversion into uranium hexafluoride; 3. Enrichment; and 4. Fuel element fabrication.
For the assessment base date, the projected costs of each component of nuclear fuel recharge may be seen below.
Table 12 – Fuel Recharge Cost – 2020 – BRL thousand
Legend:
Fuel Refill
Total
Concentrate
Conversion
Enrichment
Fuel Elements
Reimbursable costs
The values are adjusted according to the agreement with INB.
Decommissioning Fund
The Decommissioning Fund is the coverage given for the composition of the financial fund required for the decommissioning of the Angra 1 and Angra 2 Generation Plants after their respective shutdowns.
Based on the parameters used for the annual adjustment process for the year 2021, which established the total amount of resources necessary for the decommissioning of Angra 1 and Angra 2, it was calculated the coverage to be granted in 2021 for the composition of the fund, resulting in the amount of BRL186,781,337.77.
Page 37 of 68 |
14/01/2022
IT DFP-004/22 |
Table 13 – Need for Resources – Desc. Angra 1 and 2 – BRL thousand
Legend:
Plant
Funds Required
Total
Installment B
Operating Costs
The Operating Costs item includes the costs with Personnel, Materials, Third-Party Services and Other Operating Costs (PMSO), which are manageable by Eletronuclear.
In the scope of the tariff review process, for the year 2021 it was established an amount of BRL994.9 million/year, as shown in Table 11. The amounts shall be adjusted by the IPCA, except in the years of Periodic Revision.
Capital Remuneration
The Capital Remuneration consists of the remuneration of the investments made by Eletronuclear related to the NPPs Angra 1 and Angra 2. The following table summarizes the parameters used in the last review that occurred in 2018.
Table 14 – Capital Remuneration Parameters – 2018 Revision
Source: Thymos Assumptions Report
Page 38 of 68 |
14/01/2022
IT DFP-004/22 |
Legend:
Description
Revision 2018 (Ref.: December 2018)
Total Net Remuneration Base
RGR Balance Other Investments
Real before taxes WACC
RGR Rate Other Investments
The parameters for the WACC are defined in Submodule 12.3 of PRORET, and the resulting the WACC is 6.76% real pre-tax, to be considered as an assumption in the next review processes.
The capital installments financed with RGR resources shall be remunerated by the rate of the loans contracted by Eletronuclear of 1.80% per year in real terms.
Regulatory Base
As noted in the Thymos Assumptions report, which served as the basis for the Eletronuclear Valuation as part of the Eletrobras capitalization process,
“(...) The remuneration base approved in the previous periodic review shall be shielded. It is understood as Shielded Base the values approved in the previous cycles, associated with the assets in operation, excluding the movements that occurred (write-offs and depreciation) and considering the respective updates. Considering also the accounting values for the incremental investments that occurred between the previous base date and the current one, which shall be updated by the IPCA.”
In its last periodic review process 2018, the values were:
Table 15 – Regulatory Base Parameters – 2018 Revision
Source: Thymos Assumptions Report
Legend:
Description
Revision 2018 (Ref.: December 2018)
Gross Remuneration Base
Accrued Depreciation
Total Net Remuneration Base
RGR Balance Other Investments
Page 39 of 68 |
14/01/2022
IT DFP-004/22 |
Depreciation Rate
The definitive value of the average depreciation rate to be used in the calculation of Eletronuclear’s revenue review is 3.26%, adopting it as an assumption for the next reviews.
For the incremental investments, the amounts provided for in the 2018 review cycle were considered, as well as the amounts contained in the company’s business plan.
Revenue Deductions
PIS and COFINS rates are 1.65% and 7.6%, respectively, on revenue. Thus, the deductions from gross operating revenue considered in the projection were:
· | PIS: 1.65% throughout the projection – Actual Profit |
· | COFINS: 7.6% throughout the projection – Actual Profit |
The graphic below shows the projection of operating revenue of THE NPPs Angra 1 and Angra 2.
Graph 3 – Gross and Net Revenue – BRL Million
4.3.5 | Costs and Expenses |
PMSO
In order to estimate the costs and expenses of the plant, Eletronuclear used the information made available by Eletronuclear as well as data used by Alvarez & Marsal from August 2021 in the Angra 3 tariff study.
Page 40 of 68 |
14/01/2022
IT DFP-004/22 |
The table below summarizes the distribution of the PMSO values between Angra 1 and Angra 2.
Table 16 – PMSO – BRL thousand
Legend:
Personnel
Material
Services
Stops
Total
BRL thousand/year
Amount
Base date
Indexer
Adjustment Month
PMSO Administrative
As observed above, for the projection it was considered the actual values in the base date of December 2020, updated by inflation using the IPCA.
Energy Transportation
Considering that the transportation costs are relevant components of Installment A of the gross revenue of THE NPPs Angra 1 and Angra 2, the estimates of this item follow the rationale discussed in the item Transportation Costs of the Operating Revenue.
Page 41 of 68 |
14/01/2022
IT DFP-004/22 |
Sectorial Charges
Similarly to the item above, the description of the projection of the sectorial charges was presented in the corresponding item in Installment A of the gross revenue.
There is no R&D payment forecast by Eletronuclear for the operation of its nuclear power plants.
Nuclear Fuel
The presentation of the projection of nuclear fuel costs is also included in the item of Installment A of the revenue.
Nevertheless, it is noteworthy that the value that goes through the DRE is the thermal depreciation of the nuclear fuel stock, while the projection of the recharge costs is inserted in the assessment both in the revenue projection and as accounts payable in the working capital.
4.3.6 | PIS/COFINS credit |
In the economic and financial assessment, as presented in BR Partners’ assessment report, the assumption of a PIS/COFINS credit refund on inputs directly linked to the company’s main activity was adopted, which can then be used against the costs of
· | MSO – Materials, Services, and Others; |
· | Connection charges and use of the transmission and distribution systems; and |
· | Capex. |
The graph below shows the projected costs and expenses of THE NPPs Angra 1 and Angra 2.
Page 42 of 68 |
14/01/2022
IT DFP-004/22 |
Graph 4 – Costs and Expenses – BRL Million
Legend:
PMSO
Fuel
Administrative
Charges + Transportation
4.3.7 | Investments |
Regarding the NPPs Angra 1 and Angra 2, Eletronuclear presents 3 types of investments related to the maintenance and preservation of the installed capacity, the extension of the license, and the working life of Angra 1 for another 20 years, as well as the construction of the Dry Storage Unit (UAS) as an alternative to the risk of exhaustion of the spent fuel pools.
Maintenance CapEx
The Maintenance CAPEX assumptions for Angra 1 and Angra 2 considered the information contained in Eletronuclear’s business plan and in the data collected in the Alvarez&Marsal’s work of Aug/21 regarding the continuous improvement in the maintenance and performance of the assets for the period between 2021 and 2030.
For the other years, we used the estimates presented by the BR Partners in its Eletronuclear Valuation report, as shown in the table below.
Table 17 – Maintenance CapEx
Page 43 of 68 |
14/01/2022
IT DFP-004/22 |
Legend:
Maintenance Capex
Start
End
Amount
Jan
Dec
Jun
date
USD/MWh
Graph 5 – Maintenance CapEx – BRL Thousand
LTO CapEx
Regarding the initiative to extend the working life of the power plants, Eletronuclear has started the renovation process of the NPP Angra 1, whose investment curve can be observed on the left in the chart below.
Page 44 of 68 |
14/01/2022
IT DFP-004/22 |
Graph 6 – CapEx LTO Angra 1 and Angra 2 – BRL Million
Legend:
Angra 1 LTO
Angra 2 LTO
The investment curve foreseen for the LTO of Angra 1 results from the Alvarez&Marsal study of August 2021, which was based on the proposals and agreements signed by Eletronuclear with the suppliers (Holtec/WEG and Siemens).
For the LTO of Angra 2, it is assumed the same investment curve with a forward displacement of 15 years, correction for inflation (IPCA/CPI) in the period, and adjustment for the difference in power of the plants.
UAS
Regarding the construction of the Dry Storage Unit, the projection considers an investment of BRL64.0 million for the year 2021.
4.3.8 | Financing |
Considering the debts related to Angra 1 and Angra 2, Eletronuclear had an outstanding balance of BRL491 million in Dec/20, of which BRL200 million with Eletrobras (~40%). The following table summarizes the main parameters and conditions of the existing debts.
Page 45 of 68 |
14/01/2022
IT DFP-004/22 |
Table 18 – Summary Conditions – BRL thousand
Legend:
Agreement
Eletrobras Financial Agreements (ECF)
Furnas
Financial Reporting Guidelines (FRG)
Amount
Method
Start
End
Amortization
Start
End
Spread
Indexer
Customer Service
Dec
Oct
Jan
PRICE
N/A
IPCA
Regarding the investments related to the extension of the working life of the Angra 1 and Angra 2 NPPs, the modeling uses assumptions of financing up to 80% of the LTO CapEx, amortization in 12 years, and CDI interest rate + 3.82% per year.
4.3.9 | Depreciation |
The projection considered the average rate of 3.26% per year practiced for the fixed assets in service of the Angra 1 and Angra 2 Plants.
Page 46 of 68 |
14/01/2022
IT DFP-004/22 |
4.3.10 | Working Capital |
The working capital need projection considered the working days of the balance sheet items observed for the year 2020.
Table 19 – Days of Working Capital
Legend:
Working capital
Days
Days of
Assets
Clients
Net Revenue
Liabilities
Suppliers
Expense Costs
Final Obligations
Sales tax
Although the nuclear fuel stock projection is included in the working capital calculation, the modeling does not use the concept of days but the contractual fuel supply events.
4.3.11 | Income Tax/Social Contribution on Net Profits – CSLL |
Projected considering a rate of 34% on the tax basis of the operational generation upon income and financial expenses, according to the taxable income system.
Moreover, the projections considered the use of the tax benefit balance of BRL2.190 million, according to the audited financial statement as of December 2020, reducing the tax basis by 30%.
4.3.12 | Discount Rate |
On September 16, 2019, DEE, through RES-645/2019, approved the new methodology to calculate the cost of capital of Eletrobras. According to the approved methodology and Technical Information Report DFPP-005/2019 of October 2, 2019 for cases in which there is a specific source of financing for a certain asset/project, other than corporate, a specific cost of capital shall be calculated for such asset/project. The methodology also defines that for the assessment of specific projects/companies, the capital structure used results from cash flows and not from the balance sheet.
Page 47 of 68 |
14/01/2022
IT DFP-004/22 |
In compliance with current procedures related to the calculation and use of the cost of capital for assessment of assets at Eletrobras, DFPA, through memorandum DFPA-046/2021, requested from DFPP calculation of the cost of capital to be applied to the assessment of the operating assets of Eletronuclear (Angra 1 and 2), considering the base date of December 31, 2020. Thus, DFPP through memorandum DFPP-012/2021 submitted projections of discount rate to be applied.
The isolated assessment of Angra 3 under the concept of Zero NPV is not compatible with DFPP’s analysis, and, therefore, is not incorporated into the requested cost of capital calculation.
Moreover, as highlighted in the DFPP memorandum,
“(…) the discount rate proceeding from this paper for the divestiture of Angra 1 and 2 is not compatible with the discount rate of the company Eletronuclear as a whole. For the complete analysis of the Company is necessary to obtain information on Angra 1, Angra 2, and Angra 3 and a new discount rate calculation needs to be carried out.”
The equivalent fixed rate (real equivalent Ke) for the strategic premium of 0.0% would be, therefore, 7.48% per annum. It is highlighted that the Eletrobras Executive Board is responsible for the decision on the Strategic Premium, considering the interval of -2.0% to 2.0%.
4.4 | Results |
4.4.1 | Operating Assets |
Given information and assumptions, as well as the method applied, the summary of the characteristics of forecasted flows may be noted below:
· | Free Cash Flow to Equity (FCFE) |
· | Base date: December 31, 2020 |
· | LTO of Angra 1 and Angra 2 |
· | End of the Projection: June 30, 2060 |
· | Frequency: Annual |
Page 48 of 68 |
14/01/2022
IT DFP-004/22 |
· | Currency: Reais (BRL/R$) |
· | Real flow |
· Disregards the Terminal Value
The economic and financial model of the assessment incorporates balances of equity accounts and income for the base date of December 31, 2020.
Any need for contributions by the shareholders to honor operational and/or financial obligations are contemplated by the assessment upon the emergence of cash deficits (negative values) in the FCFE.
It is important to emphasize that, although income and expenses forecasts took into account the forecasted inflation and, therefore, created a cash flow in nominal terms, the present value was calculated over the FCFE deflated.
The following table presents the ascertained result for Eletronuclear given operating assets Angra 1 and Angra 2 to an actual cost of equity (Ke) of 7.48% p.a. and strategic premium of 0.0%.
Table 20 – Equity Value Result (EV) – BRL thousand
Legend:
Valuation – Angra 1 and 2
Present Value of FCFE
Balance Sheet Adjustments – ASSETS
Page 49 of 68 |
14/01/2022
IT DFP-004/22 |
AC – Cash and Cash Equivalents
ANC – Securities
AC/ANC – Collaterals and court deposits
ANC – Other accounts receivable
Balance Sheet Adjustments – LIABILITIES
PNC – Legal Proceedings (Provision)
PNC – Suppliers
PNC – Payable Taxes
PNC – Other accounts payable
Off Balance Adjustments – Contingencies/Provisions
Possible Contingent Liabilities
Remote Contingent Liabilities
Contingent Assets
Equity Value
The result comprises not only the present value of cash flows but also liabilities and non-operating assets adjustments present in the company’s balance sheet on the base date of the assessment. Additionally, the result is impacted by 50% of the number of legal proceedings assessed as potential loss and non-provisioned that in December 2020 was BRL1,647,034 thousand.
The following table presents the result of the Eletronuclear valuation to each Strategic Premium amount, considering the interval of -2.0% to 2.0%.
Table 21 – Results – Strategic Premium – BRL million
Legend:
Strategic Award
Cost of Capital
Present Value of FCFE
Balance Sheet Adjustments – ASSETS
Balance Sheet Adjustments – LIABILITIES
Off Balance Adjustments
Equity Value
Page 50 of 68 |
14/01/2022
IT DFP-004/22 |
4.4.2 | Non-Operating Assets – Angra 3 |
As mentioned above, the assessment of Angra 3 contemplates the concept of zero NPV in which the break-even tariff to be defined shall be the one that recomposes the costs and expenditures incurred as of the base date (June 2020) to the actual cost of equity of 8.88% p.a., pursuant to CNPE Resolution 23/2021.
Figure 7 – Valuation Concept Angra 3
Legend:
Non-Operating Assets
Angra 3 assessment Zero NPV concept
NPV
AFAC/Loans A3
Others
Valuation A3
Considering that the NPV of the project shall be zero on the base date of June 2020 (pre-money), the post-money valuation of Angra 3 shall be a consequence of adjustments resulting from the AFAC, capitalization of loans, and others that occurred between that and the base date of this economic and financial assessment (December 2020).
Given the discussions about the progress of the critical path for the works of Angra 3, Eletrobras approved, in the first semester of 2020, the capitalization of BRL1.8 bi, being BRL0.85 bi for payment in full of AFAC payable and BRL1.05 bi for conversion of loans into capital, as well as the concession of new AFAC of BRL3.5 bi, as follows.
Page 51 of 68 |
14/01/2022
IT DFP-004/22 |
Graphic 7 – Eletronuclear Capitalization 2020 – BRL Thousand
Legend:
2020 Contribution
Payment in Full of AFAC
Debt Capitalization
2021 Contribution Business and Management Master Plan (PDNG) Capital
Total
Over the second semester of 2020, Eletrobras gave effect to the capitalization of old AFAC and the conversion of loans (October 2020) in the total amount of BRL1,885,778 thousand and disbursed the first installment, corresponding to 2020, of the new AFAC of BRL1,052,180 thousand in two tranches.
In 2021, of the total BRL2,447,464 thousand approved, and up to the time of the preparation of this TIR, BRL1,330,000 thousand were disbursed, therefore, BRL1,117,464 thousand still need to be contributed.
The figure below presents the capitalization and the liberation of the AFAC history from a base date perspective of the economic and financial assessment.
