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Fitch Affirms Rede Energia's and Cemat's IDRs

  Fitch Affirms Rede Energia's and Cemat's IDRs

Business Wire

SAO PAULO -- February 22, 2013

Fitch Ratings has affirmed the following ratings for Rede Energia S.A. (Rede
Energia) and Centrais Eletricas Matogrossenses S.A. (Cemat):

Rede Energia:

--Local and Foreign Currency Issuer Default Ratings (IDRs) at 'D';

--Long Term National Scale Rating at 'D(bra)';

--USD575 million perpetual notes long-term rating at 'C/RR5';

--BRL370 million debenture issuance at 'C(bra)'.

Cemat:

--Local and Foreign Currency IDRs at 'RD';

--Long Term National Scale Rating at 'RD(bra)'.

Fitch has revised the Recovery Rating on Rede Energia's perpetual notes to
'RR5' from 'RR4', which reflects the expectation of a below average recovery.

Key Rating Drivers:

Rede Energia's ratings continue to reflect its bankruptcy protection, which
was filled in Brazil on Nov. 23, 2012 and accepted on Jan. 14, 2013. The
perpetual notes and the debenture issuance fall under the bankruptcy
protection.

Cemat's ratings are based on Fitch's view that the debt exchange of certain of
Cemat's obligations, including its second and fourth local debentures
issuances, are distressed debt exchanges under Fitch's 'Distressed Debt
Exchange Criteria', published Aug. 8, 2012. Although the investors agreed with
the new conditions of these issuances, Fitch understands that they resulted in
a significant change in the original contractual terms, aiming at avoiding an
event of default. Cemat is also currently under intervention by the Brazilian
power regulatory agency (Agencia Nacional de Energia Eletrica - Aneel) and,
along with Rede Energia and other holding companies and distribution
companies, should have its ownership control sold to Equatorial Energia S..A
and CPFL Energia S.A., with a minimum capital injection in the group of BRL773
million.

Fitch will monitor the execution of Rede Energia's and Cemat's change of
control and recovery plan. As soon as the debt restructuring plan is executed
and the administrative intervention of Aneel in Rede Energia's energy
distribution concessions, in place since August 2012, is suspended, the agency
will reassess the assigned ratings for both Rede Energia and Cemat.

Rating Sensitivities:

Positive rating actions could be driven by the conclusion of the sale of Rede
Energia and its subsidiaries' ownership control to Equatorial Energia and CPFL
Energia.

Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 8, 2012);

--'Distressed Debt Exchange Criteria' (Aug. 8, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Distressed Debt Exchange Criteria for Structured Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=683152

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Contact:

Fitch Ratings
Primary Analyst
Renata Pinho
Director
+55-11-4504-2207
Fitch Ratings Brasil Ltda
Alameda Santos, 700 - 7th andar, Sao Paulo, sp CEP 01418-100
or
Secondary Analyst
Mauro Storino
Senior Director
+55-21-4503-2625
or
Committee Chairperson
Ricardo Carvalho
Senior Director
+55-21-4503-2627
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com
 
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