Possibility Of Prepayment Of Infrastructure Debentures

The Brazilian Central Bank published on April 13, 2016 that the Brazilian Monetary Counsel ("CMN") has authorized, in accordance with Resolution 4.476, issued on April 11, 2016 ("Resolution 4.476"), the prepayment of infrastructure debentures described in Article 2 of Law 12.431/2011.

Under the terms of Law 12.431/2011, companies which issued infrastructure debentures to raise funds in the Brazilian capital markets were not allowed to early redeem or prepay such securities. Now, with the recent CMN regulation, the companies are permitted to early prepay the debenture, which brings more flexibility for such companies.

Under the terms of the Resolution, the prepayment shall occur after 4 years counted as of the debentures issuance date, in case the current market conditions are more favorable.

According to the Resolution, the prepayment of the debentures:

shall occur after, at least, 4 years; shall occur only with respect to the totality of debentures of the same series, not being allowed the partial early redemption of the debentures; and shall be expressly permitted under the debentures indenture, including the terms and conditions for the payment of the amounts due...