Southern Company has opportunity to buy stake in CEMIG

Southern Company, through its Southern Energy Inc. subsidiary, has entered an agreement with AES Corp. of Arlington, Va., that will give Southern Company the opportunity to purchase up to 3.6 percent of a Brazilian utility.

The Brazilian utility, Companhia Energetica de Minas Gerais (CEMIG), is headquartered in Belo Horizonte, serving the state of Minas Gerais in southern Brazil. CEMIG is a fully integrated utility with generation, transmission and distribution, serving a population of more than 16 million. With a distribution area the size of France, it is the largest electricity distributor in South America, serving 4 million homes and businesses.

“This arrangement gives us the opportunity to enter a rapidly growing market in a way that would be immediately beneficial to our earnings,” said A.W. Dahlberg, Southern Company’s chairman, president and chief executive officer.

A consortium including a Southern Energy affiliate in Brazil successfully bid to buy 33 percent of the voting shares of CEMIG today for $1.056 billion, gaining a 14.4 percent economic interest in the company. Southern Energy initially has no money in the transaction, but provides technical and operational support, with initial funding from a Brazilian investment fund, The Brazilian National Development Bank and AES.

Southern Energy will have until Jan. 9, 1998, to participate in the transaction by buying up to 8.25 percent of CEMIG’s voting shares for $274 million (including non-recourse debt of $150 million), a move that would result in Southern Energy holding a 3.6 percent economic interest in CEMIG.

Southern Company (NYSE: SO), the largest producer of electricity in the United States, is the parent firm of Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric. Based in Atlanta, Southern Company supplies electricity in eight countries on four continents and provides energy-related marketing, trading and technical services and wireless telecommunications. Southern Company’s common stock is one of the 20 most widely held corporate stocks in America.

Southern Energy Inc., a unit of Southern Company, develops, builds, owns and operates power production and delivery facilities and provides a broad range of services to utilities and industrial companies around the world.