The crisis of Hidroituango generated a need for a high cash flow in EPM. The company announced the sale of several of its assets to address this emergency, creating a discussion in the country. The Council of Medellín decided on this alternative.
According to El Colombiano, the Council of Medellin approved, in the first debate, the sale of some shareholdings of EPM to attend the crisis of Hidroituango.
The Council approved this alternative with seven votes in favor and none against. However, the debate was very ‘heated’.
EPM requested approval to sell the shares it has in ISA (10.1%), in Hidroeléctrica del Río Aures (42%), in Energy Management (0.1%), in Investments of Colombian Insurers (0.03%), in Terpel (0.004%), in Emgesa (0.0007%) and in Davivienda (0.0005%).
In addition, the company plans to sell assets abroad worth approximately CoP $4T. The firm explained that these resources are necessary to meet the Hidroituango crisis, maintain its investment plan and continue to transfer 55% of its profits to Medellín for social investment projects.
Luz María Múnera, councilor of Medellín, criticized this decision, because she believes that the approval of the project would be the first step to the EPM debacle and its social investment.
“Today, with what they are going to dispose of, the group’s debt goes from CoP $18.5T to CoP $24.5T,” Múnera said.
She said she criticized the current administration of the company, because the financial decisions have been wrong, and Múnera believes that EPM should sell only its assets abroad.
The council scheduled a second debate for next October 29 this year.
Bottom-Line: Hidroituango represents a huge challenge for EPM and the sale of non-strategic assets is the best solution to address this emergency in the short term. If the council denies that this strategy of generating resources, that would be the beginning of the EPM debacle.