The proceeds will be used to reduce the company’s debt load and help execute its five-year strategic plan.

In a securities filing, Brazil’s state-run power firm stated, its board of directors has approved an extraordinary shareholders meeting to decide upon a capital increase of $2.42 billion (9.99 billion reais) via a follow-on share offering.

According to a statement from Brazil’s state-run power firm formally known as Centrais Eletricas Brasileiras SA, the new preferential shares would be issued at 35.70 reais and new ordinary shares would be issued at 35.72 reais.

It also stated that the federal government would purchase 4.054 billion reais worth of the new shares. The proceeds from the follow-on would be used to reduce debt and execute the company’s five-year strategic plan, said the company.

The government’s participation in the IPO offering would be routed through a mechanism known as AFACs which allows loans by the federal government to turn into equity capital, thus reducing the firm’s debt load.

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Tags: AFACs, board, board of directors, Brazil, Brazillian, capital increase, Centrais Eletricas Brasileiras SA, extraordinary shareholders meeting, follow-on, IPO, new preferential shares, ordinary shares, power firm, reduce debt, securities filing, share offering, state run, strategic plan