Washington, DC, July 22, 2005
—The International Finance Corporation, the private sector arm of the World Bank Group, announced that it will convert the outstanding balance of a loan into shares of the Brazilian electricity company CPFL Energia S.A. The conversion of this balance, amounting to about $32 million, will benefit CPFL Energia and its shareholders by increasing the liquidity of the company’s shares and strengthening its capital base.
In June 2003, IFC provided a $40 million loan to CPFL, with an option to convert it into company’s common shares. In May 2005, IFC converted $10 million of this loan, resulting in a 0.32 percent interest in the company. The conversion of the remaining $32 million balance, including accrued interest, will increase IFC’s ownership interest to 1.22 percent.
CPFL Energia is one of the three largest groups in Brazil’s electricity sector. It controls three power distribution companies that serve over 15 million people, and has invested in generation projects which would bring CPFL’s total generation capacity to 1,990 MW by 2008. In October 2004, CPFL successfully launched an IPO on the Novo Mercado segment of Sao Paulo’s stock exchange, Bovespa, as well as on the New York Stock Exchange.
Francisco Tourreilles, Director of IFC’s Infrastructure Department, said, “We are very pleased to increase our shareholding in CPFL. This operation demonstrates our strong commitment to a long-term partnership with CPFL, as well as our confidence in the company’s business strategy and prospects for growth.”
Atul Mehta, IFC’s Director for Latin America and the Caribbean, noted, “CPFL’s commitment to high corporate governance standards makes it an example of the type of firms IFC wants to support. We seek companies that share our vision on sustainability and good practices.”
The mission of IFC (
www.ifc.org)
is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
