Brazil's Celpa Seeks Debt Haircut, More Funds
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Brazil's debt-laden power distributor, Celpa, proposed a 40 percent reduction in the value of its liabilities as part of a debt renegotiation proposal seeking to stave off bankruptcy, according to a court document released on Monday, Reuters reported. Celpa, controlled by electricity holding company Rede Energia, plans to raise 650 million reais ($337 million) through the sale of local debt notes that can be converted into shares after a certain period, the document said. The plan also includes Celpa's obtaining 200 million reais in fresh credit lines through the end of 2013. Celpa, which serves the northern state of Pará, filed for bankruptcy protection in February, citing "a worsening financial and economic situation." The company had until Monday to present a debt restructuring plan to a Pará court, and analysts largely expected it could force creditors to accept losses and give Celpa more time to pay its debt. The restructuring plan seeks to help Rede Energia prevent cross-default clauses from hampering the group in the event of a Celpa debt moratorium. Still, lack of support from bond- and shareholders could drag on Rede Energia's finances, analysts said. Read more. (Subscription required.)