Eletropaulo Gains as Court Blocks Loan Payment to Eletrobras

Eletropaulo Metropolitana Eletricidade de Sao Paulo SA rose the most in a week after a court order blocked a loan payment of as much as 1.3 billion reais ($659 million) to Centrais Eletricas Brasileiras SA. (ELET6)

Shares gained 0.6 percent to 12.69 reais at 1:56 p.m. in Sao Paulo, the most on a closing basis since Feb. 14. The benchmark Bovespa (IBOV) index retreated 0.6 percent.

Eletropaulo, Brazil’s largest electricity distributor, got a court order suspending a decision ordering it to pay off a loan taken out in 1986 from Eletrobras. The company isn’t making a provision for possible liability related to the loan, Eletropaulo said today in a regulatory filing today.

“We consider this an important victory for Eletropaulo,” Bradesco BBI analysts Vladimir Pinto and Marcelo Sa wrote in a research note today. “Had the lower-court decision not been overruled, the company would probably have to recognize a provision for the liability.”

Eletropaulo has fallen 66 percent in the past year as utility companies plunged while the Bovespa lost 16 percent during the same period.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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