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CESP Companhia Energetica de São Paulo : Evaluation Report - art.264

01/24/2022 | 08:04am EDT

VTRM ENERGIA PARTICIPAÇÕES S.A.

Assessment of Shareholders' Equity at Market Prices:

  • VTRM Energia Participações S.A. (VTRM) and
  • Companhia Energética de São Paulo

(CESP) Base date: September 30, 2021.

Strictly confidential

January 19, 2022

January 17, 2022 | Draft

Ernst & Young

Assessoria Empresarial

Ltda.

Av. Presidente Juscelino Kubitschek, 1909 Torre Norte - 10º andar

04543-011 - São Paulo - SP Phone Number: +55 11

2573-3000www.ey.com

Strictly confidential

VTRM Energia Participações S.A.

January 19, 2022

Av. Dra. Ruth Cardoso, 8.501 - 2º

andar Pinheiros - São Paulo, SP

CEP: 05425-070 - Brazil

Assessment of Shareholders' Equity at market prices of VTRM Energia Participações S.A. and Companhia Energética de São Paulo S.A.

As requested by you, Ernst & Young Assessoria Empresarial Ltda. ("EY") presents the assessment report ("Report") of the Shareholders' Equity at market prices ("PLA") of Companhia Energética de São Paulo ("CESP") and VTRM Energia Participações S.A. ("VTRM") - including among its subsidiary Votorantim Geração de Energia S.A. ("VGE"), (CESP and VTRM collectively hereinafter referred to as "Companies"), on the base date of September 30, 2021 ("base date").

We understand that the Management of VTRM ("Management") will use this Report as a subsidy to the Companies' shareholders in the approval of the Corporate Reorganization Proposal, described in a Material Fact published by CESP on October 18, 2021 ("Material Fact"), regarding the Merger of around 60% of the shares issued by CESP currently not belonging to VTRM, by VTRM ("Transaction CESP").

As described in the Material Fact, the exchange ratio of the merged shares issued by CESP for new shares issued by VTRM will be freely negotiated between VTRM and the special independent committee ("Independent Committee") set by CESP as per and for the purposes of CVM Guidance Opinion 35, of September 1, 2008 ("Opinion 35"). Besides the other information provided to the Independent Committee and the shareholders of the Companies, and as provided for in Articles 252 and 264 of Law 6404/76 ("Corporate Law"), this Report will be presented to calculate the replacement ratio compared to that proposed by the Management.

We emphasize that our work should not be considered as a fairness opinion, or as an advice or recommendation for carrying out any transaction involving the capital of CESP or VTRM, or on the conditions that an eventual transaction may occur, or even used to financing or fundraising, or for any other purpose, except compliance with the Brazilian Corporate Law. We understand that the final decision on the occurrence and conditions of an eventual restructuring of the Companies is the exclusive responsibility of the Management and shareholders of VTRM and CESP.

It should be noted that the data provided by the Management were considered and assumed as reliable. We did not investigate independently, and no audit process was applied to the financial information of CESP and VTRM provided to us. EY had access to the information it deemed necessary, besides carrying out the analyzes it deemed appropriate, and considers that the information and analyzes used to prepare this Report are consistent. As mentioned in our agreement, our analysis is subject to the general limitations described in this Report.

We assume that Management has consistently analyzed the factors that may affect the results presented, as well as has not omitted any relevant information, which could significantly impact the conclusions of our work.

We appreciate the opportunity and make ourselves available for any questions or additional clarification. Kind Regards,

Andréa B.

Rafael Max Senior

Fuga Partner

Manager

VTRM ENERGIA PARTICIPAÇÕES S.A.: Fair Value Assessment of Assets of Votorantim Geração de Energia S.A. and its Investees, on the base date of September 30, 2021. | Page 2 of 130

January 17, 2022 | Draft

Control Panel

1 Executive Summary

7 Exhibits

Contents

2 Context

8 Exhibits

3 CESP

4 VTRM

5 Summarized Figures

6 Overall Limits

Page

1. Executive Summary

04

2. Context

09

3. CESP

12

3.1

Adjusted Balance Sheet

13

3.2

Property, Plant and Equipment

18

3.3

Intangible Assets

29

3.4

Other Assets and Liabilities

33

4. VTRM

38

4.1

Consolidated Balance Sheet

39

4.2 CESP

42

4.3 VTRM ex-CESP

44

4.3.1 Adjusted Balance Sheet

45

4.3.2 Property, Plant and Equipment

48

4.3.3. Intangible Assets

59

4.3.4 Other Assets and Liabilities

66

4.4 VGE

68

4.4.1 Adjusted Balance Sheet

69

4.4.2 Investments Not Consolidated

72

4.4.3. Other Assets and Liabilities

87

5. Summarized Figures

89

5.1

CESP - Adjustments to the Book Value

90

5.2

VTRM - Adjustments to the Book Value

91

6. Overall Limits

92

7. Appendix

97

8. Exhibits

103

VTRM ENERGIA PARTICIPAÇÕES S.A.: Fair Value Assessment of Assets of Votorantim Geração de Energia S.A. and its Investees, on the base date of September 30, 2021. | Page 3 of 130

1

Executive Summary

ENERGIA PARTICIPAÇÕES S.A.: Fair Value Assessment of Assets of Votorantim Geração de Energia S.A. and its Investees, on the base date of September 30, 2021. | Page 4 of

January 17, 2022 | Draft

1 Executive Summary

1 Executive Summary

7 Exhibits

Shareholders' Equity at Market

2

Context

8 Exhibits

3 CESP

4 VTRM

5

Summarized Figures

6

Overall Limits

Summarized Figures

R$7.49 bn

CESP's Accounting Shareholders' Equity on September 30, 2021

R$(1.12) bn

Net Balance - Fair Value Adjustments

R$6.37 bn

CESP Shareholders' Equity at market prices

R$7.02 bn

VTRM's Accounting Shareholders' Equity on September 30, 2021, including the contributions provided for in the Material Fact

R$1.38 bn

Net Balance - Fair Value Adjustments

R$8.40 bn

VTRM Shareholders' Equity at market prices

This Report presents the calculation of the value of Shareholders' Equity valued at market prices ("PLA") of VTRM and CESP, on the base date of September 30, 2021.

The calculation was based on CVM Instruction 436 Exhibit III, in its following paragraphs:

XV. The value of shareholders' equity valued at market prices must be determined based on the sale or liquidation of assets and liabilities separately under the following conditions:

  1. market value must correspond to the balance expressed in cash or cash equivalents at which the property (or any other asset or liability) could be exchanged between a willing buyer and a willing seller, with reasonable knowledge of both and there is no compulsion to buy or sell by one or both; and
  2. the value of the assets must be evaluated by reference to market prices under orderly liquidation conditions, or "current cash equivalents", i.e., the liquidation value under forced sale conditions, at any cost, must not be considered.

XVI. The report will itemize the asset and liability items calculated under negotiation with debtors and creditors and will contain the justification and calculation memories for each tangible and intangible, monetary and non-monetary item, which may be grouped only under conditions of similarity and relevance of the item.

VTRM ENERGIA PARTICIPAÇÕES S.A.: Fair Value Assessment of Assets of Votorantim Geração de Energia S.A. and its Investees, on the base date of September 30, 2021. | Page 5 of 130

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

CESP – Companhia Energética de São Paulo published this content on 24 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 January 2022 13:03:08 UTC.


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