Page 52 of 68 |
14/01/2022
IT DFP-004/22 |
Figure 8 – Financial flows – Angra 3 – BRL thousand
Legend:
Base Date
Valuation A3
Loans Conversion
Payment in Full of AFAC
Valuation A3 and 2
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Mar
Apr
May
AFAC Disbursement
AFAC to be incurred
Assuming that the base date for the NPV of zero of Angra 3 is June 2020, all transactions made after this date are not captured in the pre-money valuation of the project.
Additionally, because the valuation base date of the operating assets Angra 1 and Angra 2 is December 2020, the capitalizations and funding contributions made between June and December 2020 under the Angra 3 project shall be included in its assessment.
Page 53 of 68 |
14/01/2022
IT DFP-004/22 |
Since the valuation of the operating assets took into account the position of the company’s equity accounts of December 2020, the cash and cash equivalents include the net balance of the implementation of funding contributions made during the period, as well as any uses.
Therefore, the first adjustment in the Angra 3 assessment is due to the need to correct the effect of the contributions on the assessment, as the repercussion about the company’s cash balance sheet composes the result of the valuation of the operating assets, according to Table 14, preventing double count.
With that, the amounts disbursed over 2020 in a total of BRL1,052,1 million were absorbed in cash line item and cash equivalents of the company’s balance sheet in December 2020 and shall be removed from the Angra 3 valuation, only remaining the payment in full of the AFAC (2019) and the loan capitalization.
For the conversion of debt contracts into capital, it is worth highlighting the need to take into account only the capitalization of those that have been directed to the development of Angra 3. The allocation of loans regarding Angra operating assets (A1 and A2) and Angra 3, as well as corresponding amounts, may be seen below.
Table 22 – Loan Contracts – BRL thousand
Legend:
Debt Agreements
BRL thousand
Assets
ECF
NOV
Efficient Consumer Response (ECR)
Resolution (RES)
Total
Based on the table it is possible to note that the amount related exclusively to assets Angra 1 and 2 correspond to BRL512.5 million, as to Angra 3 is BRL523.3 million. Therefore, for the Angra 3 valuation, it is important to only take into account the amounts assigned exclusively to the project and not the total of BRL1,035,8 million.
Page 54 of 68 |
14/01/2022
IT DFP-004/22 |
In short, the Angra 3 valuation results from the sum of the following installments, amounts lead to the base date of December 2020:
· | NPV = BRL0,0 million |
· | Payment in Full of AFAC (2019) = BRL850,0 million |
· | Angra 3 Loans = (BRL1,035.8 million – BRL512.5 million) BRL523.3 million |
· | AFAC (2020), net of cash effect = BRL0.0 million |
In addition to such amounts, the valuation included expenditures realized with investments, financial costs, and exclusive interest of Angra 3 for the period. The table below briefly shows the effects and transactions described.
Table 23 – Adjustments to the Angra 3 Valuation – BRL thousand
Legend:
Jun
Jul
Aug
Sep
Oct
Nov
Dec
AFACs/Integralizations
Loans Adjustment
Cash Adjustment
Debt Costs/Angra 3 Investment
Total Made
Present Value
Therefore, on the base date of December 2020, the Angra 3 valuation is equal to BRL1,403,974 thousand, which corresponds to the sum of the present value of the transactions between June and December 2020, given the actual cost of capital of 8.88% p.a. as defined in CNPE Resolution 23/2021.
Page 55 of 68 |
14/01/2022
IT DFP-004/22 |
According to the segregation of operating and non-operating assets method, Eletronuclear consolidated valuation is BRL3,947,211 thousand, as it is possible to see in the graph below.
Graph 8 – ETN Valuation Result – BRL thousand
Legend:
NPV
Assets/Liabilities Adjustment
Contingents
Valuation A1 and 2
A3 Assessment
Equity Value ETN
4.5 | BNDES/BR Partners Assessment<0} |
Using the assumptions described in the report prepared by Thymos, engaged by BNDES, BR Partners prepared the Eletronuclear valuation with the segregation of operating assets (Angra 1 and 2) and non-operating assets (Angra 3), as described in item Rationale and Assessment Scope.
Given information and assumptions detailed by the technical consultant, as well as the method applied, a summary of the characteristics of forecasted flows may be seen below:
· | Free Cash Flow to the Firm (FCFF) |
· | Base date: March 2021 |
· | LTO only of Angra 1 |
· | End of the Projection: 2045 |
· | Frequency: Annual |
· | Currency: Reais (BRL/R$) |
· | Nominal Flow |
Page 56 of 68 |
14/01/2022
IT DFP-004/22 |
4.5.1 | Results |
BR Partners used the discounted cash flow to the firm (FCFF) method to assess Eletronuclear assets, discounting forecast cash flows to operating assets (Angra 1 and 2) according to the WACC of 8.94% p.a. in nominal terms.
The results obtained by BNDES for the economic and financial assessment of Eletronuclear, according to the methodology presented, may be seen below.
Graph 9 – Valuation Result for Angra 1 and 2 – BRL Million
Legend:
Amount of Firm Angra 1 and 2
Accrued loss base
Net Cash
Balance of non-operating accounts
Labor liabilities
Probable loss
Amount of the Shares of Angra 1 and 2
In which,
1. | NPV Free Cash Flow to the Firm @ WACC = 8.94% (nominal). |
2. | Use of the tax benefit balance of BRL2,228 million, reducing by 30% the tax basis discounted to a nominal Ke of 11.1%. |
3. | Eletronuclear net cash – does not account for debt positions for Angra 3. |
4. | Adjustment of non-operating Assets and Liabilities, not forecasted in the FCFF (Angra 1 and 2). |
5. | Material legal proceeding. Possible loss, with a disbursement of the total amount. |
For Angra 3, the methodology suggested by CNPE for Angra 3 Tariff Price reflects in zero NPV of the asset in the base date of June 2020, so the tariff shall be sufficient to honor the debt (current and new funding), as well as capital and financial expenditures incurred and to be incurred as of the base date.
Page 57 of 68 |
14/01/2022
IT DFP-004/22 |
Given the concept of an zero NPV, the transactions of funds applied by Eletrobras in the project after the base date (June 2020) were adjusted by the actual cost of capital of 8.88% p.a., as established by CNPE.
Table 24 – Angra 3 Assessment – BNDES/BR Partners – BRL million
Legend:
Flow following external metrics
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Costs with exclusive Angra III debt
Exclusive investments Angra III
AFAC Angra III
AFAC Conversion
Loans conversion
Total flow – Angra III
Total flow on the assessment base date
Cost of equity defined in the official letter = 8.88% (real terms) BRL ml
NPV of FCFE
The consolidated result for Eletronuclear is BRL3,468 million, resulting from the sum of the assessments of operating and non-operating assets, being:
Page 58 of 68 |
14/01/2022
IT DFP-004/22 |
Figure 9 – ETN Result – BNDES/BR Partners – BRL million
Legend:
Amount of the Shares of Angra 1, 2, and 3
Amount of the Shares of Eletronuclear
The comparison between the assessment results made externally and the DFPA internal study discloses that the difference is within the margin of tolerance. The figure below shows the comparison between the consolidated results and the Company's Net Equity.
Figure 10 – ETN Result Comparison – BRL billion
Legend:
BNDES Result
BRL3.5 Billion
March 2021
Valuation disregards the extension of the useful life of NPP Angra 2 or disbursements with decommissioning fund.
Preliminary Result
BRL3.9 Billion
December 2020
Preliminary result with cost of equity (Ke) obtained from BNDES studies.
ETN Net Equity
BRL3.2 Billion
June 2021
The net worth on the base date of the assessment was BRL3.5 billion.
Page 59 of 68 |
14/01/2022
IT DFP-004/22 |
Nonetheless, as provided for in the first section of this Technical Information Report, the Eletronuclear restructuring transaction also included the anticipation of a capital increase to cover investments necessary for the completion of the Angra 3 project.
In addition to the AFAC already incurred up to the assessment base date, there are fund balances already contributed and to be contributed in 2021 that together amount to BRL3,5 billion. Additionally, for the start-up of ENBpar in the Eletronuclear capital, there is an anticipation of an additional contribution of BRL3,5 billion.
The effect of recognizing payable and non-distributed dividends impacts capital stock transactions, not affecting the company's final amount.
In this regard, the Eletronuclear assessment, given the effects of the capitalization, ex-dividends is of BRL10,9 billion. The graph below briefly shows the ETN result given the transactions described above for the capital increase.
Graph 10 – ETN Result – BNDES – BRL million
Similarly, based on the Eletrobras valuation, applying the same BNDES rationale for the Eletronuclear final amount, we obtained a result of BRL11,4 billion, about 5.5% higher.
Page 60 of 68 |
14/01/2022
IT DFP-004/22 |
Graph 11 – ETN Result – Eletrobras – BRL million
4.5.2 | Considerations |
Considering that, given the restrictions of data and information to forecast Angra 3 at the moment of preparation of the assessments, both the BNDES study and the DFPA assessment are based on the methodology for segregation of assets as commented timely in the Technical Information Report.
Therefore, the comparative analysis of the models indicates four main difference points in the approaches and use of assumptions, as it is possible to note in the figure below.
Figure 11 – Differences between assessments – BRL billion
Legend:
Assumptions
Method
Base Date
BNDES: March 2021
DFPA: December 2020
Discount Fund
BNDES does not project annual contributions to the fund
Angra 2 LTO
The model considers the extension of NPP A1, but disregards NPP A2.
Page 61 of 68 |
14/01/2022
IT DFP-004/22 |
Cash Flow
Free cash flow to the firm (FCFF)
Flow discounted by the WACC
DFPA: Assessments by FCFE
The difference of the base dates, as well as between the model of cash flows to the firm (compared to the equity) shall not impact the result significantly.
However, regarding the decommissioning fund, there is an important alteration to understanding the forecast of the contribution in the fund and its consequence over the Company's assessment. In this regard, in the assessment report available, BR Partners mentions that:
“(...) for such exercise of this report, additional contributions to the decommissioning fund are not taken into account, because the new forecast received by Eletronuclear with an expected retirement of Angra 1 only in January 2045, thus creating a surplus amount to the amount established today for the respective fund, such assumption was widely discussed between assessment teams and BNDES Technical Operational Team, and this understanding is the one that best reflects the correct amount for the construction of Installment A. (...)”
Nonetheless, in Eletrobras’ point of view, the forecast of operating assets cash flows took into account annual disbursements to the formation of the decommissioning fund, and the outstanding balance adjusted by the CPI. In consultation with Eletronuclear, there is no internal or regulatory orientation to discontinue such disbursements. For this reason, the DFPA model maintains the forecast of the contributions both in the calculation of installment A of the gross revenue and in the cash flow with annual disbursements.
For the extension of the useful lives of operating plants Angra 1 and Angra 2, the BNDES model took into account only the extension of the first, given that Eletronuclear already initiated agreements in this regard.
The international experience, especially from the United States, indicates that the extension of the useful life of 40-year-old nuclear power plants for another 20 years proves to be a reality in the industry situation. The forecast of the extension of the plants in the Eletronuclear model is, therefore, an assumption to be adopted, using all investments required.
4.6 | Analysis of Multiples |
Given the particularities of Eletronuclear’s business, a governmental entity that is a monopolist in nuclear power generation in Brazil, companies with activities comparable to the business were not found in order to assess market multiples of the company.
Despite the fact that the valuation methodology by market multiples enable the use of databases of, in the absence of information on similar transactions and products, companies of the same segment with similar risk profile or with similar exposures to economic factors, the situation of Eletronuclear, a monopolist and with a complex capital-intensive project under development, implies difficulties in obtaining consistent analysis.
Page 62 of 68 |
14/01/2022
IT DFP-004/22 |
In Eletronuclear’s valuation report, BNDES carried out a study to assess whether the difference of the beta coefficients (β) given the listed companies that have Nuclear Power Generation in addition to the comparable companies selected for the Brazilian universe sample was significant. The study concluded that the coefficient calculated by the Brazilian sample presents an immaterial difference in order to assess, which, according to the consulting services, confirmed the use of the national sample for calculating the beta.
Thus, the document presents a sample of comparable companies in the domestic market that would be whose average EV/Installed Capacity ratio is 5.10x (median of 4.38x).[2]
Table 25 – Comparable Companies
Legend:
Company
Gross Debt
Market Value
Institutional Capital
Amount/MW
BRL MM
MW
BRL MM/MW
Average
Median
According to the final amounts presented in the previous sections of this IT, BRL10.8 billion and BRL11.4 billion for BNDES and Eletrobras assessments, respectively. Given the same amount/MW indicator for Eletronuclear’s current installed capacity, we have 5.49x and 5.76x, a little above the average.
[2] Eletronuclear’s Assessment Report. Page 41-44.
Page 63 of 68 |
14/01/2022
IT DFP-004/22 |
Graph 12 – Comparable Companies – BRL MM/MW
4.7 | Points of Attention of Economic and Financial Assessment |
4.7.1 | Methods |
As shown throughout the Technical Information Report, given the legal application of maintenance of government control in Eletronuclear, with the capitalization process of Eletrobras, it is necessary to carry out the company’s corporate restructuring, with the economic and financial assessment being a fundamental step.
Given the lack of definition of relevant assumptions about the feasibility of Angra 3 project, such as the schedule and CapEx for completion and the break-even tariff,[3] for the economic and financial assessment of Eletronuclear, BNDES established the segregation of the analysis between Operating Assets (Angra 1 and Angra 2) and Angra 3.
Despite the best efforts to perform the assessment in the time required to complete the capitalization process, the segregated analysis of Angra 3, under the concept of Zero NPV, from the other assets may generate distortions in relation to the impact of certain initials in the financial statements on the forecast of cash flows compared to Eletronuclear consolidated model.
As the assets were assessed separately with different discount rates and on different base dates, even though respecting the concept of zero NPV for Angra 3, the result of the segregated assessment may present distortions when compared to the result obtained by the company’s forecasted consolidated cash flow.
[3] The definition of the tariff to be calculated by BNDES for Angra 3 Project contemplates the concept of zero NPV, recomputing the expenditures as of the base date of June 30, 2020.
Page 64 of 68 |
14/01/2022
IT DFP-004/22 |
Additionally, it is worth highlighting that, according to Eletrobras’ current methodology for calculation of the cost of capital, differences in cash flow change the perception of risk and, therefore, the resulting discount rate.
4.7.2 | Angra 3 Model |
Considering that the rationale adopted for the economic and financial assessment of Eletronuclear represents the best efforts given the information available, as well as the exiguous time for completion of the analyses, it is important to sign some risks inherent in the transaction.
4.7.3 | Tariff |
Based on the concept of zero NPV for Angra 3, Eletronuclear’s assessment presents significant dependence on the break-even tariff to be defined by CNPE based on BNDES studies. In this sense, the implicit assumption, both in the valuation performed by BNDES and DFPA, is that the defined tariff shall be sufficient to maintain the economic and financial balance of the project and, thus, the NPV = zero.
Since the corporate restructuring of Eletronuclear shall be concluded without knowledge of the company’s break-even tariff, its lack of definition brings uncertainties to the transaction.
Additionally, given the scenario of delays and growing project costs vis-à-vis the country’s economic and sectoral situation, the resulting break-even tariff may be subject to the regulator’s restrictions. In other words, the tariff that the regulator is willing to approve to make Angra 3 project feasible may be lower than those required.
Therefore, if the economic break-even point of the project is not reached, the tariff shall not be sufficient to raise the amount of debt defined by the studies, requiring more funds from shareholders, eroding the expected yield.
The new shareholder shall pay more for Eletronuclear’s shares upon entry into the Company’s capital.
4.7.4 | Schedule and CapEx to Complete |
Regardless of the fact that the lack of definition about the break-even tariff for the Angra 3 project persists until the closing of this TIR, BNDES provided the preliminary report with an estimate of the costs and schedule for the conclusion of the company on January 15, 2021.
Page 65 of 68 |
14/01/2022
IT DFP-004/22 |
In this sense, the report presents direct costs of BRL21.1 billion and the entry into a business transaction on February 16, 2028, metrics different from Eletronuclear’s estimates in previous studies [19 billion and operation in November 2027].
The significant difference in terms of costs and start-up further pressures the break-even tariff upwards and, consequently, raises the tariff risk highlighted above.
4.7.5 | Completion of the Critical Path |
The model proposed by BNDES considers the contribution of BRL1.4 billion by Eletrobras until January 2022 due to the Plan for Acceleration of the Critical Path.
