EPM sale of Tigo-Une shares faces another obstacle

A Colombian lawyer filed a class action lawsuit against the approval of the sale of the shares publicly owned multi-utility EPM holds in telco Tigo-Une.

The operation was approved by Medellín city council in August after three years of processing and facing a series of political obstacles. The bill was approved in the second legislative debate with 16 votes in favor and five against.

Independent lawyer Esteban Manco claims the main problem is that the preliminary endorsement of Medellín's finance secretariat was not presented, nor were the technical studies on the economic estimate of EPM's shares.

“Law 226 of 1995, which enshrines this duty, was ignored and in this sense the right to public morality and public property was violated because this requirement is for the councilors to know how much the preliminary valuation of the shares is on the market,” Manco was quoted as saying by local press.

The amount the state will receive was one of the main topics the council discussed. It is estimated that EPM could raise around 1.6tn pesos (US$381mn) from the sale of its stake, based on the value of accounting records.

EPM mentioned that valuation “is beginning” and will be commissioned to an investment bank.

The city plans to use the funds to invest in training, technological projects and a new solid waste model, among others.

EPM is seeking to divest its telecoms business, which it says is causing harm to the State. Last year, the company had to contribute 300bn pesos to rescue Tigo-Une, half the capitalization required.

Majority shareholder Millicom announced that it could allocate US$1bn for two operations in Colombia, one related to the acquisition of EPM's shares and the other to a possible purchase of Telefónica's shares in Coltel for US$400mn.

Millicom's board recently changed due to the acquisition of a larger stake by Atlas Luxco.