Eletropaulo Advances on Plans to Appeal Reimbursement Demands

Eletropaulo Metropolitana SA, the Brazilian power distribution unit of AES Corp. (AES), rallied after the company said it plans to appeal orders to pay back clients who regulators found were overcharged.

Shares rose to a nine-month high. climbing 6.2 percent to 10.22 reais at 1:16 p.m. in Sao Paulo. Trading volume was 1.8 times the daily average of the past three months. It was the biggest gain on the Ibovespa gauge, which added 0.9 percent.

Eletropaulo said in a filing after the market closed yesterday that it will take legal action to nullify an order from Brazil’s power regulator to reimburse consumers for 626 million reais ($268 million) in charges. The regulator said the money should be paid back to customers through discounts on their bills over the next four years after the utility overstated the value of investments it made in its network.

The penalty would mean “a 15 percent reduction in Ebitda every year an installment is paid, if the company is not able to reverse the ruling,” Maria Carolina Carneiro, an analyst at Banco Santander Brasil SA (BSBR), wrote in a note to clients today.

Eletropaulo’s earnings before interest, taxes, depreciation and amortization will climb 23 percent this year to 808.7 million reais, according to the average estimate of analysts surveyed by Bloomberg. The shares have slumped 39 percent this year.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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