Companhia de Saneamento do do Parana (Sanepar)

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In June 1998, the Consorcio Liberal acquired 39.71% common shares (equivalent to 35.16% equity) of Companhia de Saneamento do Parana (Sanepar) –the Parana state Water & Sewerage Company. The acquisition was priced at US$216.7 million (249.8 million reals) and Consorcio Liberal paid 30% cash while the remaining 70% was to be financed. The Consorcio Liberal was initially formed by Vivendi (known as Veolia Environment as of May 2003), Andrade Gutierez Concessoes, and Parana state-owned power generator Copel. As of 2001, the consortium was known as Domino Holdings, and was formed by Vivendi (30%), Andrade Gutierrez (27.5%), Opportunity Dalleth Participacoes (27.5%) and Copel (15%). After the transaction, a shareholders agreement was signed, giving the consortium controlling power over Sanepar. In February 2003, the shareholders agreement was nullified by the governor of the state of Parana. In March, the control of the company was officially transferred to the majority shareholder, the state government (which owns 60% of the voting capital and 52.5% of the total capital). Domino Holdings filed legal suits to restore the shareholders agreement. In 2004 the Brazilian federal court gave control of the company back to Domino Holdings; however in September 2004 a Brazilian state court suspended this decree and returned control to the state government. In September 2005 the state parliament of Parana approved a governmental decree to remove Sanepar controller Domino Holdings. Initially, the consortium was planning to invest R$1.2 billion to develop the sewerage and water supply networks in Parana state. The consortium had committed to achieve the following coverage targets by 2005: 99.4% for water distribution (in 1998, the coverage was 99%), 65% for sewerage collection (37.7% in 1998) and 100% for sewerage treated (75% in 1998). As of December 1997, the company had 7,100,742 users connected to the water system and 2,176,818 users connected to the sewerage system (total population: 7,197,914). The network extension in 2002 was 35,181 km for the water distribution network and 15,713 for the sewerage network. No private stakeholder owns >= 15% of Sanepar: Veolia (10.5%), Andrade Gutierrez (9.7%) and Opportunity Dalleth Participacoes (9.7%). Therefore no private stakeholder can be entered as sponsor. Investments by Sanepar were the following: 2001 - US$ 123.5 million (R$ 275 million); 2002 - US$ 87.5 million (R$ 256 million) (US$ 42.1 million/R$ 149 million for sewerage investment and US$ 33 million/R$ 117 million in its water distribution system); 2003 - US$ 83.6 million (R$ 251 million). Year % Private Inv. in Gov. Assets Commit. Inv. in Facilities 1998 35% 216.7 176.4 1999 35% 0 110.6 2000 35% 0 111.3 2001 35% 0 121.5 2002 35% 0 87.5 2003 35% 0 83.6