It is important to highlight that the amounts and schedule for the conclusion of Angra 3, according to BNDES preliminary report, are based on the assumption that the Critical Line Acceleration Plan be resumed as soon as possible, with the execution of the agreement for new civil construction works and electromechanical assembly activities by March 31, 2022, under the risk of impacting the project schedule.
To follow through with the acceleration plan, it is necessary for Eletrobras to pay the full amount of the AFAC approved by the Board of Directors in 2020 [DEL CA-115/2020 (July 17, 2020)]. However, of the total BRL3.5 billion in new contributions approved, about BRL650 million for the new agreements were provisioned by Eletrobras’ Board of Directors.
Although the Eletrobras Board of Directors has authorized the payment of the contingent funds for the critical path in a meeting held on December 22, 2021, the resolution was to maintain the restriction on the execution of new agreements for civil works, which keeps the critical path paralyzed.
If this scenario for completion of the critical path persists, the model proposed by BNDES shall be reviewed, both in terms of scope and schedule as in terms of CapEx.
4.7.6 | Funding and Guarantees |
The corporate restructuring of Eletronuclear implies ENBpar’s entry into the company's capital stock to maintain government control. At the end of the restructuring, Eletrobras shall have a majority of the total capital of Eletronuclear, but not control of the company.
However, to date, ENBpar’s ability to leverage funds for the project is limited. If the Federal Government does not offer guarantees, without requiring counter guarantees from ENBpar, Angra 3 project may not achieve the funding structure defined by BNDES studies for its conclusion.
As the financial structuring shall probably occur only after ENBpar’s entry into Eletronuclear, the private Eletrobras shall be committed to a project that shall require more capital from the partners or more expensive debts than expected, implying an economic and financial imbalance, which ultimately may render the continuous project unfeasible.
Page 66 of 68 |
14/01/2022
IT DFP-004/22 |
5. | FINAL CONSIDERATIONS |
This TIR sought to analyze the Eletronuclear segregation model under two aspects: i) the corporate steps and ii) the company’s economic and financial assessment. Regarding the segregation model proposed by BNDES, it is important to highlight that the points of attention brought up throughout this document, especially in items 3.5 and 4.7, where we point out the risks we observed in the model.
From an economic and financial assessment point of view, the results of the internal assessment differ from the results of BNDES within a tolerable range and, therefore, are eligible to be forwarded to the general meeting. It is important to note that the assessments were independent, and some assumptions used in both models are different, as explained throughout item 4 of this TIR.
Finally, as already indicated at the beginning of the document, this Technical Information Report is not intended to perform an exhaustive analysis on all points of the segregation and assessment of Eletronuclear, being necessary that the decision-making bodies read it together with other analyses, such as the legal, accounting, tax, risks, and governance analyses, as well as the other competent areas of Eletrobras, aiming at complying with the laws and regulations that regulated Eletrobras capitalization process.
_____________________________ Marcos Barreto de Faria Pinho
_____________________________ Bruno vieira Martins
|
Page 67 of 68 |
14/01/2022
IT DFP-004/22 |
_____________________________ Leonardo Michelsem Monteiro de Barros
| |
I agree: _____________________________ Rodrigo Vilella Ruiz |
Page 68 of 68 |
ANNEX 16
Description of the restructuring involving Eletronuclear
I – name and qualification of the interested related party;
Empresa Brasileira de Participações em Energia Nuclear e Binacional S.A. - ENBPar
II – nature of the interested related party's relationship with the company;
ENBPar and the Company are controlled by the Federal Government.
III – number of shares and other securities issued by the company that are owned by the interested related party, directly or indirectly;
None.
IV – any existing balances, payable and receivable, between the parties involved;
None.
V – detailed description of the nature and extent of the interest in question;
The restructuring acts involving Eletronuclear will result in the acquisition of control, by ENBPar, of Eletronuclear.
VI – management recommendation about the proposal, highlighting the advantages and disadvantages of the operation for the company; and
The Administration recommends the restructuring involving Eletronuclear, as it is a condition for the privatization process under the terms of Law 14,182/2021, according to Technical Note DC 001/2022 - TPR Global.
VII – if the matter submitted for approval by the assembly is a contract subject to the rules of art. 245 of Law No. 6,404 dated 1976:
a) detailed demonstration, prepared by the officers, that the agreement observes commutative conditions, or provides for adequate compensatory payment; and
The Administration recommends this proposal, as it is a condition for the privatization process under the terms of Law No. 14,182/2021, according to Technical Note DC 001/2022 - TPR Global.
b) analysis of the terms and conditions of the agreement in light of the terms and conditions prevailing in the market.
The Administration recommends this proposal, as it is a condition for the privatization process under the terms of Law No. 14,182/2021, according to Technical Note DC 001/2022 - TPR Global.
ANNEX 17
Description of the “Contract for the Transition and Transfer of Management of Sectorial Programs and BUSA”, with the purpose of transferring the Mais Luz to Amazônia and Luz para Todos programs and the administration of Union assets and the assignment of commercialization contracts within the scope of of Proinfa, management of the current account called Procel, and of financing contracts that use RGR resources
I – name and qualification of the interested related party;
Empresa Brasileira de Participações em Energia Nuclear e Binacional S.A. - ENBPar
II – nature of the interested related party's relationship with the company;
ENBPar and the Company are controlled by the Federal Government.
III – number of shares and other securities issued by the company that are owned by the interested related party, directly or indirectly;
None.
IV – any existing balances, payable and receivable, between the parties involved;
None.
V – detailed description of the nature and extent of the interest in question;
The proposed transaction consists of the transfer of management, by the Company to ENBPar, of the programs, contracts and strategic resources of the Brazilian government in the electricity sector, in addition to the Federal Government’s assets, as detailed in the Management Proposal, in addition to establishing conditions for the operational transition of the management of activities and assignment of said agreements.
VI – management recommendation about the proposal, highlighting the advantages and disadvantages of the operation for the company; and
The Administration recommends this proposal, as it is a condition for the privatization process under the terms of Law No. 14,182/2021, according to Technical Note DC-010/2021
VII – if the matter submitted for approval by the assembly is a contract subject to the rules of art. 245 of Law No. 6,404 dated 1976:
a) detailed demonstration, prepared by the officers, that the agreement observes commutative conditions, or provides for adequate compensatory payment; and
As stated in the draft of the agreement to be entered into, contained in Schedule 18, the Company will be remunerated during the operational transition, for the management activities to be transferred to ENBPar, according to the conditions currently existing.
b) analysis of the terms and conditions of the agreement in light of the terms and conditions prevailing in the market.
See item VII(a) above.
ANNEX 18
Agreement for the Transaction and Transfer of Management of Sectorial Programs and BUSA
AGREEMENT FOR THE TRANSITION AND TRANSFER OF MANAGEMENT OF SECTORIAL PROGRAMS AND ASSETS OF THE FEDERAL GOVERNMENT UNDER MANAGEMENT OF ELETROBRAS
entered into by and between
CENTRAIS ELÉTRICAS BRASILEIRAS S.A.
and
EMPRESA BRASILEIRA DE PARTICIPAÇÕES
EM ENERGIA NUCLEAR E BINACIONAL S.A.
Rio de Janeiro, [●]
AGREEMENT FOR THE TRANSITION AND TRANSFER OF MANAGEMENT OF SECTORIAL PROGRAMS AND ASSETS OF THE FEDERAL GOVERNMENT UNDER MANAGEMENT OF ELETROBRAS
By means of this private instrument and pursuant to the applicable law, the following parties:
(1) | CENTRAIS ELÉTRICAS BRASILEIRAS S.A., a company of mixed capital (sociedade de economia mista), enrolled with the CNPJ/ME under No. 00.001.180/0001-26, with its head office in the city of Rio de Janeiro, State of Rio de Janeiro, at Rua da Quitanda, No. 196, city center, Zip Code 20090-070, hereby duly represented pursuant to its bylaws (“Eletrobras”); and |
(2) | EMPRESA BRASILEIRA DE PARTICIPAÇÕES EM ENERGIA NUCLEAR E BINACIONAL S.A., a state-owned company, enrolled with the CNPJ/ME under No. 43.913.162/0001-23, with its head office in the city of Brasília, Federal District, at Esplanada dos Ministérios, block U, ground floor, Zip Code 70065-900, hereby duly represented pursuant to its bylaws (“ENBPar”); |
(Eletrobras and ENBPar hereinafter jointly referred to as “Parties” and, individually, as “Party”);
WHEREAS:
(A) | Eletrobras is currently responsible for (i) the management of the commercialization agreements regarding the Program for the Incentive of Alternative Sources of Electric Energy (Program de Incentivo às Fontes Alternativas de Energia Elétrica or “Proinfa“), (ii) the management of the account of the National Program for the Saving of Electric Energy (Program Nacional de Conservação de Energia Elétrica or “Procel“), the operation and management of the agreements relating to Procel, (iii) the management of financing agreements that use the funds arising from the Global Reversion Reserve (Reserva Global de Reversão or “RGR“) signed before November 17, 2016, and (iv) the operation of the Programs More Light to the Amazon and Light to All (Program Mais Luz para a Amazônia or “MLA“, and Program Luz para Todos or “LPT“, respectively) and the management of the agreement relating to MLA and LPT, in accordance with the applicable law and regulation (jointly, the “Sectorial Programs“); |
(B) | Eletrobras is also responsible for the management of the Assets of the Federal Government Under Management of Eletrobras (Bens da Federal Government sob Administração da Eletrobras or “BUSA“) transferred to the Federal Government and expropriated with funds from the RGR and management of the agreements of BUSA; |
2 |
(C) | On February 23, 2021, the Provisional Measure (Medida Provisória) No. 1.031 was issued, and later converted into Law No. 14,182, dated July 12, 2021 (“Law No. 14,182/2021“), which set forth the rules to be complied with for the privatization of Eletrobras; |
(D) | Law No. 14,182/2021 authorized the incorporation of a state-owned company by the Federal Government and determined that this new state-owned company will have the purpose, among others, to (i) hold the rights and obligations relating to Proinfa and its extensions, (ii) manage the so-called Procel account, (iii) manage the financing agreements that use funds of RGR signed until November 17, 2016, and (iv) manage the BUSA that are set forth in the Decree-Law No. 1,383, dated December 26, 1974; |
(E) | On September 10, 2021, Decree No. 10,791 (“Decree No. 10,791/2021”) was issued and then created ENBPar, a state-owned company that is linked to the Ministry of Mines and Energy and organized as a corporation (sociedade anônima), in order to undertake the duties set forth in Law No. 14,182/2021, and also provided that the duties related to the financings that use the funds of RGR, BUSA, Procel and Proinfa will be undertaken by ENBPar no later than twelve (12) months from the holding of a shareholders’ meeting that will confirm the capital increase of Eletrobras; |
(F) | On October 19, 2021, the Resolution No. 203 of the Board of Investment Partnerships Program (Conselho do Programa de Parcerias de Investimentos) (“CPPI Resolution No. 203/2021“), which approved the operational model, adjustments and conditions for the privatization of Eletrobras in the context of the National Privatization Program (Programa Nacional de Desestatização), setting forth (i) the continuity of the management by Eletrobras of the Sectorial Programs and BUSA for a transition period of up to twelve (12) months from the date of liquidation of the Global Offer; and (ii) the signing between Eletrobras and ENBPar of an agreement to govern the transition of the management of the Sectorial Programs and BUSA and the assignment and/or amendment to the related instruments, as well as the undertaking by Eletrobras, without payment, of the commitment to provide the required support to ENBPar for the management of those activities, including the training of staff, delivery of data base and information; |
(G) | In order to assure its operational, commercial, financial, regulatory and administrative continuity, and, in general, preserve the governance of the Sectorial Programs and management of BUSA, as well as to allow the transfer of the duties from Eletrobras to ENBPar, the Parties enter into this instrument, which sets forth the terms and conditions that will apply to the transition, in accordance with the provisions of Law No. 14,182/2021, Decree No. 10,791/2021 and CPPI Resolution No. 203/2021. |
3 |
Therefore, the Parties agree to enter into this Agreement for the Transition and Transfer of Management of Sectorial Programs and Assets of the Federal Government Under Management of Eletrobras (“Agreement”), which shall be governed and interpreted in accordance with the following terms and conditions:
1 | PURPOSE1.1The purpose of this Agreement is to provide the rules to be complied with during the entire Transition Period (as defined in Section 2.2 below) until the actual transfer by Eletrobras to ENBPar of the following duties: |
(i) | management of all power purchase agreements that are in effect and were signed in the context of Proinfa; |
(ii) | management of all BUSA that were taken by the Federal Government or expropriated with the funds of RGR and management of all arrangements and agreements in effect relating to the BUSA; |
(iii) | management of the Procel account and management of all agreements for the rendering of administrative, financial, Consulting and engineering services, arrangements and agreements for technical and financial cooperation that are in effect and that were signed in the context of Procel and its subprograms; |
(iv) | management of all financing agreements in effect that use funds of RGR and that were signed before November 17, 2016; |
(v) | operation of the MLA, in accordance with the duties defined in the respective program operation manual; |
(vi) | management of all commitment agreements and operating agreements in effect and those under ending of credit that were signed in the context of the MLA; |
(vii) | operation of the LPT, in accordance with the duties defined in the respective in accordance with program operation manual; and |
(viii) | management of all commitment agreements, technical cooperation agreements and financing agreements in effect and those under ending of credit that were signed in the context of the LPT. |
1.1.1 | Services, duties and responsibilities of each Sectorial Program and the management of BUSA shall be performed in accordance with the applicable law, until the conclusion of the transition. |
4 |
1.2 | The Parties shall sign assignment instruments and/or amendments to the applicable agreements in effect to which Eletrobras is a party or intervening party, substantially in the form of Schedule VI – Template for the Instrument of Assignment of Agreement, in order to formalize the transfer of the Sectorial Programs and the management of BUSA and transfer those contractual positions to ENBPar, in accordance with the timeline set forth in the applicable Transition Plan. |
1.3 | The transfer of the management of the Sectorial Programs and BUSA as provided in this Agreement shall not in any way be deemed as or intended to create a partnership or joint venture between the Parties or to create a representation or agency relationship between the Parties, and each Party shall be responsible for the engagement of its own labor force. |
2 | EFFECTIVENESS AND TERMS |
2.1 | This Agreement shall remain in effect until (i) the conclusion of the transfer of the management of all Sectorial Programs and BUSA to ENBPar, by means of the issuance of all Certificates of Conclusion of Transfer, or (ii) the Deadline for Transfer, whichever occurs first (“Term”). |
2.2 | The obligations undertaken by the Parties under this Agreement shall be suspended, in accordance with article 125 of the Civil Code, and paragraph 2 of article 3 of Law 14,182/2021, until the liquidation of the Global Offer that is provided in article 3 of CPPI Resolution No. 203/2021 (“Transition Start Date”, provided that the period between the Transition Start Date and the final date of the Term shall be the “Transition Period”). |
2.3 | The transfer of the management of each Sectorial Program and BUSA shall be completed before twelve (12) months from the Transition Start Date, in accordance with article 3 of the CPPI Resolution No. 203/2021 (“Deadline for Transfer”). |
2.4 | The termination of this Agreement, for any reason, shall not affect the obligations that (i) arise during the Transition Period and that remain in default or (ii) shall survive the termination as a result of their nature or as a result of express contractual provision. |
3 | GOVERNANCE |
3.1 | No later than [five (5)] Business Days from the Transition Start Date, each Party shall indicate four representatives, two of which shall be effective representatives and two alternates, to form the Transition Committee of the management of the Sectorial Programs and BUSA. |
3.1.1 | The Transition Committee will be presided by one of the representatives indicated by Eletrobras (“President of the Committee”). |
5 |
3.1.2 | The Transition Committee shall be responsible for monitoring and assuring the usual and continuous compliance with the Transition Plan of the management of each Sectorial Program and BUSA, in accordance with the respective timelines, and it shall report to the Board of Officers (Diretoria Executiva) of the Parties at least on a bi-weekly basis and shall function until the signing of all Transition Terms. |
3.1.3 | The Transition Committee shall gather to follow-up and promote the activities that are required for the transition, on a monthly basis or whenever called by the President of the Committee. |
3.1.4 | The Transition Plans will be managed and interpreted by the Transition Committee. |
3.1.5 | The Transition Committee shall have all duties that are attributed to it under this Agreement and under the Transition Plans. |
3.1.6 | The interpretation of any provision of the Transition Plans by the Transition Committee will be final and binding if not otherwise decided by the Board of Officers of the Parties. |
