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CESP PRF B

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CESP Companhia Energetica de São Paulo : Material Fact - Private Instrument of Protocol and Justification of the Merger of Shares

01/24/2022 | 07:14am EDT

CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO

Publicly Listed Company

Taxpayer Identification Number CNPJ: 60.933.603/0001-78

CVM (Brazilian Securities & Exchange Commission) Code No. 00257-7

MATERIAL FACT

CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO ("CESP" or the "Company"), pursuant to article 157, section 4, of Law 6,404/76 ("Corporation Law") and CVM Resolution 44/21, hereby informs the following, in continuity with the Material Facts disclosed by the Company on October 18th, 2021, October 21st, 2021, November 24th, 2021, December 10th, 2021, January 3rd, 2022, and January 10th, 2022, concerning the proposed reorganization which aims to consolidate into a single entity certain energy assets owned by the Company's indirect controlling shareholders, Votorantim S.A. ("VSA") and Canada Pension Plan Investment Board ("CPPIB" and, together with VSA, the "Controlling Shareholders", and the "Reorganization", respectively), including the investment in the Company.

As informed by the Material Fact disclosed by the Company on October 21st, 2021, the Company appointed the Special Independent Committee, in compliance with CVM Guidance Opinion No. 35 (the "Independent Committee"), in order to negotiate with its controlling shareholder's management, VTRM Energia Participações S.A. ("VTRM"), the transaction involving a merger of all of the shares issued by the Company by VTRM, excluding the shares that, on the effectiveness date of the merger of shares ("Closing Date"), (a) are held by VTRM, (b) are in CESP's treasury, or (c) have been subject to the exercise of the right of withdrawal by CESP's shareholders ("Merger of Shares"). Also, as informed by the Material Fact disclosed by the Company on January 10th, 2022, the Independent Committee submitted to the Company's Board of Directors its recommendation for the proposed exchange ratio of the shares issued by CESP for shares issued by VTRM related to the Merger of Shares ("Exchange Ratio"), which was unanimously approved by the Company's Board of Directors on the meeting held on January 7th, 2022 ("BDM 01.07.22").

Afterwards, on a meeting held on January 21, 2022, the Company's Board of Directors approved, among other matters, (i) the execution, between the Company and its controlling shareholder, VTRM, of the Private Instrument of Protocol and Justification of the Merger of Shares (Instrumento Particular de Protocolo e Justificação de Incorporação de Ações da CESP - Companhia Energética de São Paulo pela VTRM Energia Participações S.A.) ("Merger Protocol"), which sets forth, among other matters, the terms and conditions for the Merger of Shares; and (ii) the calling of the extraordinary shareholders meeting of the Company to be held, at first call, on February 15th, 2022 to

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resolve, among other matters, upon the Merger Protocol, the exit by the Company of the Nível 1 listing segment of B3 S.A. - Brasil, Bolsa, Balcão ("B3") and other matters related to the Merger of Shares ("ESM").

It is worth noting that, according to the Merger Protocol, in order to optimize the market value of VTRM shares, stimulating liquidity and the least impact of price fluctuations, after the VTRM Transaction (as defined below) and before the completion of the Merger of Shares, a grouping of VTRM shares will be carried out, so that 4,253509378 VTRM shares will be grouped into 1 share, without changing VTRM's capital stock ("Reverse Stock Split").

Considering the above, by force of the Reverse Stock Split, the Exchange Ratio approved on the BDM 01.07.22 will be adjusted proportionately, as described in Exhibit I of this Material Fact, being all of such adjustments already reflected on the Merger Protocol for all purposes.

Still, pursuant to the Merger Protocol, upon the completion of the Merger of Shares, the Company's shareholders will receive, in consideration for the merged shares issued by the Company held by them, new common and redeemable preferred shares issued by VTRM ("VTRM Redeemable Preferred Shares"). The VTRM Redeemable Preferred Shares will be immediately and compulsorily redeemed, in consideration for a cash payment to shareholders ("Redemption").

Pursuant to the Merger Protocol, the Merger of Shares and the Redemption are interdependent and linked events, the effectiveness and consummation of which will be subject to applicable corporate approvals and the implementation of certain conditions precedent ("Conditions Precedent"), including, among other usual conditions for this type of operation: (i) the listing of VTRM as a Category "A" publicly held company with the Comissão de Valores Mobiliários ("CVM"); (ii) the listing of VTRM on B3 and the admission of its shares to be traded at Novo Mercado, subject to the Redemption; (iii) the completion of certain steps of the Reorganization, including the transfer to VTRM, by VSA and CPPIB, of certain assets and cash ("VTRM Transaction"); and (iv) the approval of the Merger of Shares by the debenture holders of the 11th and 12th debenture issuance of the Company, pursuant to the terms and conditions provided in the respective deeds, or the redemption of the mentioned debentures, pursuant to the applicable terms and conditions set out in the respective deeds.

If approved by the ESM, the Merger of Shares will be conditioned upon and shall only be effective upon the satisfaction (or waiver, as applicable) of the Conditions Precedent, to be verified and declared by the Company and VTRM's Board of Directors.

