Copasa Says Share Offering Will Have Minimum Price of R$47.23 and Cuts Additional Share Supply

Copasa said on Thursday, May 28, that the minimum price for shares to be sold in its secondary offering will be R$47.23 per share. The price was set by the state of Minas Gerais, which is the selling shareholder in the transaction.

The company also changed the offering timetable. The share price is now expected to be set on June 11, nine days later than previously planned. In the updated preliminary prospectus, Copasa said the number of additional shares offered was reduced slightly, from 19.13 million to 19.03 million. The base offering remains unchanged at 171.11 million shares.

According to a person familiar with the matter quoted by Reuters, the change came after bids from potential anchor investors were below the minimum target sought by the Minas Gerais government.

The market reacted negatively to the announcement. On Wednesday, May 27, when Copasa first said it would adjust the schedule, its shares fell 4.52% to R$50.85, the biggest drop on the B3 exchange that day, when the benchmark index ended down 0.47%. During the session, the stock lost as much as 7.32%.

Copasa filed the request for the secondary public share offering on Thursday, May 21, and said the deal could raise more than R$10 billion. If the base and additional lots are fully sold, the state of Minas Gerais will no longer hold a stake in the company. It currently owns 50.03% of the utility.

The transaction is being coordinated by BTG Pactual as lead coordinator, together with Itaú BBA, Bank of America, Citi, and UBS BB.

The Minas Gerais State Court of Accounts, which has been closely monitoring the privatization process, has ordered Copasa to provide explanations by Thursday, May 28, for the change in the offering schedule. The court wants details on the “supervening factors” cited by the company, what has changed in the share sale, the new timetable, and which offering conditions will be altered.