3.1.7 | The Transition Committee will decide by consensus, provided that any dispute shall be mutually decided by the Board of Officers of each Party. |
3.2 | Until the same term set forth in Section 3.1, each Party shall establish its own Working Group for the transition of the management of the Sectorial Programs and BUSA, focused on the management and execution thereof, and they shall inform the other Party the contact details of one of the representatives and one alternate that will be responsible for each Sectorial Program and BUSA. |
3.2.1 | The Working Groups of both Parties shall gather whenever required (and not less than twice per month) in order to assure the continuity of the activities required for the transition. |
3.2.2 | During the entire Transition Period, the Working Groups of the Parties for each Sectorial Program and BUSA shall jointly prepare a monthly report of the status of the transition activities and deliver to the Transition Committee, provided that any delays in those activities shall be followed by a plan for the acceleration of the transition until the Deadline for Transfer. |
3.2.3 | Whenever requested, the Working Groups of the Parties shall join the meetings and conference calls with the Transition Committee for the discussion of the monthly reports provided in Section 3.2.2 or any other matter that affects the Transition Plans. |
6 |
3.3 | Any changes to the members of the Transition Committee and Working Groups shall be informed in writing to the other Party, in accordance with Section 10.4. |
4 | TRANSITION PLAN |
4.1 | Each Sectorial Program and management of BUSA will be the purpose of a specific transition plan to be prepared by Eletrobras and complied with by both Parties, and shall provide for the transition activities to be performed by each Party, the deliverables required for the conclusion of the transfer and transition timeline (each, a “Transition Plan”). |
4.2 | No later than thirty (30) days from the Transition Start Date, Eletrobras shall deliver to ENBPar, for each Sectorial Program and BUSA: |
(i) | the detailed Transition Plan, for the review, comment and approval of ENBPar, which shall observe the guidelines of each Transition Plan, in accordance with Schedules I a V; and |
(ii) | the full list of contractual instruments in effect or not yet terminated which shall be assigned and amended pursuant to Section 1.2, which shall be kept updated by Eletrobras during the entire Transition Period. |
4.3 | Each Transition Plan shall include: |
(i) | the estimated date for the issuance of the Certificate of Conclusion of Transfer, complying with the Deadline for Transfer; |
(ii) | a timeline of the activities that are required to be performed by Eletrobras and ENBPar for the completion of the transfer, including an estimate of deadline for each activity; |
(iii) | the minimum requirements, including non-proprietary systems and personnel structure, that ENBPar will need to supply in an adequate manner the support that is provided in Section 4.4; |
(iv) | the dates of delivery of documents, information, proprietary systems and others instruments that may be required for the transfer of the operation and knowledge involved in the Sectorial Programs and management of BUSA; |
(v) | a support report that includes (a) a description of the main activities performed in the context of the Sectorial Program or BUSA, as applicable; and (b) a reasonable estimate from Eletrobras with respect to the number, qualification and expertise of people and type of infrastructure required for the applicable Sectorial Program or management of BUSA, as applicable; |
(vi) | a list of requirements that will be demanded as condition for the issuance of the Certificate of Conclusion of Transfer (as defined in Section 5.1 below). |
7 |
4.4 | In accordance with article 11, item VI, of CPPI Resolution No. 203/2021, Eletrobras commits to provide without charge, during the Transition Period, the support that is required to ENBPar for the full undertaking of each Sectorial Program and management of BUSA, including the training of staff and delivery of data base and existing information, as detailed in the respective Transition Plan (“Free Support”). |
4.4.1 | Each training included in the scope of the Free Support will be offered by Eletrobras to ENBPar only once, and ENBPar shall assure that all applicable staff will be present on the dates scheduled for those trainings, which will be given in the head office of ENBPar in Brasília-DF. |
4.4.2 | It is not included in the scope of the Free Support the trainings of systems of third parties, certifications, general courses of qualification of personnel or others trainings that are not specified and are exclusive to the Sectorial Programs and management of BUSA, which, when required, will be borne by ENBPar. |
4.5 | No later than [four (4)] months in advance of the Deadline for Transfer, the Parties shall notify the Federal Government, informing the status of the transition of the management of each Sectorial Program and BUSA, in order to allow that all required arrangements are duly made. |
5 | CERTIFICATE OF TRANSFER |
5.1 | Notwithstanding the provisions of Section 5.3 below, each Sectorial Program and BUSA shall be considered as transferred to ENBPar when: |
(i) | the Parties have complied with the activities of the Transition Plan, in a way that ENBPar is actually operating the management of the respective Sectorial Program or BUSA; |
(ii) | as applicable, the Parties shall have signed the assignment and/or amendment terms in order to replace Eletrobras in all agreements that are in effect or under termination related to a Sectorial Program or BUSA, as applicable; |
(iii) | as applicable, Eletrobras shall have transferred to ENBPar all information, documents and others forms of knowledge relating to a Sectorial Program or BUSA, as applicable; |
(iv) | as applicable, Eletrobras shall have performed the trainings of staff of ENBPar as described in the Transition Plan; |
(v) | ENBPar shall have engaged a service for an independent assessment on the accounting and financial information of the Sectorial Programs or BUSA, as applicable, in order to assure that the assets and liabilities relating to the foregoing complies with the level of risk that is acceptable to ENBPar; and |
8 |
(vi) | the Parties shall have signed the Certificate of Transfer, in accordance with Section 5.2 below. |
5.2 | The completion of the transfer of each Sectorial Program will be formalized by means of the signing by the Parties of the Certificate of Transfer, in the form of Schedule VII – Template of the Certificate of Transfer, under which ENBPar will fully and immediately undertake any and all right or obligation relating to the Sectorial Programs or BUSA. |
5.3 | In the event that any of the documents listed in Section 5.1 (ii) and (iii) are not available until the Deadline for Transfer, the Parties may jointly decide that ENBPar is able to manage the applicable Sectorial Program, so that those missing documents do not prevent the management of the Sectorial Program or BUSA by ENBPar. In this event, the Parties will sign the respective Certificate of Transfer, which shall comprise a list and a new timeline to be followed by the Parties for the completion of those pending matters. |
6 | OBRIGATIONS OF ELETROBRAS |
6.1 | Notwithstanding the other obligations that are provided in this Agreement, Eletrobras shall: |
(i) | indicate, within the term set forth in Section 3.1, two representatives, one of which will be an actual member and the other will be an alternate, to join the Transition Committee; |
(ii) | gather, within the term set forth in Section 3.2, a Working Group for the transition of the management of the Sectorial Programs and BUSA, with management focus, comprised of one representative and one alternate for each Sectorial Program, and inform ENBPar of the contact details of the individuals responsible for the transition of each Sectorial Program; |
(iii) | provide reasonable support to ENBPar for the full undertaking of each Sectorial Program and management of BUSA, including the training of staff and delivery of data base and existing information, for the period defined in the respective Transition Plan; |
(iv) | comply, within the term set forth in the respective timeline, with all activities defined in the Transition Plan of the management of each Sectorial Program and BUSA; |
9 |
(v) | provide training of staff of ENBPar, in the terms and conditions specified in the Transition Plan of the management of each Sectorial Program and BUSA; |
(vi) | deliver to ENBPar the operation manuals and others documents related to the Operational Programs and BUSA, with sufficient details to allow ENBPar to maintain the operational, commercial, financial, regulatory and administrative continuity of the Sectorial Programs and BUSA; |
(vii) | sign the Certificate of Transfer of management of each Sectorial Program and BUSA, once all conditions set forth in Section 5.1 are satisfied; and |
(viii) | cooperate with the operational, commercial, financial, regulatory, administrative and governance continuity of the Sectorial Programs and BUSA. |
7 | OBRIGATIONS OF ENBPAR |
7.1 | Notwithstanding the other obligations provided in this Agreement, ENBPar shall: |
(i) | indicate, within the term set forth in Section 3.1, two representatives, one of which will be an actual member and the other will be an alternate, to join the Transition Committee; |
(ii) | gather, within the term set forth in Section 3.2, a Working Group for the transition of the management of the Sectorial Programs and BUSA, with management focus, comprised of one representative and one alternate for each Sectorial Program, and inform Eletrobras of the contact details of the individuals responsible for the transition of each Sectorial Program; |
(iii) | no later than six (6) months from the Transition Start Date, structure internal departments, allocate responsibilities and perform all other activities that are required to assure the timely transfer and continuous management of the Sectorial Programs and BUSA; |
(iv) | comply, within the term set forth in the respective timeline, with all activities defined in the Transition Plan of each Sectorial Program and BUSA; |
(v) | be liable, as from the actual transfer of management of each Sectorial Program and BUSA to ENBPar, for the operational, commercial, financial, regulatory, administrative and governance continuity of the Sectorial Programs and BUSA; |
(vi) | operate the Sectorial Programs in accordance with the applicable laws and guidelines and recommendations set forth in the operation manuals and similar documents issued by the governmental bodies that supervise those Sectorial Programs and BUSA; and |
10 |
(vii) | reimburse Eletrobras, until the fifth (5th) business day of the month following the disbursement, of any payments that may have been made with respect to Proinfa and that did not have sufficient coverage in tariff in the applicable month of disbursement. |
8 | RESPONSIBILITIES |
8.1 | Eletrobras shall remain responsible for the events related to Sectorial Programs and to the management of BUSA occurring during the period when Eletrobras was managing the foregoing, provided that, as from the date of actual transfer of management of each Sectorial Program and BUSA as provided in the respective Certificate of Transfer, the applicable responsibility will become solely of ENBPar. |
8.2 | Until the date of actual transfer of each Sectorial Program to ENBPar, Eletrobras will continue to be entitled to the compensation for the management of Sectorial Programs and BUSA that may be provided in specific law on the matter relating to each Sectorial Program and management of BUSA, as applicable, and no payment will be owed by ENBPar. |
8.3 | The purpose of this Agreement shall not in any manner be interpreted or intended to create a partnership or joint venture between the Parties or create a representation or agency relationship between the Parties, and each Party shall be responsible for the compensation, health and operational safety of its own staff, in accordance with the applicable laws. |
9 | INDENIFICATION |
9.1 | Each Party (“Responsible Party”) undertakes to indemnify the other Party (“Indemnifiable Party”) for the losses and damages and expenses (including judicial costs and legal counsel fees) incurred by the other Party as a result of any act or omission of willful misconduct or negligence of the Responsible Party. |
9.2 | Upon any judicial or extrajudicial measure or claim that may have been filed against the Indemnifiable Party by third parties, the Indemnifiable Party shall immediately and, in any event, no later than three (3) days from its formal knowledge of the claim, inform the Responsible Party and provide copy of all material documents. In this event, the Responsible Party shall immediately present itself before the applicable courts and inform its exclusive and sole liability with respect to that claim (in case of exclusive liability) and require the immediate exclusion of the Indemnifiable Party as a defendant party in the claim. In the event that such exclusion is not accepted by the courts, the Responsible Party shall provide all support that may be required by the Indemnifiable Party until the final decision of the applicable claim, including by indicating legal counsel, providing documents and arguments to support the defense of the applicable Indemnifiable Party. If the Indemnifiable Party is ultimately condemned of obliged to pay any amount, the Responsible Party shall, no later than five (5) days from the notice delivered by the other Party, pay any amount directly to whom is entitled to that payment on behalf of the Indemnifiable Party or, at sole discretion of the Indemnifiable Party, reimburse the Indemnifiable Party for the disbursement of any such amounts, including any amounts to be paid to the claimant of the applicable claim, legal counsel fees, judicial costs and any other expenses that are proven to be incurred. |
11 |
10 | NOTICES |
10.1 | All notices, consents, requests and other communications set forth hereunder (“Notices”) shall only be considered valid and in effect if: (i) delivered in writing; and (ii) delivered in person, by means of letter delivered with proof or protocol of receipt, or e-mail with proof of receipt. |
10.2 | The Notices shall be delivers to the Parties to the addresses below, or to any other address that the Parties inform, in writing, to the other Parties: |
If to Eletrobras:
Address: Rua da Quitanda, No. 196, city center, city and State of Rio de Janeiro, Zip Code 20090-070
E-mail: [●]
Telephone: ([●]) [●]
Attn.: [●]
If to ENBPar:
Address: Esplanada dos Ministérios, block U, ground floor, Brasília – DF, Zip Code 70065-900
E-mail: [●]
Telephone: ([●]) [●]
Attn.: [●]
10.3 | The Notices relating to this Agreement shall be deemed to have been duly delivered (i) on the date of the actual delivery, when delivered by means of registered mail or recognized courier service; (ii) on the day of delivery, if delivered in person; or (iii) on the first Business Day following the date of delivery or the date of confirmation of receipt, whichever occurs first, is delivered by e-mail. |
10.4 | The change of addressee, address or any other information above shall be promptly informed in writing to the other Party, by the means set forth herein. In the event that this communication is not duly delivered, any notice or communication delivered to the addressees or addresses indicated above shall be considered as duly performed and received for all purposes of law. |
12 |
11 | GOVERNING LAW AND DISPUTES RESOLUTION |
11.1 | The Parties hereby elect the courts of the jurisdiction of the capital of the State of Rio de Janeiro to solve any controversy that may arise from this Agreement, hereby expressly waiving the right to use any other jurisdiction, regardless of how favorable it may be. |
12 | MISCELLANEOUS |
12.1 | This Agreement may not be partially or fully assigned by the Parties to third parties without the express consent of the other Party. |
12.2 | This Agreement, together with its Schedules, comprises the full agreement of the Parties and, except and to the extent that this Agreement provides otherwise, it replaces all other agreements, understandings and negotiations between the Parties, whether verbal or in writing, with respect to the matters provided herein. |
12.3 | If any provision of this Agreement is judicially declared invalid or unenforceable, such provision shall be considered as excluded from this Agreement and the other provisions of this Agreement shall remain in full force and effect. In this event, the Parties shall negotiate in good faith an agreement about the terms of a mutually satisfying provision that replaces the invalid and/or unenforceable provision. |
12.4 | The tolerance of any Party with respect to the exercise of any of the rights provided hereunder or under the applicable law shall not be deemed as an amendment or renewal of the Sections of this Agreement, and shall not harm the exercise of the same right in the future or upon the exact same event, and shall not be raised as a precedent for the repetition of the applicable tolerance and neither shall create any rights to any of the Parties. |
12.5 | No Party will be entitled to act or undertake any obligation on behalf of the other Party, except as may be otherwise expressly provided hereunder. |
12.6 | This Agreement and its Schedules may only be amended or changed by means of a written instrument between the Parties. |
12.7 | Each Party will have the right to claim the injunction, preliminary measures, specific performance or similar fair remediation in order to prevent the other Party to cause or to continue to cause a violation or threat of violation, or in order to seek the specific performance of the obligations of the other Party in the terms of this Agreement, and to execute the terms and provisions of this Agreement in any jurisdiction, notwithstanding any other arrangement or right that it may be entitled to hereunder. For purposes of specific performance, the Parties acknowledge that this Agreement constitutes an extrajudicial title, in accordance to article 784 of the Code of Civil Procedure. |
13 |
12.8 | This Agreement is executed between the Parties in irrevocable and irreversible character, for all rights end, except the provisions provided otherwise in the applicable law, and binds not only the Parties, but also their respective successors and assignees that undertake the obligations hereunder at any title. |
In witness whereof, the Parties enter into this Agreement in two (2) counterparts of same content and form, in the presence of the two (2) witness identified below.
Rio de Janeiro, [●] [●], [●].
(Remainder of the page intentionally left blank)
(Signatures in the next page)
14 |
(Signature page of the Agreement for the Transition and Transfer of Management of Sectorial Programs and Assets of the Federal Government Under Management of Eletrobras, entered into on [•])
________________________________________________________________
CENTRAIS ELÉTRICAS BRASILEIRAS S.A.
Name: [●]
Title: [●]
________________________________________________________________
EMPRESA BRASILEIRA DE PARTICIPAÇÕES EM
ENERGIA NUCLEAR E BINACIONAL S.A.
