06/17/2010

On June 16, an agreement that was signed on December 22, 2009, between the BNDES, Southern Electric do Brasil Participações Ltda (SEB) and AGC Energia S.A. was ratified in the Federal Justice of Rio de Janeiro. In the agreement, AGC Energia, a subsidiary of the Andrade Gutierrez Group, has taken on SEB’s debt together with the BNDES in the amount of R$ 2.115 million. The legal ratification of the agreement, a condition for such ratification, puts an end to the litigation suit which began approximately six years ago and now allows the BNDES to make an important recovery of credit.

SEB’s debt stems from financing of R$ 600 million, granted in 1997 by the BNDES to the company, to acquire convertible debentures in 32.96% of the ordinary shares issued by CEMIG. With SEB’s default, the BNDES won the right in court to attach said shares, in addition to its dividends. Since May 2004, the date the dividends were attached, some R$ 815 million has been accrued by the BNDES.

The conditions for the payment of the debt, established in the agreement, are as follows:

(i)  R$ 500 million will be paid in cash, as a down payment, after the ratification of the agreement;
(ii)  R$ 850 million will be paid through AGC Energia’s issuance of simple debentures, in 10 years and with payment at market rates, equivalent to the CDI rate, plus a spread of 1.5% p.a.; and
(iii)  R$ 765 million will be paid through AGC Energia’s issuance of participative debentures, exchangeable for 39.18% of the ordinary stocks of CEMIG’s issuance held by AGC Energia.

All shares currently attached within the scope of lawsuit - 89,383,266 (eighty-nine million, three hundred and eighty-three thousand, two hundred and sixty-six) ordinary nominative shares issued by the Power Company of Minas Gerais (CEMIG) and owned by SEB - will be held as guarantee of payment of the debt taken on by AGC Energia.