Exclusive: Brookfield mulls raising bid for Brazil's Renova, sources say

By Guillermo Parra-Bernal

SAO PAULO (Reuters) - Brookfield Asset Management Inc is considering increasing a takeover offer for Renova Energia SA by 25 percent, in a bid to sway the two largest shareholders in the Brazilian renewable power firm to exit their controlling stakes, two people with direct knowledge of the matter said on Tuesday.

Under terms of a revised bid, Brookfield would offer power utility Cia Energetica de Minas Gerais SA and subsidiary Light SA 11.25 reais per unit of Renova, said the people, who asked for anonymity because the talks remain private. Each Renova unit comprises a common share and two preferred shares.

 

Units jumped the most in 10 weeks on Tuesday, adding as much as 4.5 percent to 7.66 reais - still 47 percent below a revised offer. Preferred shares of Cemig, as Renova's largest holder is known, shed 1.8 percent to 8.96 reais in São Paulo.

Under terms of the bid, Canada-based Brookfield would have to pay about 1 billion reais ($321 million) to win control of Renova, the people said. Brookfield could either pump an extra 800 million reais into Renova or take the company private, they said.

Reuters reported on July 7 that Brookfield had originally submitted a bid valuing Renova at the equivalent of 9 reais per unit. Cemig and Light own a combined 64.4 percent voting stake in Renova.

Brookfield declined to comment, while Cemig did not have an immediate comment. Light referred questions on Renova to controlling shareholder Cemig.

Renova has struggled with a severe cash crunch over the past couple of years. Financing conditions for Renova, which was founded in 2001, worsened significantly when a partnership with renewable energy company SunEdison Inc collapsed weeks before the latter filed for bankruptcy protection in the United States.

Exiting Renova could allow Cemig, Brazil's No. 3 power utility, a faster refinancing of almost 4 billion reais of debt maturing this year. Chief Financial Officer Adezio Lima said in August that a partial or full sale of Cemig's and Light's stakes in Renova could take up to 60 days.

($1 = 3.1185 reais)

(Editing by Bill Rigby and Phil Berlowitz)