Name: [●]
Title: [●]
Witnesses:
1. ________________________________ |
2. ________________________________
|
15 |
SCHEDULE I
GUIDELINES FOR THE TRANSITION PLAN OF PROINFA
The Transition Plan shall describe at least the context and legal grounds of the program, the instruments to be assigned, the activities to be performed by Eletrobras and later undertaken by ENBPar, the timeline of transfer and the requirements for the signing of the term of completion of transfer.
I. Context and Legal Grounds
This section shall list the legal grounds of the Sectorial Program and indicate whether those applicable laws already provide for the transition of operation to ENBPar.
Proinfa was created by the Brazilian Law No. 10,438/2002. Other rules that govern Proinfa include the Brazilian Laws No. 11,075/2004, 10,889/2004, 14,182/2021, the Decrees No. 5,025/2004 and 10,798/2021, in addition to rules issued by the Ministry of Mines and Energy and ANEEL.
Eletrobras is currently a purchaser under the power purchase agreements of Proinfa, being entitled to the reimbursement of the price paid for the energy, administrative and financial costs and tax costs incurred in those transactions, pursuant to Law No. 10,438/2002. Law No. 14,182/2021 provided that ENBPar shall undertake those power purchase agreements of Proinfa and allowed the selling agents to adhere to the extension of those agreements and related power granting, pursuant to article 23 of Law No. 14,182/2021 and Decree No. 10,798/2021.
Eletrobras shall indicate any pending amendments of laws and regulation that may be required for the transfer of the duties thereunder from Eletrobras to ENBPar.
II. Assignment and Amendment of Agreements and others Instruments
This section shall list all agreements and others instruments that shall be assigned or amended to replace Eletrobras for ENBPar under those agreement.
Eletrobras shall list the Power Purchase Agreements of Proinfa and the communication plan of the Parties and call for signing of those amendment terms. It shall also provide for the operation of extensions of the agreements of Proinfa, in the event that there are pending activities during the transition period.
16 |
It shall also be informed any possible disputes involving each instrument, the history of defaults, full registration data of the agents and any other material contractual information.
III. Activities and Processes
This section shall detail the activities performed by Eletrobras in the context of the program, followed by the mapping of the applicable flows and processes.
Eletrobras shall deliver the manuals of the processes that will be migrated to ENBPar, including the following activities: (i) Management of the Power Purchase Agreements of Proinfa, (ii) Representation of sellers before CCEE, (iii) Drafting of Annual Plan with ANEEL, (iv) Representation in Disputes involving Proinfa and (v) Management of Proinfa by means of financial and operational software.
The manuals of processes shall include at least the following items: flow charts, operational processes, reference terms and amounts, targets and indexes, references to manuals and technical notes issued about specific matters of the program.
IV. Proposed structure
This section shall include a reasonable estimate from Eletrobras with respect to the number of people and type of infrastructure that will be required for the operation of the Sectorial Program.
Staff
Professional | Title | Duties | Use |
[●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] |
It shall be informed the estimate of staff only for Proinfa, disregarding the commercialization of Itaipu – which will be the purpose of another agreement.
Note: A list of proposed staff includes the direct execution of activities relating to Proinfa. It shall not consider other supporting activities, such as legal, financial and accounting support which may also be needed, as those supporting departments shall also be structured by ENBPar.
17 |
Minimum infrastructure
Eletrobras shall present a reference of minimum infrastructure for the operation of the Sectorial Program, such as third-party software that ENBPar shall engage.
V. Information Technology
This section shall provide for the conditions for the rendering of possible information technology services, by Eletrobras to ENBPar, that may have been developed in the context of the Sectorial Program.
If applicable, Eletrobras shall indicate the use by ENBPar, of proprietary systems and bases of Eletrobras that may be required for the operation of the processes to be migrated, until the moment on which ENBPar may assume those bases in its infrastructure. It shall be included any observations about the operation and maintenance of existing systems and bases related to the processes to be migrated during the transition process.
In case of proprietary systems and bases, Eletrobras shall also inform the use and maintenance assignment terms for software designed for the sectorial program. If there are other software, Eletrobras shall deliver a list of technical and operational requirements that support the choice of similar software by ENBPar.
VI. Date Base, Information and Documents
This section shall inform the data base that shall be transferred, from Eletrobras to ENBPar, in the context of the transfer of duties related to the Sectorial Program.
Eletrobras shall provide a list of data base, information and documents that shall be transferred to ENBPar for the operation of Proinfa, as well as operational guidelines for the migration of data, information and documents to the infrastructure of ENBPar.
18 |
VII. Training
This section shall describe the specific trainings about the Sectorial Program that shall be performed by Eletrobras in order to allow ENBPar’s staff to undertake the execution of the migrated activities.
Eletrobras shall detail the trainings that will be performed to the staff of ENBPar about the Sectorial Programs and the prior conditions that shall be observed by that staff (such as third-party platform trainings that may be required for the operation of the Sectorial Program, but that are not exclusively designed for the Sectorial Programs – such as SAP, CCEE, among others).
Trainings that involve systems and processes that are developed internally by Eletrobras shall be given by employees of Eletrobras during the Transition Period. Trainings with respect to platforms of third parties shall be indicated by Eletrobras and engaged directly by ENBPar.
Trainings assume that ENBPar’s staff is familiar with the specific legislation that applies to the Sectorial Program, where it is highlighted the ONS regulation and the rules and proceedings for the commercialization and operational systems of CCEE and ONS.
VIII. Financial remarks
This section shall describe any financial remarks that may apply to the transfer of Sectorial Programs.
It shall be provided, for example, the way of reimbursement to Eletrobras for the costs already incurred with Proinfa and that shall be reimbursed by the Federal Government after the transfer of the Sectorial Program to ENBPar.
Eletrobras shall list the requirements for the issuance of invoices, tax receipts, performance of payments, financial, accounting and budget controls, among others.
IX. Timeline
This section shall set forth the timeline and activities that are attributed to each party, as well as an estimate of the deadline for the completion of each activity.
19 |
It shall be set forth the date for the transfer of duties (always respecting the Deadline for Transfer), and the requirements and activities that are needed for the compliance with that date.
Date | Responsible | Activities | Estimated duration | Requirements |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
X. Requirements for the Certificate of Completion
This section shall provide for the requirements for the signing of the Certificate of Completion, as well as the mechanism to certify the satisfaction of those requirements.
It shall be listed all deliverables that are required for the transfer to be considered as completed. The list shall include, for example, the signing of terms for the amendment of the power purchase agreements of Proinfa, the transfer of data base, information and documents, the performance of trainings and, if applicable, the engagement of a service for the independent assessment of the financial and accounting information of the Sectorial Program, in order to assure that the assets and liabilities related thereto comply with the level of risk that is acceptable to ENBPar.
20 |
SCHEDULE II
GUIDELINES FOR THE TRANSITION PLAN OF BUSA
The Transition Plan shall describe at least the context and legal grounds of the management of BUSA, the instruments to be assigned, the activities to be performed by Eletrobras and later undertaken by ENBPar, the timeline of transfer and the requirements for the signing of the term of completion of transfer.
I. Context and Legal Grounds
This section shall list the legal grounds of the management of BUSA and indicate whether those applicable laws already provide for the transition of operation to ENBPar.
The Assets of the Federal Government Under Management of Eletrobras (“BUSA“) are assets and facilities that were taken or expropriated by the Federal Government with funds of RGR integrated to the assets of the Federal Government under a special regime for the use of public service, and managed by Eletrobras until those assets are (i) sold, (ii) transferred to the management of concessionaires, permissionaires or entities authorized to act in the generation, transmission or distribution of energy, or transferred to the management of the Secretaria de Coordenação e Governança do Patrimônio da União da Secretaria Especial de Desestatização, Desinvestimento e Mercados of the Ministry of Economy, in accordance with the Brazilian Decree-Law No. 1,383, dated December 26, 1974.
Eletrobras shall indicate any pending amendments of laws and regulation that may be required for the transfer of the duties thereunder from Eletrobras to ENBPar, such as the review of Decree-Law No. 1,383/1974 and any need for regulation by means of a Joint Act (Ato Conjunto) of the Secretaria de Coordenação e Governança do Patrimônio da União da Secretaria Especial de Desestatização, Desinvestimento e Mercados of the Ministry of Economy and ANEEL.
II. Assignment and Amendment of Agreements and others Instruments
This section shall list all agreements and others instruments that shall be assigned or amended to replace Eletrobras for ENBPar under those agreement.
21 |
Eletrobras shall list the instruments that need to be amended and the communication plan of the Parties and call for signing of those amendment terms, including:
(i) the consultation to the entities involved, such as CCEE, ANEEL and SPU;
(ii) arrangements and agreements signed between Eletrobras and the state concessionaires of electric energy, with the consent of ANEEL; and
(iii) agreements for the free assignment of use signed between SPU and public entities with the consent of Eletrobras.
When listing those instruments, it shall also be informed any possible disputes involving the agreements of BUSA, the history of defaults, full registration data of the parties and any other material contractual information.
III. Activities and Processes
This section shall detail the activities performed by Eletrobras in the context of the management of BUSA, followed by the mapping of the applicable flows and processes.
Eletrobras shall deliver the manuals of the processes that will be migrated to ENBPar, such as those relating to: (i) management of arrangements and agreements signed between Eletrobras and the state concessionaires of electric energy, with the consent of ANEEL, (ii) management of the agreements for the free assignment of use that were signed between SPU and public entities with the consent of Eletrobras, (iii) technical inspections of all assets for the observation of their status of preservation, (iv) representation in disputes involving BUSA and (v) management of BUSA by means of financial and operational software.
The manuals of processes shall include at least the following items: flow charts, operational processes, reference terms and amounts, targets and indexes, references to manuals and technical notes issued about specific matters of management of BUSA.
IV. Proposed structure
This section shall include a reasonable estimate from Eletrobras with respect to the number of people and type of infrastructure that will be required for the operation of the management of BUSA.
22 |
Staff
Professional | Title | Duties | Use |
1 | PS III | ENGINEER | 60% |
2 | PMS IV | ADMINISTRATIVE SUPPORT | 60% |
3 | PMS III | ADMINISTRATIVE SUPPORT | 60% |
4 | PMS IV | ADMINISTRATIVE SUPPORT | 60% |
5 | PS III | MANAGER | 60% |
6 | PS II | ENGINEER | 60% |
7 | PS III | ENGINEER | 60% |
8 | PMS IIII | ADMINISTRATIVE SUPPORT | 60% |
9 | PS III | LAWYER | 60% |
10 | APA PCR II | OPERATIONAL SUPPORT | 60% |
Note: It was not considered other supporting activities, such as legal, financial and accounting support which may also be needed, as those supporting departments shall also be structured by ENBPar.
Minimum infrastructure
Eletrobras shall present a reference of minimum infrastructure for the operation of the management of BUSA, such as third-party software that ENBPar shall engage.
V. Information Technology
This section shall provide for the conditions for the rendering of possible information technology services, by Eletrobras to ENBPar, that may have been developed in the context of the management of BUSA.
If applicable, Eletrobras shall indicate the use by ENBPar, of proprietary systems and bases of Eletrobras that may be required for the operation of the processes to be migrated, until the moment on which ENBPar may assume those bases in its infrastructure, including specific conditions about the licensing of SIGBUSA. It shall be included any observations about the operation and maintenance of existing systems and bases related to the processes to be migrated during the transition process.
In case of proprietary systems and bases, Eletrobras shall also inform the use and maintenance assignment terms for software designed for the management of BUSA. If there are other software, Eletrobras shall deliver a list of technical and operational requirements that support the choice of similar software by ENBPar.
23 |
VI. Date Base, Information and Documents
This section shall inform the data base that shall be transferred, from Eletrobras to ENBPar, in the context of the transfer of duties related to the management of BUSA.
Eletrobras shall provide a list of data base, information and documents that shall be transferred to ENBPar for the operation of BUSA, as well as a list of movable assets and real estate under management of Eletrobras.
Eletrobras shall also inform the operational guidelines for the migration of data, information and documents to the infrastructure of ENBPar.
VII. Training
This section shall describe the specific trainings about the management of BUSA that shall be performed by Eletrobras in order to allow ENBPar’s staff to undertake the execution of the migrated activities.
Eletrobras shall detail the trainings that will be performed to the staff of ENBPar about the management of BUSA and the prior conditions that shall be observed by that staff (such as third-party platform trainings that may be required for the operation of the management of BUSA, but that are not exclusively designed for the Sectorial Programs – such as SAP, if applicable).
Trainings that involve systems and processes that are developed internally by Eletrobras shall be given by employees of Eletrobras during the Transition Period. Trainings with respect to platforms of third parties shall be indicated by Eletrobras and engaged directly by ENBPar.
Trainings assume that ENBPar’s staff is familiar with the specific legislation that applies to the management of BUSA.
VIII. Financial remarks
This section shall describe any financial remarks that may apply to the transfer of the management of BUSA, if applicable.
Eletrobras shall list the requirements for the issuance of invoices, tax receipts, performance of payments, financial, accounting and budget controls, among others.
24 |
IX. Timeline
This section shall set forth the timeline and activities that are attributed to each party, as well as an estimate of the deadline for the completion of each activity.
It shall be set froth the date for the transfer of duties (always respecting the Deadline for Transfer), and the requirements and activities that are needed for the compliance with that date.
Date | Responsible | Activity | Estimated duration | Requirements |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
X. Requirements for the Certificate of Completion
This section shall provide for the requirements for the signing of the Certificate of Completion, as well as the mechanism to certify the satisfaction of those requirements.
It shall be listed all deliverables that are required for the transfer to be considered as completed. The list shall include, for example, the signing of terms for the amendment of agreements and instruments, the transfer of data base, information and documents listed in the section, the performance of trainings and, if applicable, the engagement of a service for the independent assessment of the financial and accounting information of the management of BUSA, in order to assure that the assets and liabilities related thereto comply with the level of risk that is acceptable to ENBPar.
25 |
SCHEDULE III
GUIDELINES FOR THE TRANSITION PLAN OF PROCEL
The Transition Plan shall describe at least the context and legal grounds of the program, the instruments to be assigned, the activities to be performed by Eletrobras and later undertaken by ENBPar, the timeline of transfer and the requirements for the signing of the term of completion of transfer.
I. Context and Legal Grounds
This section shall list the legal grounds of the Sectorial Program and indicate whether those applicable laws already provide for the transition of operation to ENBPar.
Eletrobras was responsible for the management of the Procel account, in accordance with the Brazilian Law No. 9,991/2000, and performs the duty of Secretaria-Executiva do Grupo Coordenador de Conservação de Energia Elétrica (“GCCE”) of Procel, with the duties of (i) promoting technical and administrative support to GCCE, (ii) analyzing projects that are presented to it and proposing to GCCE their classification in the lines of support of financing of Procel, (iii) opining on proposals of public and private bodies and entities related to Procel; (iv) following and assessing the activities developed by private and public bodies and entities related to Procel, (v) regulating and overseeing the activities under its responsibility; and (vi) developing and managing a system of information and documentation, in accordance with Decree No. 9,863, dated June 27, 2019.
Eletrobras shall indicate any pending amendments of laws and regulation that may be required for the transfer of the duties thereunder from Eletrobras to ENBPar, such as the revision of Decree No. 9,863/2019 for the change of composition of GCEE and CGEE, preserving the governance of Procel, as well as in other committees and groups of work, such as CGIEE, GT Edificações, GT Motores, etc.
II. Assignment and Amendment of Agreements and other Instruments
This section shall list all agreements and others instruments that shall be assigned or amended to replace Eletrobras for ENBPar under those agreement.
Eletrobras shall list the instruments that will need to be amended and the communication plan of the Parties and call for signing of those amendment terms, including arrangements, agreements and technical cooperation terms, administrative agreements and financial services agreements. In the list of instruments it shall also be informed any possible disputes involving Procel, the history of defaults, full registration data of the agents and any other material contractual information.
26 |
III. Activities and Processes
This section shall detail the activities performed by Eletrobras in the context of the program, followed by the mapping of the applicable flows and processes.
Eletrobras shall deliver the manuals of the processes that will be migrated to ENBPar, such as those relating to each subprogram of Procel: Reluz, Selo Procel, Educação, Edificações, Indústria, Saneamento, Procel Info, GEM and Marketing.
