Brazil's Eletropaulo: Court Orders BRL1.3 Billion Payment to Eletrobras

SAO PAULO--Brazilian courts ruled that AES Eletropaulo (ELPL4.BR) will have to pay a government-controlled utility 1.3 billion Brazilian reais ($624 million) to zero out a loan that was granted to the Brazilian unit of AES Corp. (AES) when it was still state-controlled, Eletropaulo said Friday.

The court found that Eletropaulo was responsible for full repayment of the balance of the loan, which was granted by federal utility Centrais Eletricas Brasileiras, or Eletrobras (ELET6.BR), to Eletropaulo in 1986. At the time the company was controlled by the state government of Sao Paulo, which later broke up and privatized the company's assets. Those assets were taken over by AES and by CTEEP (TRPL4.BR), owned by Colombia's Interconexion Electrica SA (ISA.BO).

The courts ruled that CTEEP didn't have to pay Eletrobras, and that Eletropaulo was solely responsible for repayment, Eletropaulo said in a regulatory filing. Eletropaulo estimates that the outstanding amount is about BRL1.3 billion.

Eletropaulo is appealing the court decision and said "our legal advisors estimate that the company has good chances in the appeals," adding that "at this moment the judicial decision has no impact on the company's earnings."

Write to Paulo Winterstein at [e-mail]

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