Share swap of EPM?

Company News    Aug 6, 2021 2:00 PM

Mayor of Medellín Daniel Quintero made a statement on the proposed swap of the company’s shareholding in Hidroituango.

Quintero acknowledged that the intention is to negotiate, define valuations with investment banks and seek resources, Valora Analitik reported.

The swap proposal proposed by the Governor’s Office might make EPM almost the sole owner of the project since it could acquire 50.74% of the Hidroituango Company controlled by the Institute for the Development of Antioquia (IDEA), while the Governor’s Office has 2.14%, EPM 46.3% and the remaining percentage corresponds to minority shareholders. However, Quintero ruled out this possibility for the moment.

“Investment banks will make a valuation of the Government’s shareholding in Hidroituango and we will make an offer, with current money, but not in shares,” Quintero explained.

Quintero highlighted that no part of EPM will be sold in the process, the firm will remain as a 100% public company, owned by the Medellin.

“There will be no sale, nor will we convert EPM into a joint stock company because that opens the way to privatization,” Quintero added.

Julián Vásquez, Manager of IDEA, said that all the actors involved are still in the analysis.

“We are clarifying some scopes of what it will imply and the Board can analyze issues such as whether it is better to have one or two investment banks,” Vásquez said.

The expert said that the most convenient way to avoid more legal obstacles is to propose a swap before resorting or activating legal recourses through the arbitration court.

He explained that the Governor’s Office of Antioquia and IDEA should have been receiving resources since 2018, something that has not been possible due to the contingency.

Bottom-Line: Quintero proposes to buy the participation of the government and IDEA, but it is unlikely that they will accept this proposal.

It seems like EPM will have to give in or assume the enormous cost of a lawsuit by the government and IDEA. The concept was to avoid lawsuits by bringing EPM and Antioquia into the “same tent”.

A possible lawsuit plus Hidroituango’s cost overruns could leave the company in a very complicated situation.

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