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Material Fact - FIP Coliseu and Cemig Agreement


MATERIAL FACT

The Transmissora Aliança de Energia Elétrica S.A. ("Company", "Taesa"), pursuant to Paragraph 4 of Article 157 of Law 6404/76 and CVM Instruction No. 358/02, hereby informs its shareholders, the market in general and other interested parties that, on this date, it received a notice sent by the Fundo de Investimento em Participações Coliseu ("COLISEU") and by the Companhia Energética de Minas Gerais ("CEMIG" and, together with COLISEUM, "Parties"), informing that on May 31, 2016, was signed an agreement between the parties ("Agreement"), in order to agree on guidelines and terms that will govern their relationship as shareholders of the Company by amending some provisions of the First Amendment to the Agreement of the Company‘s Shareholders, signed on April 20, 2010 ("Shareholders‘ Agreement").

Under this Agreement, the Parties agreed to, on this date:

(i) dissociate from the Shareholders‘ Agreement (i) 55,251,870 common shares issued by the Company and held by CEMIG; and (ii) 110,503,740 preferred shares issued by the Company and held by CEMIG; and that, immediately, CEMIG will constitute 55,251,870 units of the Company, consisting of 55,251,870 common shares and 110,503,740 preferred shares, all issued by the Company, so that Cemig may offer these 55,251,870 units of the Company as collateral for the obligations undertaken by Cemig in the transaction involving the Redentor Fundo de Investimento em Participações - FIP Redentor;

(ii) additionally, dissociate from the Shareholders‘ Agreement (i) 75,000,000 common shares issued by the Company and held by COLISEU; and (ii) 22,273,452 common shares and 44,546,904 preferred shares issued by the Company and held by CEMIG;

(iii) change the number of shares associated to the Shareholders‘ Agreement to (i) 153,775,790 common shares held by COLISEU; and (ii) 215,546,907 common shares held by CEMIG, therefore, the other shares issued by the Company and held by the Parties are completely dissociated from the Agreement;

(iv) subject to the quorum provided for in the Clause 6.5 of the Shareholders‘ Agreement for the creation of new Executive Boards and for the amendment or termination of the Company‘s Executive Boards set forth in Clause 9.1 of the Shareholders‘ Agreement;

(v) ratify that the members of the Board of Directors will continue to be elected pursuant to Clause 8.1 of the Shareholders‘ Agreement, the composition of which shall have the following wording, not being applicable the provisions of Clause 8.1.1 of the Shareholders‘ Agreement and its subclauses until the celebration of the second amendment to the Shareholders‘ Agreement, when the Parties will adjust Clause 8.1.1 of the Shareholders‘ Agreement and its subclauses to reflect the new composition of the shares subject to the Shareholders‘ Agreement:

‘8.1 Composition. The Company will have a Board of Directors composed of eleven (11) members and their respective alternate members, shareholders of the Company, for term of offices of 1 (one) year, renewable, being COLISEU‘s responsibility to appoint four (4) members and their alternate members, and being CEMIG‘s responsibility to appoint five (5) members and their alternate members, given that the Chairman of the Board of Directors will be appointed by the Party holding the largest number among the common Shares held by the Parties. The other members of the Board of Directors will be elected in accordance with items 5.3, 5.3.1 and 5.3.2 of the Regulation Level 2.‘

(vi) rule out Clause 8.5.1 of the Shareholders‘ Agreement and the matters listed in such clause will become subject to the quorum set forth in Clause 8.5 of the Shareholders‘ Agreement, as well as including the following matter as subject to the quorum set forth in Clause 8.5 of the Shareholders‘ Agreement, and other that are required to comply with the provisions of the Company‘s Bylaws:

‘establishment of the specialized agency when hiring executives, which will be responsible for the hiring process of the Chief Executive Officer and of the Chief Financial and Investor Relations Officer, as appropriate‘;

