Copasa Pauses Privatization and Will Reissue Prospectus

Overview

• Two rival groups formally submitted proposals last week to become Copasa’s strategic investor, including a Livorno consortium led by Itaúsa, GIC and Equipav with Aegea taking a small stake, and a separate group tied to Equatorial.
• Copasa said Wednesday it will publish a new prospectus and revised offer documents at the government’s instruction, a move that delays the expected announcement of the chosen strategic partner and resets the offering timetable.
• Under the previous offering documents the strategic investor would buy 30% of Copasa before a secondary public sale and could reach up to 45% of voting rights while the state could fall to as little as 5% and keep a possible 'golden share'.
• The planned secondary sale was structured to raise more than R$10 billion, with an initial block of 171.1 million shares priced at about R$53.77 each and large guarantee letters required from bidders.
• The pause sent Copasa shares down roughly 4.7% on the day and raises uncertainty over timing of state revenue, the company’s investment plans and which investors will shape service expansion after privatization.