China’s State Grid Said to Bid for Abengoa Brazil’s Power Lines

  • Company has seven operating transmission lines in Brazil
  • Abengoa got approval for bankruptcy protection in February

State Grid Corp. of China made a bid to acquire Abengoa SA’s power-transmission lines in Brazil, according to two people with knowledge of the matter.

The world’s largest power utility made an offer this month to buy Abengoa’s assets in operation in the country, both people said, asking not to be identified as the information is private. Government controlled State Grid agreed to pay $1.8 billion for a stake in Brazil’s CPFL Energia SA earlier this month.

Abengoa had its request for bankruptcy protection for some of its Brazilian units approved in February amid a larger effort to restructure debt and shed operations around the world. The Seville-based company is Brazil’s biggest non-state owned transmission line operator, with 10,000 kilometers (6,214 miles) of lines in operation and under construction. Abengoa has seven operating transmission lines in Brazil, worth about 1 billion reais ($305 million) plus 1.2 billion reais of debt that would be transferred to the buyer, according to a financial feasibility report obtained by Bloomberg News. 

A press official for Abengoa didn’t respond to a request for comment on the sale, while a press official for State Grid declined to comment on the subject.

Abengoa has six projects in Brazil that are behind schedule and three that haven’t begun construction, Andre Pepitone da Nobrega, director of Brazil’s energy regulator Aneel, told reporters at an event in Rio de Janeiro in June. The projects that have not yet started will be included in auctions this year, according to Energy Ministry’s Planning Secretary Eduardo Azevedo.

State Grid

Haitong Bank is advising State Grid in the acquisition of Abengoa’s assets in Brazil, according to one of the sources. Abengoa has hired the Brazilian consulting firm G5 Evercore to lead its financial restructuring.

Haitong and G5 didn’t immediately reply to e-mails and a phone call seeking comment.

There are more companies interested in Abengoa’s assets. Transmissora Alianca de Energia Eletrica SA, a state-owned operator of power lines in Brazil, is “interested and evaluating” some of Abengoa’s assets, Chief Executive Officer Joao Procopio Vale said in an interview Tuesday.

The proceeds from Abengoa’s asset sales will be used to cover the company’s debt, according to the document obtained by Bloomberg News. Abengoa’s Brazil unit had total net debt of about 3.3 billion reais in February.

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