Edesur SA

distressed

Edesur distributes electricity to the southern half of the Greater Buenos Aires area and the south portion of the Federal District of Argentina. Edesur's market comprised 1.9 million customers by 1992. Edesur was privatized in three stages. In the first stage (August 1992), the government sold a 51% equity stake for $511 million to Cia. Naviera Perez Compac (20.7%), Enersis (10.2%), Distribuidora Chilectra Metropolitana (9.9%), Grupo PSI Energy Inc. (5.1%), and Endesa de Chile (5.1%). The control of Edesur was transferred to the winning consortium with a 95-year exclusive concession contract. In the second stage, a 10% equity stake was sold to Edesur's employees. In the third stage, the remaining 39% equity stake was sold to Enersis for $390 million in 1995. In December 1998, Perez Companc bought Entergy's 10% share in Distrilec Inversora thus increasing its ownership stake in Edesur. In 2000, Perez Companc acquired an additional stake in Distrilec, raising its indirect stake in Edesur to 27.3%. In 2003, Brazil's Petrobras aqcquired Perez Companc and its shares in Edesur. The consortium experienced losses in 2002 due to the devaluation of the peso and the freezing of electricity rates by the regulator. Enersis registered complaints against the Argentine government with the International Centre for Settlement of International Disputes (ICSID) as a result of losses caused by the devaluation of the peso and the conversion of dollar-denominated tariffs into pesos. The ICSID reported that the proceedings were suspended on March 28, 2006. For updates on the international arbitration proceedings, check http://www.worldbank.org/icsid (case # ARB/03/21). Edesur invested $57.2 million in 1992, $105.1 million in 1993, $212.2 million in 1994, $125.8 million in 1995, $94 million in 1996, and $115.5 million in 1997 in improving its network to reduce electricity losses. The IFC partially funded the rehabilitation of Edesur distribution network. In the fiscal year 1995, the IFC approved a $40 million direct loan, and a $80 million syndicated loan.