The manuals of processes shall include at least the following items: flow charts, operational processes, reference terms and amounts, targets and indexes, references to manuals and technical notes issued about specific matters of the program.
IV. Proposed structure
This section shall include a reasonable estimate from Eletrobras with respect to the number of people and type of infrastructure that will be required for the operation of the Sectorial Program.
Staff
Professional | Title | Duties | Use |
1 | PS I | ||
2 | PS II | ||
3 | PS II | ||
4 | PS III | ||
5 | PS III | ||
6 | PS III | ||
7 | PS III | ||
8 | PS III | ||
9 | PS III | ||
10 | PS III | ||
11 | PS III | ||
12 | PS III | ||
13 | PS III |
27 |
14 | PS III | ||
15 | PS III | ||
16 | PS III | ||
17 | PS III | ||
18 | PS III | ||
19 | PS III | ||
20 | PS III | ||
21 | PS III | ||
22 | PS III | ||
23 | PS III | ||
24 | PS III | ||
25 | PS IV | ||
26 | PS IV |
Note: It was not considered other supporting activities, such as legal, financial and accounting support which may also be needed, as those supporting departments shall also be structured by ENBPar.
Minimum infrastructure
Eletrobras shall present a reference of minimum infrastructure for the operation of the Sectorial Program, such as third-party software that ENBPar shall engage.
V. Information Technology
This section shall provide for the conditions for the rendering of possible information technology services, by Eletrobras to ENBPar, that may have been developed in the context of the Sectorial Program.
If applicable, Eletrobras shall indicate the use by ENBPar, of proprietary systems and bases of Eletrobras that may be required for the operation of the processes to be migrated, until the moment on which ENBPar may assume those bases in its infrastructure. It shall be included any observations about the operation and maintenance of existing systems and bases related to the processes to be migrated during the transition process.
In case of proprietary systems and bases, Eletrobras shall also inform the use and maintenance assignment terms for software designed for the sectorial program. If there are other software, Eletrobras shall deliver a list of technical and operational requirements that support the choice of similar software by ENBPar.
28 |
VI. Date Base, Information and Documents
This section shall inform the data base that shall be transferred, from Eletrobras to ENBPar, in the context of the transfer of duties related to the Sectorial Program.
Eletrobras shall provide a list of data base, information and documents, including a bibliographic archive, that shall be transferred to ENBPar for the operation of Procel, as well as operational guidelines for the migration of data, information and documents to the infrastructure of ENBPar.
It shall also be included any observations that may apply to the transfer of the website used by the Sectorial Program and transfer of the registers at INPI of related trademarks, as applicable.
VII. Training
This section shall describe the specific trainings about the Sectorial Program that shall be performed by Eletrobras in order to allow ENBPar’s staff to undertake the execution of the migrated activities.
Eletrobras shall detail the trainings that will be performed to the staff of ENBPar about the Sectorial Programs and the prior conditions that shall be observed by that staff (such as third-party platform trainings that may be required for the operation of the Sectorial Program, but that are not exclusively designed for the Sectorial Programs – such as SAP, if applicable).
Trainings that involve systems and processes that are developed internally by Eletrobras shall be given by employees of Eletrobras during the Transition Period. Trainings with respect to platforms of third parties shall be indicated by Eletrobras and engaged directly by ENBPar.
Trainings assume that ENBPar’s staff is familiar with the specific legislation that applies to the Sectorial Program.
VIII. Financial remarks
This section shall describe any financial remarks that may apply to the transfer of Sectorial Programs, if applicable.
It shall be informed any specific condition for the transfer of the Procel Account (Conta Corrente do Procel).
29 |
Eletrobras shall list the requirements for the issuance of invoices, tax receipts, performance of payments, financial, accounting and budget controls, bank information, among others.
IX. Timeline
This section shall set forth the timeline and activities that are attributed to each party, as well as an estimate of the deadline for the completion of each activity.
It shall be set forth the date for the transfer of duties (always respecting the Deadline for Transfer), and the requirements and activities that are needed for the compliance with that date.
Date | Responsible | Activity | Estimated duration | Requirements |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
X. Requirements for the Certificate of Completion
This section shall provide for the requirements for the signing of the Certificate of Completion, as well as the mechanism to certify the satisfaction of those requirements.
It shall be listed all deliverables that are required for the transfer to be considered as completed. The list shall include, for example, the signing of terms for the amendment of agreements and instruments, the transfer of data base, information and documents, the performance of trainings and, if applicable, the engagement of a service for the independent assessment of the financial and accounting information of the Sectorial Program, in order to assure that the assets and liabilities related thereto comply with the level of risk that is acceptable to ENBPar.
30 |
SCHEDULE IV
GUIDELINES FOR THE TRANSITION PLAN OF FINANCINGS WITH FUNDS OF RGR
The Transition Plan shall describe at least the context and legal grounds of the program, the instruments to be assigned, the activities to be performed by Eletrobras and later undertaken by ENBPar, the timeline of transfer and the requirements for the signing of the term of completion of transfer.
I. Context and Legal Grounds
This section shall list the legal grounds of the Sectorial Program and indicate whether those applicable laws already provide for the transition of operation to ENBPar.
Eletrobras is currently responsible for the management of the financing agreements that use funds for the Global Reversion Reserve (Reserva Global de Reversão or “RGR“) and that were signed before November 17, 2016, and Eletrobras shall (i) monthly deliver to CCEE the applicable evidence of the amounts to be delivered to and received by CCEE for the compliance with the financing agreements signed in the context of the Power Development Account (Conta de Desenvolvimento Energético or “CDE”) and RGR, (ii) charge those financing agreements in accordance with the timeline set forth in the applicable sections of each agreement, and (iii) reimburse RGR, no later than five days from the actual payment by the debtor, the funds relating to the amortization, contractual interest fees and credit reserve fees, and, if applicable, default penalties and interest; provided that, as a result of those activities, Eletrobras is entitled to receive a contractual management fee, in accordance with Decree No. 9,022/2017.
Eletrobras shall indicate any pending amendments of laws and regulation that may be required for the transfer of the duties thereunder from Eletrobras to ENBPar.
II. Assignment and Amendment of Agreements and others Instruments
This section shall list all agreements and others instruments that shall be assigned or amended to replace Eletrobras for ENBPar under those agreement.
Eletrobras shall list the instruments that need to be amended and the communication plan of the Parties and call for signing of those amendment terms.
31 |
When listing those instruments, it shall also inform any possible disputes involving the financial agreements that use funds of RGR, the history of defaults, full registration data of the agents and any other material contractual information.
III. Activities and Processes
This section shall detail the activities performed by Eletrobras in the context of the program, followed by the mapping of the applicable flows and processes.
Eletrobras shall deliver the manuals of the processes that will be migrated to ENBPar, such as the processes for charging, transfer of funds and publishing.
The manuals of processes shall include at least the following items: flow charts, operational processes, reference terms and amounts, targets and indexes, references to manuals and technical notes issued about specific matters of the program.
IV. Proposed structure
This section shall include a reasonable estimate from Eletrobras with respect to the number of people and type of infrastructure that will be required for the operation of the Sectorial Program.
Staff
Professional | Title | Duties | Use |
1 | Technical Assistant I | 50% | |
2 | Technical Assistant 2 | 10% | |
3 | Manager NH-II | 2% |
Note: It was not considered other supporting activities, such as legal, financial and accounting support which may also be needed, as those supporting departments shall also be structured by ENBPar.
32 |
Minimum infrastructure
Eletrobras shall present a reference of minimum infrastructure for the operation of the Sectorial Program, such as third-party software that ENBPar shall engage.
V. Information Technology
This section shall provide for the conditions for the rendering of possible information technology services, by Eletrobras to ENBPar, that may have been developed in the context of the Sectorial Program.
If applicable, Eletrobras shall indicate the use by ENBPar, of proprietary systems and bases of Eletrobras that may be required for the operation of the processes to be migrated, until the moment on which ENBPar may assume those bases in its infrastructure. It shall be included any observations about the operation and maintenance of existing systems and bases related to the processes to be migrated during the transition process.
In case of proprietary systems and bases, Eletrobras shall also inform the use and maintenance assignment terms for software designed for the sectorial program. If there are other software, Eletrobras shall deliver a list of technical and operational requirements that support the choice of similar software by ENBPar.
VI. Date Base, Information and Documents
This section shall inform the data base that shall be transferred, from Eletrobras to ENBPar, in the context of the transfer of duties related to the Sectorial Program.
Eletrobras shall provide a list of data base, information and documents, including a bibliographic archive, that shall be transferred to ENBPar for the operation of Procel, as well as operational guidelines for the migration of data, information and documents to the infrastructure of ENBPar.
VII. Training
This section shall describe the specific trainings about the Sectorial Program that shall be performed by Eletrobras in order to allow ENBPar’s staff to undertake the execution of the migrated activities.
Eletrobras shall detail the trainings that will be performed to the staff of ENBPar about the Sectorial Programs and the prior conditions that shall be observed by that staff (such as third-party platform trainings that may be required for the operation of the Sectorial Program, but that are not exclusively designed for the Sectorial Programs – such as SAP, if applicable).
33 |
Trainings that involve systems and processes that are developed internally by Eletrobras shall be given by employees of Eletrobras during the Transition Period. Trainings with respect to platforms of third parties shall be indicated by Eletrobras and engaged directly by ENBPar.
Trainings assume that ENBPar’s staff is familiar with the specific legislation that applies to the Sectorial Program.
VIII. Financial remarks
This section shall describe any financial remarks that may apply to the transfer of Sectorial Programs, if applicable.
Eletrobras shall list the requirements for the issuance of invoices, tax receipts, performance of payments, financial, accounting and budget controls, bank information, among others.
IX. Timeline
This section shall set forth the timeline and activities that are attributed to each party, as well as an estimate of the deadline for the completion of each activity.
It shall be set forth the date for the transfer of duties (always respecting the Deadline for Transfer), and the requirements and activities that are needed for the compliance with that date.
Date | Responsible | Activity | Estimated duration | Requirements |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
X. Requirements for the Certificate of Completion
This section shall provide for the requirements for the signing of the Certificate of Completion, as well as the mechanism to certify the satisfaction of those requirements.
34 |
It shall be listed all deliverables that are required for the transfer to be considered as completed. The list shall include, for example, the signing of terms for the amendment of agreements and instruments, the transfer of data base, information and documents listed in the section, the performance of trainings and, if applicable, the engagement of a service for the independent assessment of the financial and accounting information of the Sectorial Program, in order to assure that the assets and liabilities related thereto comply with the level of risk that is acceptable to ENBPar.
35 |
SCHEDULE V
GUIDELINES FOR THE TRANSITION PLAN OF “MAIS LUZ PARA A AMAZÔNIA” PROGRAM AND “LUZ PARA TODOS” PROGRAM
The Transition Plan shall describe at least the context and legal grounds of the program, the instruments to be assigned, the activities to be performed by Eletrobras and later undertaken by ENBPar, the timeline of transfer and the requirements for the signing of the term of completion of transfer.
I. Context and Legal Grounds
This section shall list the legal grounds of the Sectorial Program and indicate whether those applicable laws already provide for the transition of operation to ENBPar.
Eletrobras was indicated by the Ministry of Mines and Energy to operate MLA program, in accordance with Order (Portaria) No. 86, dated March 9, 2020, and it should be a party to the commitments and agreements for the operation of the program, in accordance with the Program Operation Manual (Manual de Operacionalização do Programa).
Eletrobras was also indicated by the Ministry of Mines and Energy to operate LPT program, in accordance with Order (Portaria) No. 175, dated May 17, 2018, and it is a party to the commitments, cooperation agreements and operation agreements and intervening party to financing agreements. Eletrobras is also responsible for delivering to the Electric Energy Commercialization Chamber (Câmara de Comercialização de Energia Elétrica or “CCEE”) evidence of the amounts to be transferred and received for the compliance with the program, in accordance with Decree No. 9,022/2017.
Eletrobras shall indicate any pending amendments of laws and regulation that may be required for the transfer of the duties thereunder from Eletrobras to ENBPar.
II. Assignment and Amendment of Agreements and others Instruments
This section shall list all agreements and others instruments that shall be assigned or amended to replace Eletrobras for ENBPar under those agreement.
Eletrobras shall list the instruments that need to be amended and the communication plan of the Parties and call for signing of those amendment terms, including the commitment terms between the Ministry of Mines and Energy and the executing agents, which have Eletrobras, ANEEL and CCEE as intervening parties.
36 |
When listing those instruments, it shall also inform any possible disputes involving the MLA and LPT programs, the history of defaults, full registration data of the agents, system of management of data base of MLA and LPT programs, standards for the performance of technical-financial analyses of work programs presented by executing agents and any other material contractual information.
III. Activities and Processes
This section shall detail the activities performed by Eletrobras in the context of the program, followed by the mapping of the applicable flows and processes.
Eletrobras shall deliver the manuals of the processes that will be migrated to ENBPar.
The manuals of processes shall include at least the following items: flow charts, operational processes, reference terms and amounts, targets and indexes, references to manuals and technical notes issued about specific matters of the program.
IV. Proposed structure
This section shall include a reasonable estimate from Eletrobras with respect to the number, classification and habilitation of people and type of infrastructure that will be required for the operation of the Sectorial Program.
Staff
Professional | Title | Duties | Use |
1 | PMO II | ||
2 | PMO II | ||
3 | PS III | ||
4 | PS II | ||
5 | PS II | ||
6 | PS II | ||
7 | PS II | ||
8 | PS III | ||
9 | PS III | ||
10 | PS III | ||
11 | PS III |
37 |
12 | PS III | ||
13 | PS III | ||
14 | PS III | ||
15 | PS III | ||
16 | PS III | ||
17 | PS IV | ||
18 | PS IV | ||
19 | PS IV | ||
20 | PS IV | ||
21 | PS IV | ||
22 | PS IV |
Note: It was not considered other supporting activities, such as legal, financial and accounting support which may also be needed, as those supporting departments shall also be structured by ENBPar.
The financial department performs a material duty when operating the Programs, since it is responsible for the delivery of accounts and the process of termination of credit under the agreements. For those activities of support to the execution of programs, the department provides 5 partial-time employees, 3 of which are employees with 75% of participation and 2 with 50% of participation.
With respect to the Information Technology department, in order to perform the operation agent duties, Eletrobras developed and provides support to several technological tools for the management of the programs.
Minimum infrastructure
Eletrobras shall present a reference of minimum infrastructure for the operation of the Sectorial Program, such as third-party software that ENBPar shall engage.
V. Information Technology
This section shall provide for the conditions for the rendering of possible information technology services, by Eletrobras to ENBPar, that may have been developed in the context of the Sectorial Program.
If applicable, Eletrobras shall indicate the use by ENBPar, of proprietary systems and bases of Eletrobras that may be required for the operation of the processes to be migrated, until the moment on which ENBPar may assume those bases in its infrastructure. It shall be included any observations about the operation and maintenance of existing systems and bases related to the processes to be migrated during the transition process.
38 |
In case of proprietary systems and bases, Eletrobras shall also inform the use and maintenance assignment terms for software designed for the sectorial program. If there are other software, Eletrobras shall deliver a list of technical and operational requirements that support the choice of similar software by ENBPar.
VI. Date Base, Information and Documents
This section shall inform the data base that shall be transferred, from Eletrobras to ENBPar, in the context of the transfer of duties related to the Sectorial Program.
Eletrobras shall provide a list of data base, information and documents, including a bibliographic archive, that shall be transferred to ENBPar for the operation of Procel, as well as operational guidelines for the migration of data, information and documents to the infrastructure of ENBPar.
VII. Training
This section shall describe the specific trainings about the Sectorial Program that shall be performed by Eletrobras in order to allow ENBPar’s staff to undertake the execution of the migrated activities.
Eletrobras shall detail the trainings that will be performed to the staff of ENBPar about the Sectorial Programs and the prior conditions that shall be observed by that staff (such as third-party platform trainings that may be required for the operation of the Sectorial Program, but that are not exclusively designed for the Sectorial Programs – such as SAP, if applicable).
Trainings that involve systems and processes that are developed internally by Eletrobras shall be given by employees of Eletrobras during the Transition Period. Trainings with respect to platforms of third parties shall be indicated by Eletrobras and engaged directly by ENBPar.
