This content is from: Local Insights

Brazil

Privatization of mining group

The sale of the government's shares in Companhia Vale do Rio Doce (CVRD), expected to be the largest Latin American privatization to date, is to go ahead in three phases. The floor price for CVRD, one of the world's biggest natural resources group, has been fixed at R10.36 billion (approximately US$9.6 billion). The government now holds 76% of the total voting shares and 6% of preferred shares of CVRD. Minority stockholders can sell their stakes at any of the three auctions to be held.

On April 29, 45% of the voting shares held by the government will be auctioned to new investors, who will need to form a special purpose company (SPC) in which no individual group may hold more than a 45% stake. Ownership of the SPC is to remain unchanged for five years.

A second auction is expected soon after with the 6% preferred share stake and a 4% stake in voting shares being offered to CVRD's employees. Finally, 21% of the voting shares are expected to be sold on local and international markets in the next few months.


Telecommunications

The General Telecommunications Bill has been given priority and is now expected to be sent to the plenary of the House of Representatives for debate in early April. The bill reflects the changes introduced by Constitutional Amendment No. 8 of August 1995, which allowed concessions of public telecommunications services to be awarded to the private sector and established a regulatory agency for the sector.

On February 24 1997, Judge João CM Soares of the eighth Federal Court of Brasilia ruled against the injunction entered by the Syndicate of Telecommunications Workers (Sinttel – DF) requesting the suspension of the bid for concessions of band B mobile phone services. Qualifying documentation and proposals are to be submitted in Brasilia on April 7 1997.

Eliana Maria Filippozzi

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