Colombia Says Isagen Ruling Risks Devaluing State-Owned Assets

A Colombian court’s decision to block the sale of power company Isagen SA sends a “perverse” message to international investors and risks devaluing shares in other companies owned by the state, the Finance Ministry said.

In a plea to overturn the suspension submitted to the Council of State court, the Finance Ministry warned of a risk that investors may withdraw from bidding for Isagen and delay the building of new highways.

“A decision of this kind could have indirect consequences on other shares owned by the nation, because the government’s discretionary decision to sell now depends on new factors like a final binding ruling that without a doubt devalues the nation’s assets,” the Finance Ministry said in the May 21 plea, which it e-mailed Tuesday to Bloomberg News.

The legal uncertainty means would-be bidders may lose interest and seek less difficult investments elsewhere, the Finance Ministry said. Engie, the French energy company formerly known as GDF Suez SA, Brookfield Asset Management Inc. and Chile’s Colbun SA had put down deposits to take part in the auction. A previous suspension was lifted last year.

The Council of State halted the auction, which was scheduled for May 19, while it rules on three cases against the sale, saying that it was seeking to avoid potential damage to the public interest.

The government is seeking to raise at least 5.3 trillion pesos ($2.1 billion) in the sale to fund highway projects.

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