Trainings assume that ENBPar’s staff is familiar with the specific legislation that applies to the Sectorial Program and are able to perform works in the area of electric risks and in remote areas and that they are already trained in NR-10 provided by ENBPar itself.
VIII. Financial remarks
This section shall describe any financial remarks that may apply to the transfer of Sectorial Programs, if applicable.
39 |
Eletrobras shall list the requirements for the issuance of invoices, tax receipts, performance of payments, financial, accounting and budget controls, bank information, among others.
IX. Timeline
This section shall set forth the timeline and activities that are attributed to each party, as well as an estimate of the deadline for the completion of each activity.
It shall be set forth the date for the transfer of duties (always respecting the Deadline for Transfer), and the requirements and activities that are needed for the compliance with that date.
Date | Responsible | Activity | Estimated duration | Requirements |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
[●] | [●] | [●] | [●] | [●] |
X. Requirements for the Certificate of Completion
This section shall provide for the requirements for the signing of the Certificate of Completion, as well as the mechanism to certify the satisfaction of those requirements.
It shall be listed all deliverables that are required for the transfer to be considered as completed. The list shall include, for example, the signing of terms for the amendment of agreements and instruments, the transfer of data base, information and documents listed in the section, the performance of trainings and, if applicable, the engagement of a service for the independent assessment of the financial and accounting information of the Sectorial Program, in order to assure that the assets and liabilities related thereto comply with the level of risk that is acceptable to ENBPar.
40 |
SCHEDULE VI
MODELO DE TERMO DE CESSÃO CONTRATUAL
(This schedule provides indication of the standard sections for the assignment of contractual position, and shall be adjusted to reflect each instrument to be assigned by Eletrobras to ENBPar)
ASSIGNMENT TERM OF [INSTRUMENT]
By this private instrument, the parties:
(1) | [PARTIES AND INTERVENING PARTIES]; |
(2) | CENTRAIS ELÉTRICAS BRASILEIRAS S.A., a company of mixed capital (sociedade de economia mista), enrolled with the CNPJ/ME under No. 00.001.180/0001-26, with its head office in the city of Rio de Janeiro, State of Rio de Janeiro, at Rua da Quitanda, No. 196, city center, Zip Code 20090-070, hereby duly represented pursuant to its bylaws (“Assignor”); and |
Hereinafter jointly referred to as “Parties” and, individually, as “Party”;
(3) | EMPRESA BRASILEIRA DE PARTICIPAÇÕES EM ENERGIA NUCLEAR E BINACIONAL S.A., a state-owned company, enrolled with the CNPJ/ME under No. 43.913.162/0001-23, with its head office in the city of Brasília, Federal District, at Esplanada dos Ministérios, block U, ground floor, Zip Code 70065-900, hereby duly represented pursuant to its bylaws (“Assignee”); |
WHEREAS:
(A) | [History of the agreement and previous amendments]; |
(B) | The Assignee is a state-owned company linked to the Ministry of Mines and Energy, which was incorporated pursuant to the Brazilian Law No. 14,182/2021, for the purpose of, among others, keep the rights and obligations relating to the sectorial programs, including Proinfa and its extension, the Procel account, the management of financings that use the funds of RGR signed before November 17, 2016 and the management of BUSA set forth in the Decree-Law No. 1,383, dated December 26, 1974; |
(C) | Decree No. 10,791/2021 sets forth that the duties related to those sectorial programs shall be undertaken by ENBPar within twelve (12) months from the date when the shareholders’ meeting confirming the capital increase of Eletrobras has occurred as a result of its privatization process; |
41 |
(D) | Resolution No. 203/2021 of the Board of Investment Partnerships Program (Conselho do Programa de Parcerias de Investimentos), which approved the operational model, adjustments and conditions for the privatization da Eletrobras in the context of the National Privatization Program (Programa Nacional de Desestatização), provides for the operational transfer of the sectorial programs, including LPT and MLA, shall occur within twelve (12) months from the liquidation of the Global Offer provided in Law No. 14,182/2021, and that, among other provisions, the agreements related to sectorial programs, as well as to LPT and MLA, shall be assigned and amended to formalize the succession of the Assignor by the Assignee; |
(E) | The Global Offer was completed on [●], and the Assignor and Assignee are currently in a transition period with respect to the duties related to the sectorial programs; |
(F) | The Assignor intends to assign and transfer the Agreement and its contractual position in the Agreement to the Assignee, and the Assignee intends to undertake the position of the Assignor in the Agreement; |
(G) | The remaining Parties agree with the assignment and transfer of the Agreement and the contractual position of the Assignor to the Assignee; |
(H) | The Parties agree to enter into this instrument for the assignment of the agreement, and its effectiveness is subject to a suspensive condition as set forth in this instrument. |
Therefore, based on the foregoing, the Parties decide to enter into this Term of Assignment of [Instrument] (“Assignment Term”), which shall be governed and interpreted in accordance with the following terms and conditions:
1 | PURPOSE1.1The purpose of this Assignment Term is to provide for the assignment and transfer of the Agreement and the contractual position of the Assignor under the Agreement to the Assignee, subject to the Suspensive Condition set forth in Section 2.2. |
1.2 | As a result of the aforementioned assignment and transfer, the Assignee, with the express consent of the other Parties, will replace the Assignor in its contractual position under the Agreement, and will irrevocably and irreversibly undertake all rights, obligations and liabilities of the Assignor that may have been agreed with the other Parties in the Agreement. As a result, all references to the Assignor in the Agreement shall be understood as references to the Assignee, after the satisfaction of the Suspensive Condition and actual assignment and transfer. |
42 |
1.3 | Also as a result of the assignment and transfer, the Parties grant full, irreversible and irrevocable release to the Assignor for all rights and obligations arising from the Agreement since the beginning of its effectiveness until the date hereof, including with respect to the amounts paid by the Assignor to the other Parties, at any title, and thereafter those rights and obligations and any and all legal relationship or event of any nature arising from acts or legal transactions arising from the civil relationship between the Assignor and the other Parties of the Agreement are hereafter terminated, and the other Parties hereby agree that there are no claims, interest or intention that may justify any dispute in any jurisdiction against the Assignor, and nothing else may therefore be claimed against the Assignor, in the present or in the future, at any title. |
2 | EFFECTIVENESS2.1As from the satisfaction of the Suspensive Condition of this Assignment Term, the Assignee is liable for all obligations and rights arising from the Agreement that were originally attributed to the Assignor. |
2.2 | This Assignment Term will be in effect as from the date of completion of the transfer of the management of the sectorial program [●], by means of the signing, by Assignor and Assignee, of a certificate of transfer, which shall be broadly disclosed by ENBPar in its website (“Suspensive Condition”). |
3 | COMMUNICATIONS3.1All communications set forth in this Agreement with respect to the contractual position undertaken by the Assignee shall be made in writing and delivered by means of express delivery, e-mail or registered mail with proof of receipt, to the following addresses: |
If to ENBPar:
Address: Esplanada dos Ministérios, block U, ground floor, Brasília – DF, Zip Code 70065-900
E-mail: [●]
Telephone: ([●]) [●]
Attn.: [●]
4 | MISCELLANEOUS4.1All other terms and conditions of the Agreement which are not expressly amended as a result of this Assignment Term (including expressly the dispute resolution section set forth in the Agreement) shall remain in full force and effect and are hereby confirmed, and those terms and conditions shall be complied with by the Assignee and other Parties (except for the Assignor) in accordance with the terms and conditions of the Agreement. |
In witness whereof, the Parties enter into this Agreement in three (3) counterparts of same content and form, in the presence of the two (2) witness identified below.
43 |
(City, date and signatures)
44 |
SCHEDULE VII
TEMPLATE OF CERTIFICATE OF TRANSFER
CEERTIFICATE OF TRANSFER OF [NAME OF THE SECTORIAL PROGRAM]
We hereby certify that the Transition Plan and transfer of [NAME OF THE SECTORIAL PROGRAM], as set forth in the Agreement for the Transition and Transfer of Management of Sectorial Programs entered into by and between Centrais Elétricas Brasileiras S.A. – Eletrobras and Empresa Brasileira de Participações em Energia Nuclear and Binacional S.A. – ENBPar, on [•] ("Agreement"), was duly completed on the date hereof, after verification of all requirements for the completion of the transfer of the aforementioned program in accordance with the applicable plan.
It is hereby agreed that, as from the date hereof, ENBPar is the sole responsible for the management of such sectorial program.
[City], [date].
________________________________________________________________
CENTRAIS ELÉTRICAS BRASILEIRAS S.A.
Name: [●]
Title: [●]
________________________________________________________________
EMPRESA BRASILEIRA DE PARTICIPAÇÕES EM
ENERGIA NUCLEAR E BINACIONAL S.A.
Name: [●]
Title: [●]
45 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
SUBJECT: Transition of the management of government programs from Eletrobras to ENBpar.
REFERENCES:
CPPI Resolution No. 203 of October 14, 2021; Law No. 14,182 of July 13, 2021; Decree No. 10,791/2021 of September 10, 2021; Law No. 10,438 of April 26, 2002; Ordinance No. 556/GM/MME of October 6, 2021.
1. PURPOSE:
This Technical Note aims at presenting the main aspects of the SECTORAL PROGRAM MANAGEMENT TRANSITION AND TRANSFER AGREEMENT to be entered into by and between Eletrobras, and ENBpar with the Federal Government as an intervening-consenting party, herein represented by the Ministry of Mines and Energy, to support the decision-making process of the Shareholders’ Meeting that shall assess such transaction.
2. BACKGROUND:
Eletrobras is a publicly-held, state-owned company with shares in three stock exchanges (São Paulo, New York, and Madrid) and in the US stock market (NYSE), where its shares are traded since 2008.
Eletrobras is currently in preparation for capitalization under Law No. 14,182 of July 13, 2021, as a result of Conversion Bill PLV 7/2021 and Provisional Measure No. 1,031.
According to Law No. 14,182 of July 13, 2021, some activities predominantly related to Public Policies shall be transferred from Eletrobras to a new State-owned company yet to be established.
Article 9 of Law No. 14,182 of July 13, 2021:
Article 9. For purposes of the provisions in item I of the main section of article 3 of this Law, the Federal Government is hereby authorized to create a public-private company or governmental entity, in case the companies are not under its direct control.
Paragraph 1. The public-private company or governmental entity referred to in the main section of this article shall:
I – keep the operation of nuclear power plants under the control of the Federal Government, pursuant to item V of the main section of art. 177 of the Federal Constitution;
1 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
II – maintain the ownership of the capital stock and the acquisition of electricity services provided by Itaipu Binacional by a federal public agency or entity, to comply with the provisions in the Treaty between the Federative Republic of Brazil and the Republic of Paraguay for the Use of the Water Resources of the Paraná River for Hydroelectric Purposes, Resources which are Held in Condominium by Both Countries, from and Including Salto Grande de Sete Quedas or Salto de Guairá to the Mouth of the Iguaçu River, enacted by Decree No. 72,707 of August 28, 1973;
III – manage credit facility agreements that use funds from the Global Reversal Reserve (RGR) entered into up to November 17, 2016, and manage assets of the Federal Government managed by Eletrobras as provided for in Decree Law No. 1,383 of December 26, 1974, and keep rights and obligations related to the Incentive Program For Alternative Energy Sources (Proinfa) and its extension; and
IV – manage the checking account referred to as National Program for Energy Conservation (Procel), as provided for in Law No. 9,991 of July 24, 2000.
Paragraph 2. Eletronuclear is hereby authorized to include in its purposes those set forth in ¶ 1 of this Article in case the Federal Government does not create the governmental entity or public-private company referred to in the main section of this article.
Paragraph 3. The public-private company or governmental entity referred to in the main section of this article is hereby authorized to associate with the Electric Energy Research Center – Cepel.
Decree No. 10,791/2021 of September 10, 2021 was published in the Federal Official Gazette to create Empresa Brasileira de Participações em Energia Nuclear e Binacional S.A. – ENBpar. The new state-owned company, established as a result of the Eletrobras capitalization process, as provided for in Law No. 14,182/2021, was designed as a holding company model.
Article 2 of Decree No. 10,791 of September 10, 2021 indicates the activities that shall be transferred from Eletrobras to ENBpar.
“Article 2. ENBpar, as provided for in art. 9 of Law No. 14,182 of July 12, 2021, shall:
I – keep the operation of nuclear power plants under the control of the Federal Government;
II – maintain the ownership of the capital stock and the acquisition of electricity services provided by Itaipu Binacional by a federal public agency or entity, to comply with the provisions in the Treaty between the Federative Republic of Brazil and the Republic of Paraguay for the Use of the Water Resources of the Paraná River for Hydroelectric Purposes, Resources which are Held in Condominium by Both Countries, from and including Salto Grande de Sete Quedas or Salto de Guairá to the Mouth of the Iguaçu River, enacted by Decree No. 72,707 of August 28, 1973;
2 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
III – manage credit facility agreements that use funds from the Global Reversal Reserve (RGR) entered into up to November 17, 2016;
IV – manage the assets of the Federal Government managed by Centrais Elétricas Brasileiras S.A. – Eletrobras, as provided for in Decree-Law No. 1,383 of December 26, 1974;
V – manage the checking account referred to as National Program for Electric Energy Conservation (Procel), as provided for in Law No. 9,991 of July 24, 2000; and
VI – manage the agreements for trading the electricity generated by the undertakings contracted under the Incentive Program for Alternative Energy Sources (Proinfa), as provided for in Law No. 10,438 of April 26, 2002.
Sole paragraph. The powers referred to in items III to VI of the main section shall be undertaken by ENBpar within twelve months of the date of the meeting for ratification of the result of the increase in the capital stock of Eletrobras, referred to in ¶ 1 of art. 1 of Law No. 14,182 of 2021.“
Additionally, Ordinance No. 556/GM/MME of October 6, 2021 defined the appointment of ENBpar as Operator of the National Program for Universalization of the Access and Use of Electric Energy (“LUZ PARA TODOS” [“Light for All”]) and the National Program for Universalization of the Access and Use of Electric Energy in the Legal Amazon (Mais Luz para a Amazônia [More Light for the Amazon]), whose powers shall be undertaken within up to twelve months of the date of the meeting of ratification of the result of the increase in the capital stock of Centrais Elétricas Brasileiras S.A. – Eletrobras.
Within the scope of the Board of the Investment Partnership Program – CPPI, among the resolutions issued, Resolution No. 203 of October 14, 2021, which addressed the operational method, adjustments, and conditions for privatization of Centrais Elétricas Brasileiras S.A. – Eletrobras under the National Privatization Program (PND), was published. Article 11, items XIV and XV, reproduced below, presented guidelines with respect to the transition process of the Government Programs and some activities that shall be transferred from Eletrobras to ENBpar.
“XIV – Eletrobras shall continue to manage, for the transition period of up to twelve months of the settlement date of the Global Public Offering, the trading agreements under the Incentive Program for Alternative Energy Sources (Proinfa), the checking account referred to as National Program for Electric Energy Conservation (Procel), the credit facility agreements that use funds from the Global Reversal Reserve (RGR), the Mais Luz para a Amazônia and Luz para Todos programs, and the assets of the Federal Government as provided for in Decree-Law No. 1,383 of December 26, 1974;
3 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
XV – execution by and between ELETROBRAS and ENBpar of an agreement governing the operational transition of the management of the activities and the assignment of the agreements referred to in item XIV of the main section, as well as the assumption, by ELETROBRAS, free of charge, of the commitment to provide support and assistance to ENBpar for management of these activities, including training personnel, making databases and information available;“
3. ASPECTS OF THE TRANSFER OF ACTIVITIES AND GOVERNMENT PROGRAMS FROM ELETROBRAS TO ENBPAR
As provided for in Law No. 14,182/2021, in Decree No. 10,791 of September 10, 2021, in Ordinance No. 556/GM/MME of October 6, 2021, in CPPI Resolution No. 203 of October 14, 2021, regardless of the order of the foregoing documents, Eletrobras shall transfer the following activities to ENBpar:
Management of the following activities and government programs within 12 months of the date of the meeting of ratification of the result of the increase in the capital stock of Eletrobras:
i. National Program for Electric Energy Conservation (Procel);
ii. Incentive Program for Alternative Energy Sources (Proinfa);
iii. Luz Para Todos Program (LPT);
iv. Mais Luz para a Amazônia Program (MLA);
v. Management of the Global Reversal Reserve (RGR) agreements entered into up to 2016;[1]
vi. BUSA – Management of the assets of the Federal Government managed by Centrais Elétricas Brasileiras S.A. – Eletrobras, as provided for in Decree-Law No. 1,383 of December 26, 1974;
On the other hand, it is also important to add that, based on the reading of the applicable laws and regulations, it can be concluded that the activities/processes listed below shall be transferred to ENBpar soon after the meeting for ratification of the result of the increase in the capital stock of Eletrobras. Accordingly, the following are not the subject matter of this agreement under analysis:
[1] RGR remaining agreements.