(vii) amend the Clause 9.1 of the Shareholders‘ Agreement to provide that the Company will have an Executive Board composed of 05 (five) Officers, resident in Brazil, for a unified term of office of two (02) years, who may be removed at any time, being allowed the reelection of its members, in whole or partially, elected by the Board of Directors, being one Chief Executive Officer, one Chief Financial and Investor Relations Officer, one Legal and Regulatory Officer, one Business Development Officer and one Technical Officer. In addition, the Parties agreed that, from this date on, the following rules will be valid when concerning the Officers:

(a) the Chief Executive Officer and the Chief Financial and Investor Relations Officer must mandatorily (i) be professionals who have proven experience in the energy industry and/or in the financial industry and/or in investments; and (ii) be hired in the market, through an agency specialized in recruitment and hiring executives ("Headhunter");

(b) at the end of the hiring process carried out by Headhunter, the agency must submit to the Human Resources Committee a list with at least three (03) professionals who meet the requirements of each office, as set forth by the Company‘s Human Resources Committee ("List");

(c) it will be the Human Resources Committee‘s responsibility to appoint one of the names in the List to be submitted to the Board of Directors and elected in accordance with Clause 8.5(j) of the Shareholders‘ Agreement;

(d) in the event of a deadlock in the Human Resources Committee as for the name in the List to be submitted to the Board of Directors for the Chief Executive Officer position, such Officer shall be chosen by representatives of the Operator Shareholder in the Human Resources Committee;

(e) in the event of a deadlock in the Human Resources Committee as for the name in the List to be submitted to the Board of Directors for the Chief Financial and Investor Relations Officer position, such Officer shall be chosen by representatives of the Investor Shareholder in the Human Resources Committee;

(f) the Company‘s Officers will perform their positions as provided for in its Bylaws and, additionally, in accordance with the tasks set by the Board of Directors and the Human Resources Committee;

(g) the Chief Executive Officer and the Chief Financial and Investor Relations Officer who are in office at the date of the celebration of this Agreement may remain in their positions until the end of their respective mandates and may be reelected, in this case complying with the rules set forth in item "g)"; and

(h) the Parties shall take all the necessary measures to amend the term of office of the Officers for two (2) years, including the Officers elected at the Meeting of the Board of Directors held on May 9, 2016, if applicable;

(viii) bar the creation and the existence of non-statutory Executive Officers in the Company, being agreed that:

(a) until the first Meeting of the Board of Directors to be held after the Annual Shareholders‘ Meeting of 2018 (term of office of the Executive Officers), the Parties will evaluate the existing non-statutory Executive Boards and jointly establish as for the transformation of these into Statutory Executive Boards and/or the termination of these Executive Boards;

(b) at the end of the current term of office (i.e., in the first meeting of the Board of Directors to be held after the Annual Shareholders‘ Meeting of 2018), the Parties agree that the non-statutory Executive Boards will be terminated; and

(c) if, during the term of the current term of office, the non-statutory Officers are dismissed, the parties agree that the non-statutory Executive Officers will be terminated.

(ix) establish that the Committees with technical and/or advisory functions that already exist or may be created should necessarily be composed of members appointed by the COLISEU and CEMIG in equal numbers; and

(x) rule out Clause 13.5 of the Shareholders‘ Agreement.

The parties undertake, irrevocably and irreversibly, to sign, by June 30, 2016, a second amendment to the Shareholders‘ Agreement, in order to reflect the above provisions, set forth by the Agreement, which have immediate effect.

The Agreement also provides for the possibility of CEMIG requesting, up until December 31, 2016, the disassociation of up to 81,000,000 additional common shares issued by the Company, in which case COLISEU can also disassociate 21,000,000 common shares issued by the Company and held by it. Upon the exercise of these disassociations, the Parties shall review the Shareholders‘ Agreement through the signing of a third amendment, reflecting the balance between the participation of the Parties in the Company‘s control block.

The Company will keep its shareholders and the market duly informed on updates regarding the matter above.

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