Eletropaulo Plunges on Order to Pay 1986 Loan: Sao Paulo Mover
Eletropaulo Metropolitana SA, the Brazilian distribution unit of AES Corp. (AES), fell to a record low after a court ordered the electric utility to pay off a loan worth almost half the company’s market value.
Shares slid 5.5 percent to 13.23 reais at close in Sao Paulo and earlier dropped 9.3 percent to an intraday record. It was the biggest decliner on the benchmark Bovespa index, which rose 0.5 percent.
A court in the Brazilian state of Rio de Janeiro ordered Eletropaulo to pay off a loan from Centrais Eletricas Brasileiras SA (ELET6) that was taken out in 1986, according to a regulatory filing today. The amount may total 1.3 billion reais ($630 million), Eletropaulo said in the filing. The company said it will appeal the decision and sees “good chances” of succeeding.
“Although this decision is not final, we believe it represents a setback for Eletropaulo,” Vladimir Pinto and Marcelo Sa, analysts at the investment bank Bradesco BBI, wrote in a report. They have a recommendation equivalent to hold on the stock, with a 12-month price target of 24.27 reais.
Centrais Eletricas Brasileiras, a state-controlled utility known as Eletrobras, rose 1.5 percent to 9.74 reais.
Eletropaulo has a market capitalization of 2.9 billion reais after the stock tumbled 64 percent this year amid a push by President Dilma Rousseff to cut power rates.
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