4 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
i. Trading of the electricity generated by the Itaipu hydro power plant;
ii. Maintenance of the ownership of the capital stock of Itaipu Binacional;[2]
iii. It is important to note that the activities related to the disposal of assets of Itaipu Binacional, developed by Eletrobras, pursuant to the Treaty and Internal Regulations of Itaipu, despite not being explicitly listed in the instruments that defined the transfer of the responsibility for the activities to ENBpar, were taken into account among the activities to be transferred to that company in this Technical Note;
iv. Being the majority partner in Eletronuclear/nuclear power plants.[3]
Finally, it is important to note that ENBpar shall be equipped with the processes, systems, and personnel for the development of these activities that, according to the prevailing instruments, shall be transferred to that company immediately after the Eletrobras capitalization process is completed.
4. STATUS OF THE SECTORAL PROGRAMS THAT SHALL BE TRANSFERRED TO ENBPAR
Eletrobras is equipped with the apparatus of personnel, processes, and systems required for the development of the activities inherent to being a holding company and responsible for the implementation of the Government programs.
We emphasize that over years of work in the processes and programs that shall be transferred to ENBpar, the Eletrobras professionals acquired high experience, which has been decisive for the success of the management of these programs and processes.
Personnel
Eletrobras currently has about 82 professionals that work directly in the management of the Government Programs. As described in the table below, these Eletrobras workers, in most cases, are 100% assigned to the implementation of these Programs:
Program/Process | |
Procel | 26 |
LPT e MLA | 22 |
PROINFA | 19 |
BUSA | 10 |
RGR | 5 |
Grand Total | 82 |
[2] There shall be a specific agreement that shall address the return of the capital stock of Itaipu to Eletrobras.
[3] There shall be several documents and agreements that shall address the transfer of the controlling interest of Eletronuclear to ENBpar, as well as the partnership of ENBpar with Eletrobras in Eletronuclear.
5 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
It is important to note that the chart above does not account for services provided by other supporting areas.
The areas operating directly in the management of the Sectoral Programs are supported by other areas inside the company, which, at some time during the process, provide services.
Procel
Area | Apportionment % | Number of professionals |
Contracts | 40% | 6 |
Legal | 20% | 5 |
Communication | 10% | 4 |
Financial | 5% | 2 |
Information Technology (IT) | 2% | 2 |
Luz Para Todos e Mais Luz para Amazônia
Area | Apportionment % | Number of professionals |
Financial | 75% | 3 |
Financial | 50% | 2 |
PROINFA
Area | Apportionment % | Number of professionals |
Advisory Legal Department | 6.75% | 6 |
Internal Audit | 4.35% | 12 |
General Accounting | 7.07% | 7 |
Tax and Fiscal Planning | 4.64% | 4 |
Financial Transactions and Insurance | 16.49% | 9 |
Shared Services Center (CSC) Assigned Personnel – Finance | 2.09% | 10 |
Electricity Trading | 10.00% | 2 |
BUSA
6 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
It is supported by areas such as Expansion and Implementation; Environment; Operating and Maintenance (O&M), and Modernization of Generation; Accounting; Shared Services Center; Information Technology; Advisory Legal Department and Litigation; Acquisition, and Contract Planning.
RGR
It is supported by areas such as Accounting and the Legal Department – On demand.
Processes and Systems
Eletrobras processes are properly designed according to its own method. ENBpar shall evaluate the relevance of using the designs that shall be provided to it by Eletrobras, or even of any details, as it deems convenient.
The sectoral Programs use several systems for management, as shown by the examples listed below:
Procel: “Clarity” (CA PPM); SAP R3.
LPT and MLA: Distribution Modular Cost System (SMD); Technical and Budget Analysis System (ATO); Project Management System for the Luz para Todos Program (LPT System); Accountability Module (PCP).
Proinfa: SAP and a Trading Program in implementation stage;
BUSA: Computerized System for Management of Assets of the Federal Government Managed by Eletrobras (SIGBUSA) (developed by Eletrobras); Citrix Workspace; Microsoft 365 Apps for Large Companies – Power BI.
RGR: FER System – internally developed in Eletrobras.
As we can see, self-owned systems and licensed systems owned by third parties are used, including the integrated management system, which is SAP for Eletrobras and, as for ENBpar, the company shall choose its system, as well as customize it for use.
Main quantitative information on the Sectoral Programs are listed in a brief summary below:
7 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
Programs | Direct MO | Supporting Areas | Volume |
PROCEL | 26 | Legal Department; Contracts; Financial Department; | Projects: 84 in progress; 30 under contract; 32 expected; and 57 terminated. |
Funds: BRL10.0 million (average 2018 to 2021). | |||
Cost: BRL10.2 million (average 2018 to 2021). | |||
LPT and MLA | 22 | Financial Department; IT; and Presidency | Agreements: 19 agreements in progress; 19 in termination. |
Programs: 4 under contract; 7 expected; 4 under analysis; | |||
Funds: BRL13.7 million (average 2017 to 2020). | |||
Cost: BRL13.4 million (average 2017 to 2020). | |||
PROINFA | 19 – Partial assignment | Trading; Financial Department; Accounting; Legal Department; and Audit | PROINFA: 140 agreements |
Estimated Revenue 2022 – BRL6.5 Bi | |||
Estimated Expense 2022 – BRL 6.5 Bi | |||
BUSA | 10 – Partial assignment | Generation; | BUSA: 1994 Assets |
Accounting; IT; Legal Department; Treasury; and Supplies | Expenses Reimbursed: BRL 13,1 million (17 to 21) | ||
To be reimbursed: 5.9 million (2021/2022) | |||
RGR | 5 – Partial assignment | Treasury; Accounting; Legal Department | Credit Facility Agreements: 51 |
Management fee received: 2% per annum on the outstanding balance of the agreements. | |||
Expenses: Basically with personnel. |
8 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
5. ASPECTS OF THE SECTORAL PROGRAM MANAGEMENT TRANSITION AND TRANSFER AGREEMENT EVALUATED BY ELETROBRAS’ GENERAL MEETING
CPPI Resolution No. 203 of October 14, 2021, in addition to addressing the continuous management by ELETROBRAS during the transition period of up to twelve months of the settlement date of the Global Public Offering, of the Government Programs listed in its item XIV of article 11, addressed in item XV a guideline with respect to the execution by and between Eletrobras and ENBpar, of an agreement governing the operational transition of the management of the activities and assignment of the agreements referred to in item XIV of such resolution, as well as the assumption, by ELETROBRAS, free of charge, of the commitment to provide support and assistance to ENBpar for management of these activities, including training personnel, making databases and information available. Thus, the agreement evaluated in this Technical Note is hereby supported.
It is an agreement to be entered into by and between Eletrobras and ENBpar with the FEDERAL GOVERNMENT as an intervening-consenting party, herein represented by the Ministry of Mines and Energy – MME.
Such Agreement comprises the rules and definition of the procedures to be observed in the Sectoral Program transition process, which summary we now describe below:
· Considering that they include the background and legal basis for the settlement of the Agreement;
The subject matter of the agreement is to provide for the rules that shall be observed throughout the entire period until the effective transfer, by Eletrobras to ENBpar, of the powers related to: (i) management of all electricity trading agreements in effect entered into under the Incentive Program for Alternative Energy Sources (“Proinfa”), (ii) management of the Assets of the Federal Government managed by Eletrobras (“BUSA”) expropriated and taken over with funds from the Global Reversal Reserve (“RGR”) and management of all partnerships, and agreements in effect related to the BUSA; (iii) management of the National Program for Energy Conservation (“Procel”) checking account and management of all administrative, financial, consulting, and engineering service agreements, technical and financial cooperation partnerships, technical cooperation term sheets, and technical cooperation agreements in effect entered into under the Procel and its subprograms, (iv) management of all credit facility agreements that use funds from the RGR entered into up to November 17, 2016, (v) implementation of the Mais Luz para a Amazônia Program (“MLA”) and management of all term sheets and implementation agreements in effect and those in termination of credit under the MLA, and (vi) implementation of the Luz para Todos Program (“LPT”) and management of all term sheets, technical cooperation agreements, implementation agreements, and credit facility agreements in effect and those in termination of credit entered into under the LPT.
9 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
· Other definitions:
· | Services, duties, or responsibilities of each Sectoral Program and the management of the BUSA shall be performed according to the applicable laws and regulations until the transition is completed; |
· | The duty of the parties to enter into instruments of assignment and/or amendments to agreements in effect to which Eletrobras is a party or intervening consenting party, substantially in the form of Annex VI – Form of Assignment Agreement, in order to effect the transfer of the Sectoral Programs and of the management of the BUSA, and transfer such agreements to ENBpar, according to the planned schedule in the corresponding Transition Plan. |
· Definition of the Effective Period until (i) the transfer of the management of all Sectoral Programs and BUSA to ENBpar is effectively completed, upon the issuance of all Certificates of Transfer Completion, or (ii) the Transfer Deadline, whichever is the earlier (“Effective Period”).
· Definition that the transfer of the management of each Sectoral Program and the BUSA shall be completed within twelve (12) months.
· | Transition process governance, which involves, among others aspects: |
o | The establishment of a Transition Committee, its roles, and responsibilities presided over by one of the representatives appointed by Eletrobras (“Chairman of the Committee”); and |
o | The establishment of a specific Working Group for the transition of the Sectoral Programs by each Party; its responsibilities and report frequency. |
10 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
· | Determination of the creation of Transition Plans according to certain requirements, specific to each Sectoral Program and BUSA, within 30 days of the start date of the transition; |
· | Details of the free provision of training and current databases and information during the Transition Period. |
· | The definition of a TRANSFER CERTIFICATE to be prepared with a series of requirements and procedures so that the Programs are effectively deemed transferred, which includes the contract on the part of ENBpar of Assurance services, regardless of accounting and financial information of the Sectoral Programs, aiming at ensuring combined assets and liabilities are at a risk level acceptable for ENBpar; |
· | Eletrobras obligations related to terms for the appointment of members of the Transition Committee, organization of Working Groups, in addition to reasonable support and assistance to ENBpar for full assumption of each activity referred to in this agreement, including the training of personnel and the provision of current databases, information, documents, and manuals, in addition to complying with the provisions in the Transition Plan, among others. |
· | ENBpar obligations related to terms for appointment of members of the Transition Committee, organization of Working Groups, their internal organization, aiming at transferring activities and complying with the provisions in the Transition Plan, among others. |
· | Eletrobras’ responsibilities for the management of Sectoral Programs and the BUSA until the issuance of the Transfer Certificate and definition that Eletrobras shall continue to be entitled to the financial support for the management of the Sectoral Programs and the BUSA as provided for in the laws and regulations applicable to each Sectoral Program and to management of the BUSA, as applicable, with no payments due by ENBpar. |
· | Conflict resolution clause, in addition to other protective elements typical of agreements such as this. |
· | Annexes I to V addressing the Guidelines FOR THE TRANSITION PLAN Of each Sectoral Program and the BUSA, to be prepared and sent by Eletrobras to ENBpar within 30 days of the Transition Start Date with the following structure: |
11 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
I. Context and Legal Grounds:
· | This section shall list the legal grounds that provide for the Sectoral Program and indicate whether the referred laws and regulations already reflect the transition to implementation by ENBpar. |
II. Assignment and Amendments to Agreements and other Instruments:
· | This section shall list all agreements and other instruments that shall need to be assigned or amended to replace the contract position of Eletrobras with ENBpar. |
III. Activities and Processes:
· | This section shall detail the activities developed by Eletrobras under the program, and accompanied by the mapping of flows and processes. |
IV. Suggested structure, staff, and minimum infrastructure:
· | This section shall include a reasonable estimate of Eletrobras the number of people and the type of infrastructure required for the implementation of the Sectoral Program. |
12 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
V. Information Technology:
· | This section shall set forth the conditions for the provision of occasional information technology services by Eletrobras to ENBpar that have been developed under the Sectoral Program. |
VI. Databases, Information, and Documents:
· | This section shall provide for the databases that shall be transferred from Eletrobras to ENBpar in the context of the transfer of the Sectoral Program powers. |
VII. Training:
· | This section shall describe the specific training on the Sectoral Program that shall be held by Eletrobras so that ENBpar employees are eligible to undertake the development of the activities transferred. |
VIII. Financial considerations:
· | This section shall describe any financial considerations regarding the Sectoral Program transfer. |
IX. Schedule:
· | This section shall set forth the schedule and the activities under the responsibility of each party, as well as an estimated term for the completion of each activity. |
X. Requirements for the Certificate of Completion:
· | This section shall provide for the requirement for the signature of the Certificate of Completion, as well as the mechanism of proof of completion of these requirements. |
· | Annex VI “FORM OF ASSIGNMENT AGREEMENT”, presents standard clauses for the assignment of contracts, which shall be adapted to reflect each instrument to be assigned from Eletrobras to ENBpar, as the parties shall execute assignment agreements and/or amendments to agreements in effect to which Eletrobras is a party or intervening consenting party, and transfer such contracts to ENBpar, according to the schedule provided for in the corresponding Transition Plan. |
13 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
· | ANNEX VII “FORM OF TRANSFER CERTIFICATE” to be used, as the completion of the transfer of each Sectoral Program shall be effected upon the signature by the Parties of the Transfer Certificate, by means of which ENBpar shall fully and promptly assume any and all rights or obligations related to the Sectoral Programs. |
6. FINANCIAL ASPECTS OF THE SECTORAL PROGRAM MANAGEMENT TRANSITION AND TRANSFER AGREEMENT EVALUATED BY ELETROBRAS’ GENERAL MEETING
From a financial point of view, the two main topics are addressed in the paragraphs below, reproduced from the Sectoral Program and BUSA Management Transition and Transfer Agreement:
(i) “Until the date of the effective transfer of each Sectoral Program to ENBpar, Eletrobras shall continue to be entitled to the financial support for the management of the Sectoral Programs and Busa, as established in the applicable laws and regulations, until the date of effective transfer of each Sectoral Program and the management of the BUSA, as applicable, (…).”
(ii) “The completion of the transfer of each Sectoral Program shall be effected upon the signature by the Parties of the Transfer Certificate, by means of which ENBpar shall fully and promptly assume any and all rights or obligations related to the Sectoral Programs or the BUSA.”
And, among the aspects presented in item (ii) above, there is the following responsibility:
“ENBpar has contracted assurance services, regardless of accounting and financial information of the Sectoral Programs or the BUSA, as the case may be, aiming at ensuring that assets and liabilities, combined, are at a risk level acceptable for ENBpar.”
14 / 15 |
|
TECHNICAL NOTE |
31.12.2021
PR-005/2021 |
7. ANALYSIS FROM THE POINT OF VIEW OF THE RELATED-PARTY TRANSACTION POLICY
Pursuant to the “Identification Form for Related-Party Transactions” attached hereto.
8. | CONCLUSION |
In view of the foregoing, aiming at complying with the laws and regulations that govern the Eletrobras capitalization process and the transfer of the Sectoral Programs and the Management of the BUSA to ENBpar, as well as aiming at the maintenance and full operation of the Programs and activities included in the agreement addressed herein and that shall be subject to transfer, we recommend the approval of the agreement subject matter of this Technical Note for execution.
Very truly yours,
Fernando Antônio Ribeiro Soares | Ronaldo Garcia Barboza |
Presidency Advisor | Sustainability Director´s Advisor |
Annexes: “Identification Form for Related-Party Transactions”.
15 / 15 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: January 20, 2022
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRÁS | ||
By: | /S/ Elvira Baracuhy Cavalcanti Presta | |
Elvira Baracuhy Cavalcanti Presta CFO and Investor Relations Officer |
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.