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Sabesp Secures Substantial Settlement With São Paulo City, Boosting Cash Reserves
(MENAFN- The Rio Times) Sabesp, the recently privatized water and waste management company, is set to receive a significant financial boost.
The company has reached an agreement with São Paulo City to settle part of a longstanding debt. This development promises to inject R$ 455 million ($91.91 million) into Sabesp's coffers.
The announcement came on Monday, October 21, when Sabesp revealed that the São Paulo Municipal Attorney General's Office had approved partial settlements.
These agreements aim to liquidate outstanding court-ordered debts, known as precatórios in Brazil. According to Sabesp's statement to the Brazilian Securities and Exchange Commission, the updated debt amounts to R$ 701 million ($141 million).
However, a discount will be applied as stipulated in the public notice. This reduction resulted in an estimated payment of R$ 455 million ($91 million) to Sabesp.
The company expects to receive this payment over the next four months. Sabesp cautioned that the final figures might change due to calculations by the São Paulo Court of Justice.
Sabesp's Settlement and Positive Market Reaction
The company has committed to keeping the market informed about future settlement proposals. Investors responded positively to this news. Sabesp's shares (SBSP3) rose by 1.36% to R$ 92.33 around 12:15 PM Brasília time.
This increase outpaced the broader market, with the Ibovespa index showing a modest 0.06% gain. The settlement addresses part of São Paulo City's larger debt to Sabesp, estimated at R$3.1 billion ($620 million) in court-ordered payments.
Discussions about this debt predate Sabesp's privatization, as debt forgiveness was a key step in the privatization process. Earlier this year, city councilor Sidney Cruz suggested that Sabesp might forgive 40% of the debt.
This would have left the city owing R$1.8 billion ($360 million) to the company. The importance of this settlement is underscored by the fact that São Paulo City accounts for nearly half of Sabesp's total revenue.
As Sabesp moves forward as a private entity, this agreement marks a significant milestone. It not only improves the company's financial position but also resolves a complex issue that has long been on the agenda of both the company and the city government.
The company has reached an agreement with São Paulo City to settle part of a longstanding debt. This development promises to inject R$ 455 million ($91.91 million) into Sabesp's coffers.
The announcement came on Monday, October 21, when Sabesp revealed that the São Paulo Municipal Attorney General's Office had approved partial settlements.
These agreements aim to liquidate outstanding court-ordered debts, known as precatórios in Brazil. According to Sabesp's statement to the Brazilian Securities and Exchange Commission, the updated debt amounts to R$ 701 million ($141 million).
However, a discount will be applied as stipulated in the public notice. This reduction resulted in an estimated payment of R$ 455 million ($91 million) to Sabesp.
The company expects to receive this payment over the next four months. Sabesp cautioned that the final figures might change due to calculations by the São Paulo Court of Justice.
Sabesp's Settlement and Positive Market Reaction
The company has committed to keeping the market informed about future settlement proposals. Investors responded positively to this news. Sabesp's shares (SBSP3) rose by 1.36% to R$ 92.33 around 12:15 PM Brasília time.
This increase outpaced the broader market, with the Ibovespa index showing a modest 0.06% gain. The settlement addresses part of São Paulo City's larger debt to Sabesp, estimated at R$3.1 billion ($620 million) in court-ordered payments.
Discussions about this debt predate Sabesp's privatization, as debt forgiveness was a key step in the privatization process. Earlier this year, city councilor Sidney Cruz suggested that Sabesp might forgive 40% of the debt.
This would have left the city owing R$1.8 billion ($360 million) to the company. The importance of this settlement is underscored by the fact that São Paulo City accounts for nearly half of Sabesp's total revenue.
As Sabesp moves forward as a private entity, this agreement marks a significant milestone. It not only improves the company's financial position but also resolves a complex issue that has long been on the agenda of both the company and the city government.
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