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Upon the completion of the Merger of Shares, the Company shall become a wholly- owned subsidiary of VTRM, and the totality of the issued shares will be held by VTRM, without any modification in the Company's capital stock.

In compliance with the provisions of CVM Instruction No. 565/2015 ("ICVM 565"), Exhibit I describes the main terms and conditions of the Merger of Shares.

The information and documents related to the calling of the ESM, including the Management Proposal, the Merger Protocol and the opinion of the Fiscal Council regarding the Merger of Shares, will be timely disclosed to the shareholders, under the terms and deadlines of the applicable legislation, and made available in the electronic pages of CVM (https://www.gov.br/cvm), of B3 (http://www.b3.com.br) and of the Company (https://ri.cesp.com.br/).

The Company reaffirm its commitment to keep shareholders and the market in general informed about the progress of the transaction and any other matters that may be of interest to the market.

São Paulo, January 24th, 2022.

Mario Bertoncini

Chief Executive and Investor Relations Officer

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EXHIBIT I

In compliance with the provisions set forth in ICVM 565, the main terms and conditions of the Merger of Shares are described below.

1. Identification of the companies involved in the transaction and a summary describing the activities developed by them.

1.1. Company.

1.1.1. Company's identification.

The Company is a publicly listed company with head office in the City of São Paulo, State of São Paulo, at Avenida Dra. Ruth Cardoso, 7,221, 12th floor, Pinheiros, zip code ("CEP") 05425-070, with its Bylaws registered in the Board of Trade of the State of São Paulo ("JUCESP") under Company Registration Identification Number ("NIRE") 35.300.011.996, registered with the Taxpayer Identification Number ("CNPJ") under No. 60.933.603/0001-78, registered with the CVM as a category "A" publicly listed company under code 00257-7 and listed in the Level 1 segment of B3.

1.1.2. Description of the Company's main activities

The Company's corporate purpose is to (a) study, planning, design, construction and operation of systems for the production, transformation, transport, and storage, distribution and trade of energy, mainly electric, resulting from the use of rivers and other sources, especially renewable ones; (b) study, planning, design, construction, and operation of dams and accumulation reservoirs and other undertakings, intended for the multiple uses of water; (c) participation in undertakings whose purpose is the energy industry and trade, especially electricity, as well as the provision of services that, directly or indirectly, related to this object; (d) study, design, execution of plans and programs for research and development of new energy sources, mainly renewable ones, directly or in cooperation with other entities; (e) study, preparation, execution of economic development plans and programs in regions of interest to the Company, either directly or in collaboration with other state or private bodies, as well as the provision of information and assistance to help the private or state initiative, which aims at the implementation of economic, cultural, assistance and social activities in those regions, in order to fulfil their social function for the benefit of the community; (f) study, design, execution of afforestation and reforestation of trees, commercialization, and industrialization of trees, timber, and by-products resulting from these activities; (g) research, mining, exploration, and use of mineral resources, mainly energy; and (h) participation in other companies as a partner, shareholder, or quotaholder.

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1.2. VTRM

1.2.1. VTRM's identification

VTRM is a stock company with head office in the City of São Paulo, State of São Paulo, at Avenida Dra. Ruth Cardoso, 8,501, 2nd floor, room 01, Edifício Eldorado Business Tower, CEP 05425-070 with its Bylaws registered in JUCESP under NIRE 35.300.508.271, registered with the CNPJ under No. 28.594.234/0001-23. VTRM is currently in process of registration as a category "A" publicly listed company under the CVM, as well as for its listing in the Novo Mercado segment of B3.

1.2.2. Description of the VTRM's main activities.

VTRM's corporate purpose is to (a) participate in other companies, as a stockholder, partner or quotaholder, in Brazil and/or abroad; (b) acquire, administer, manage, operate and maintain generation, transmission and commercialization of energy assets, in their various forms, modalities and stages of development; (c) develop and construct generation, transmission and commercialization of energy assets, in their various forms, modalities and stages of development; (d) study, plan, develop and implement projects of generation, transmission and commercialization of energy, in its various forms and modalities; and (e) render services to third parties related to the activities mentioned in the previous items, including services related to operation and maintenance.

2. Description of the Transaction's purpose

The Merger of Shares is part of the Reorganization, which aims to consolidate certain investments of the Controlling Shareholders in the energy sector, including the investment in the Company's assets, into a single entity, VTRM, whose shares must be admitted to trading on B3's special listing segment called Novo Mercado.

The parties understand that the Brazilian energy sector has become increasingly dynamic and that current trends, based on the energy transition, the growth of competitiveness and addition of renewable sources, and the market opening process, with the consequent migration of customers from the captive market to the free energy market, provide important avenues for growth and new opportunities.

In this context, the parties understand that the Reorganization, including the Merger of Shares, will enable VTRM to become one of the main publicly listed companies in the Brazilian electricity sector, and one of the largest energy traders in the country.

As a result, it is believed that the Company's shareholders will have access to new and clear growth opportunities.

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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 12:13:01 UTC.


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Managers and Directors
Mario Antonio Bertoncini CEO & Investor Relations Officer
Marcelo Antônio de Jesus Chief Financial Officer
Fábio Rogério Zanfelice Chairman
Felipe Dutra Independent Director
Sergio Ricardo Romani Independent Director