BNDES may have bigger stake in Novacom than AES

Brazil's national development bank BNDES could have a larger than originally expected stake in the Novacom holding company that will control Brazilian assets belonging to US power company AES, due final changes in the US$1.2bn debt agreement with AES, local press reported. The final terms of the debt-for-equity agreement between BNDES and AES, whose deadline was extended to December 22 from December 15, could give the Brazilian bank 53.65% of non-voting stock in Novacom and AES 46.15%. Previous expectations were a 50-50 split. The proportion of voting stock will remain unchanged, Valor Economico reported. Behind the change is inability of AES to remove claims on shares of its Brazilian generating unit AES Tiete that were given as guarantee for a US$300mn bond issue in the US that matures in 2015, local press reported. The negotiations have been dragging on since the beginning of the year, and foresee the transference of AES stakes in distributor Eletropaulo and its Brazilian generation subsidiaries AES Tiete and AES Uruguaiana to Novacom. The agreement is a debt-for-equity deal under which, in return for writing off US$600mn debt, BNDES would own 49.9% of Novacom. AES will repay US$515mn over a period of 10-12 years, made through convertible debentures guaranteed by the assets of Eletropaulo, Uruguaiana and Tiete. In the event of non-payment, BNDES would trade in the debentures and take control of the company. The deal is settled and legal details are being ironed out, local press reported AES executive Joseph Brant as saying. Brant said that as soon as a debt settlement is reached it will announce new investment plans for Brazil in 2004, Folha de Sao Paulo reported.