OREANDA-NEWS. ENEVA - the largest privately controlled thermal energy generator in Brazil - announces today the conclusion of a deal with its shareholder E.ON SE and with the banks BTG Pactual, Citibank, HSBC and Itau to implement a series of measures that will strengthen its capital structure, raise the cash position to a sustainable level and prepare the company to start a new cycle of continuous growth.

The overall transaction, which is subject to certain conditions precedent, is divided into two stages and includes a private capital increase of up to 1,5 billion Brazilian Reais (BRL), the prorogation of the maturity of the company's financial debt and the disposal of part or the totality of an asset - the coal fired power plant Pecem II.

“The stabilization of ENEVA's financial position will allow us to concentrate on the implementation of our business plan. It also creates in the same time the basis for the future realization of our pipeline projects. ENEVA was able to turn very quickly from a pre-operational company to a large energy generator, in less than a year. We will also give more attention to internal process such as the optimization of management structures and cost management”, said Fabio Bicudo, ENEVA's CEO.

The deal will release ENEVA of any repayments of its financial debt for the next three years alongside with an overall maturity of five years. As per the agreement with the financing banks, amortization of the debt will restart only in June 2017. This new flow of payments will help strengthening the cash position of the company immediately, along with the fact that ENEVA's thermal power plants have started to present good operational results in the last months."

The successful conclusion of the deal demonstrates the confidence of all stakeholders on the equity as well as the debt side in the future of the company”, said Frank Possmeier, Deputy CEO of the company.

In the first phase of the capitalization, the company will initiate a private capital increase of up to 316,5 million Brazilian Reais (BRL), in which new shares issued by the company will be sold at the price of the closing of the last trading day at the stock market before this announcement - 1.27 BRL per share. One of the controlling shareholders of ENEVA, E.ON, will participate with 120 million BRL in this stage. Simultaneously, the company will receive a short term bridge loan of 100 million BRL from the banks that signed the deal.

In parallel, the company will organize a competitive process to dispose of a half or the totality of the shares held in the thermal plant Pecem II. E.ON backstops the acquisition of 50% of the plant at market prices but not exceeding 400 million BRL, in case no other bidder provides an offer higher than this backstop. Simultaneously to the conclusion of the sale of Pecem II the banks will provide an additional 150 million BRL long term loan to Pecem II that will be used partially to repay the before mentioned short term bridge loan.

In the second phase of the capitalization process, the total amount of the private capital increase may reach 1,5 billion BRL, less the amount raised in the first phase. E.ON is committed to a participation of up to 450 million BRL, potentially be reinjection its participation in Pecem II.

Total participation of E.ON in the private capital increase will be up to 570 million BRL. But in no event E.ONs share in the company's total capital will surpass the threshold of 49.9% of the shares.