Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Eletropaulo Surges on Plans to Appeal Reimbursement Demands

Dec. 18 (Bloomberg) -- Eletropaulo Metropolitana SA, the Brazilian power distribution unit of AES Corp., rallied the most in five years after the company said it will appeal orders to pay back clients who regulators found were overcharged.

Shares rose 17 percent to 11.25 reais at the close of trading in Sao Paulo, the biggest jump since October 2008. Trading volume was 6.6 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 through discounts on clients’ bills over the next four years after the utility overstated the value of investments it made in its network.

“After the good news yesterday, the stock began to rise, and investors who shorted the stock ran to buy it back in order to cover their open positions,” Pedro Galdi, the chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a phone interview.

The ratio of borrowed shares for Eletropaulo, an indication of short selling, was 39% as of the close of trading yesterday, the highest on the Ibovespa, according to data compiled by Bloomberg.

The penalty applied by the regulator 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, 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 33 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

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.