June 1, 2017 / 8:56 PM / 3 months ago

Brazil utility Cemig may sell up to 6.5 billion reais in assets

SAO PAULO (Reuters) - Brazil's state-run utility Companhia Energética de Minas Gerais is trying to sell assets worth 6.5 billion reais ($2 billion), the company said in a securities filing on Thursday.

Assets on sale include stakes in transmission company Transmissora Aliança de Energia Elétrica SA, hydroelectric dam Santo Antonio Energia SA, Light SA, natural gas distribution unit Companhia de Gas de Minas Gerais and renewable energy company Renova Energia SA (RNEW11.SA).

The company is also selling its telecom subsidiary Cemig Telecomunicações SA, its stake in power holding company Neoenergia SA and three small hydroelectric dams: Cachoeirão, Pipoca and Paracambi.

The company expects to complete at least half of the divestitures by next year. Cemig, as the company is known, needs to sell assets to reduce debt. Cemig director Cesar Vaz de Melo said in a conference call with investors on Thursday the company needs to reduce its leverage.

Cemig has net debt equivalent to 4.2 times its earnings before interest, tax, depreciation and amortization, a gauge of operational profitability known as Ebitda, and aims to reach 2.5 times by mid-year.

Melo said Cemig is in advanced talks with buyers for some of the assets. The company expects to receive this week a proposal for a new partner for renewable energy subsidiary Renova.

Light Energia should be sold to Aliança Energia, a joint venture between Cemig and mining giant Vale SA , company executives said.

Cemig chief financial officer Adézio Lima also said the company plans to raise up to $1.5 billion in bonds by next month. Lima said he wants to refinance bank loans and would propose to banks a 5-year extension in maturities, and a 3-year grace period.

Reporting by Luciano Costa; Writing by Tatiana Bautzer; Editing by David Gregorio and James Dalgleish

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