Privatization of Companhia Estadual de Águas e Esgotos - CEDAE
Companhia Estadual de Águas e Esgotos - CEDAE is a state owned company dedicated to the water and sewage treatment and distribution in the State of Rio de Janeiro. CEDAE registered in 2015 a net profit of BRL 248,889 thousand, corresponding to a difference of -45.9% in relation to the previous year.
In view of the recent economic turmoil that the State of Rio de Janeiro is going through, the State is looking to privatize CEDAE.
On February 22, 2017, the state legislators approved the text for the bill which authorizes the privatization of CEDAE. The approved text determines that the State Government shall have six months, extendable for another six months, to structure the sale model. The results from this operation will be used in special to repay a BRL 3.5 billion loan to be made available by the Federal Government.
We will keep monitoring the developments of potential transaction, as there is still a considerable level of political uncertainty that could affect the deal. More precisely, the municipality of Rio de Janeiro (which represents circa 77% of CEDAE's results) is threatening to create its own company for water and sewage treatment in case no decision power is given to it in the context of the sale of CEDAE. Other municipalities within the State of Rio de Janeiro have suggested they could do the same.
For more information, seek advice from one of our lawyers.