By Fabiola Gomes and Lucy Monteiro
Light's largest shareholder, Nelson Tanure, is seeking support to cancel the Brazilian electricity firm's bankruptcy reorganization request at the extraordinary general shareholder meeting scheduled for 7 June, according to two sources familiar with the matter.
The Brazilian businessman, who has amassed a 21.8% stake in Light, will also seek to replace the current board members, the first source familiar said. The idea is to push the company to give up on the bankruptcy reorganization process, the same source added.
The meeting's agenda includes voting to ratify Light’s request for judicial recovery, filed on May 12 in Rio de Janeiro, and to authorize the management to take necessary acts in connection with the judicial reorganization, according to the board's proposal for the extraordinary meeting.
Tanure has gradually increased his stake in Light since the Brazilian energy company filed a request for pre-bankruptcy protection in April, and he has shown interest in replacing the company’s financial advisor, Laplace Financas.
If Tanure is able to gather support from other shareholders, Light could fail to ratify the bankruptcy request.
“This is a possibility, a source close to the matter said. "But, in fact, nobody knows what happens if the shareholders do not ratify the bankruptcy request. There is nothing described in the corporate law or the bankruptcy law [about such a situation]."
Light needs the approval of 50% of shareholders plus one vote to ratify the request for bankruptcy reorganization, the source close said. Also, to change the board, the company would have to call another extraordinary general meeting to discuss the matter, the first source familiar said.
The Rio de Janeiro court granted the judicial reorganization request made by the Light SA holding company on 15 May, extending the protection to the operating subsidiaries. The company is expected to present a debt restructuring plan before the 60-day deadline.
Creditors have already started signing non-disclosure agreements (NDAs) to access detailed information about the company's operations, though negotiations haven't started yet, a second source close said.
Light has already suggested a 50% haircut to some market participants, as reported. However, domestic bondholders will not accept any proposal including a haircut, because the company doesn’t need a haircut, Claudio Brandao, co-founder of BeeCap, an advisor to domestic bondholders told Debtwire.
The reversal of Light’s request for judicial recovery is considered one of the viable possibilities for the company, Brandao said. “This would be one of the possibilities, but the creditors are working on other fronts.”
Other possibilities are the court acknowledging the illegality of Light's request because energy concession operators are legally forbidden to request for judicial recovery and extrajudicial recovery regimes, or the Brazilian power regulator, Aneel, opining that the request is illegal, he added.
Spokespersons for Light and for Tanure declined to comment on the matter.
Light’s USD 600m 4.375% 2026 bonds last traded today at 39.50 today, according to MarketAxess.