Companhia Energetica de Minas Gerais (CEMIG)

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Cemig was an integrated electric utility that owned 5,000-MW of generating plants and a 274,000km distribution system to serve approximately 4.2 million customers in 1996. The company was partilly privatized in May 1997 when 33% of its ordinary shares (14.4% of the total capital) were sold for US$ 1,056 million to Southern Electric Brasil (SEB) Participacoes, a group of investors comprising AES Corporation, Mirant Corporation, and Banco Opportunity. In December 2002, Mirant Corporation sold its stake in SEB to an unknown investor. The majority of Cemig shares (51%) belonged to Government of Minas Gerais State. The shareholder's agreement between Southern Electric and Minas Gerais State contained special quorum and veto provisions granting Southern expanded control over certain decisions. In August 1999, after a new administration took office, the State government of Minas Gerais filed a lawsuit in a State Court seeking to nullify the shareholders' agreement with SEB on the grounds that these special provisions constituted an unlawful transfer of control from us to Southern under principles of Brazilian constitutional law, and claiming in particular that the State government may only cede control of Ceming pursuant to specific state legislation providing for the same. On March 21, 2000, the First Court of Fazenda Pública e Autarquias in Belo Horizonte rendered a decision declaring the shareholders' agreement null and void, and this decision was ratified on August 7, 2001 by the Minas Gerais State Court of Appeals. As a result, the State Government was restored to its position as sole controlling shareholder and none of the special quorum or veto provisions were in effect In October 2001, SEB filed two appeals against the decision on the merits of the state appellate court, one to the Federal Superior Court and the other to the Supreme Court of Justice. The state appellate court denied access of these two appeals to the higher courts, and in August 2002, SEB filed two interlocutory appeals against such decision, one directed to the Federal Superior Court and the other to the Supreme Court of Justice. As of December 2004, those appeals continued to be pending. SEB Participacoes defaulted on a US$85 million loan payment to the Brazilian development bank (BNDES) in May 2003. SEB acquired a US$ 600 million loan from BNDES in 1997 to buy 33% of Cemig’s ordinary shares. Cemig’s ownership structure as of December 2004 was Minas Gerais State with 51%, SEB Participacoes with 33%, local investors with 12%, and foreign investors with 4%. The last two ones were mainly through public offering in either Brazilian stock exchange or in the NYSE. Cemig won an Aneel’s tender for the construction and exploration of the Itajuba III substation located in Itajuba (Minas Gerais) in Feb. 2000. The project was expected to involve an investment of US$ 42.5 million. In April 2005, Cemig together with Alusa acquired through a public tender the rights to build and operate for 20 years the Chilena Charrua - Temuco transmission line. In 2006, CEMIG bought a controlling share in Light SA and now includes it in its distribution network. As of December 31, 2007, CEMIG was 51% controlled by the State of Minas Gerais. Legislation would have had to be passed in order to sell more than 50% of its shares. In June 2012, AGC Energia, a subsidiary of Andrade Gutierrez acquired SEB's participation in Cemig by undertaking the responsibility of SEB's US$ 1083 million (BRL 2115 million) debt. Commit. Inv. in Facilities is not tracked since % Private is < 51%. Year % Private Inv. in Gov. Assets Commit. Inv. in Facilities 1997 33% 1056 0 1998 33% 0 336 1999 33% 0 274.5 2000 33% 0 215.6 2001 33% 0 277 0 2002 33% 0 402.2 2003 33% 0 301.3 2004 33% 0 393.2 2005 33% 0 559.8 2006 33 891.7 2007 In 2000 the total investments amounted US$ 215.6 million (R$ 420 million) and the total electricity consumption was 42,479,000 MWh. In 2001 the company invested US$ 28.9 million in its facilities but saw the total consumption raised to 46,522,000 MWh, even with the electricity rationing program, adopted by the government. In 2002 Cemig realized a huge capex program, the total investments amounted US$ 402.2 million (R$ 1,176 million) and the total electricity consumption reached the mark of 49,372,000 MWh. By the end of 2002 the company had 5,591,492 consumers units.