Felsberg Advogados advised Renova Energia in negotiating the terms and drafting the necessary agreements for the sale of shares of Brasil PCH S.A. (the “Target”) as an Isolated Productive Unit (“UPI”) to potential buyers.

As negotiations progressed, Mubadala became the transaction’s stalking horse and a Share Purchase Agreement was executed on July 20, 2021 with SF 369 Participações Societárias S.A., a subsidiary of Mubadala Investment Company PJSC.

The sale by Renova Energia of 51% equity interest in the Target (currently held by Chipley SP Participações S.A., to be merged into Renova Energia prior to closing) as an UPI will protect the purchaser from succession for past liabilities of the Renova Group.

The transaction is subject to a public bidding to be held on August 16, 2021 and Mubadala, acting as stalking horse, shall be entitled to exercise its right to match any higher proposal submitted by third parties.

The Target is the holding entity which controls 13 small hydro power plants, located in the Brazilian States of Rio de Janeiro, Espírito Santo, Bahia, Goiás and Minas Gerais, which collectively generate 291.0 MW of energy, with an average of 194 MW of assured energy.

The sale of the Target, Renova’s crown jewel, will be an essential step in Renova Energia’s recovery as the proceeds will enable Renova Energia to repay the DIP financing of BRL 362.5 million granted under the coordination of Quadra Gestão de Recursos and invest in the conclusion of the works of the wind complex Alto Sertão III Phase A, thereby generating approximately 400MW of energy, that is, capacity sufficient to supply 420,000 residences for one year.

The completion of this complex transaction is also subject to other closing conditions, among them: the exercise of the right of first refusal and tag along rights by the other shareholders of the Target; third parties’ and regulatory agencies’ approvals, including antitrust authority CADE (Administrative Council for Economic Defense) and ANEEL (National Agency of Electric Energy); and approval by holders of debentures issued by the Target’s subsidiaries.

The team from Felsberg Advogados comprised M&A partners Miriam Machado Kleissl and Evy Marques; M&A associates Mirella Kaufman and Juliana Ferreira Calix; Restructuring and Insolvency partners Fabiana Solano and Thomas Felsberg; Restructuring and Insolvency associates Thiago Dias Costa, Marina Serachiani Clemente, Nathalia Damacena Nunes, Olivia Roxo Mesquita, Bárbara Barbosa dos Santos; and Antitrust partner Paula Salles.

The 61 companies of the Renova Energia group were involved in a dramatic approval of its judicial reorganization at the end of 2020, which involved a court request by Felsberg Advogados for a cram-down of dissenting creditors. The consolidated plan was approved by a significant majority of creditors.

Felsberg Advogados's cram-down request, granted on December 18, 2020, completed an impressive cycle of five large restructuring projects in different industries that Felsberg Advogados was involved in during the last quarter alone of 2020.