Shareholders agree to continue IEBA's bankruptcy process

Shareholders of Argentine power holding company Inversora Electrica de Buenos Aires (IEBA) have unanimously voted to allow the company's board to continue with its bankruptcy protection process, the company said in a statement to the Buenos Aires stock market. A local court recently approved IEBA's request for a "Concurso Preventivo de Acreedores," the Argentine equivalent of Chapter 11 bankruptcy in the US. According to the terms, a local judge will take control of IEBA's remaining US$162mn debt, and meet with creditors to renegotiate the payments. IEBA defaulted on US$230mn of bonds in September 2001, following the conversion of rates from US dollars into Argentine pesos. In April, IEBA's Luxembourg-based parent Camuzzi International offered to buy back the bonds, but just 30% of creditors accepted the terms, and the company cannot pay the remaining debts. IEBA's only source of income is its controlling stake in Buenos Aires province-based distributor Edea, whose cash flow has fallen sharply because of Argentina's reduced power demand, the tariff conversion into pesos, and the subsequent rates freeze. Camuzzi controls 55% of IEBA through Buenos Aires Energy Company. United Utilities owns the remaining 45% of IEBA, and has previously said that it will not put any more additional equity into the holding.