Centrais Eletricas Brasileiras : Market Announcement April 17 2014 CELG D

In relation to the article published on April 16, 2014 by the online news agengy Agência Estado entitled "Government uses Eletrobras to reduce the deficit of CDE in 2014" and further to the Market Announcements made, which reported the participation of Eletrobras in the financial restructuring of Celg Distribuição S.A. ("Celg D"), by means of which Eletrobras will to acquire control of Celg D by purchasing 51% of the common shares of Celg D, Eletrobras makes the following announcement to its shareholders and the market in general:
The acquisition by Eletrobras up to 51% of the common shares in the capital of CELG D was initiated on December 2011 when the Eletrobras entered into a memorandum of understanding with the State of Goiás and with Celgpar and CELG D, as intervening parties. Under this memorandum of understanding, the parties agreed to establish a working group to develop studies and all the necessary documents for Eletrobras to purchase the CELG D shares.
The memorandum of understanding aimed to verify the legal, economic, regulatory and technical feasibility of a future partnership to promote: (i) technical, economic and financial recovery of CELG D; (ii) the adoption of an appropriate management model, the gradual search of the most suitable technical and financial standards, as well as the transfer of know-how in the management of companies in the Brazilian electric sector; (iii) the implementation of improvement in the capital structure of CELG D, through the restructuring of its debt and the reduction of its capital cost, through a cost restructuring program and (iv) the transfer of management and shareholder control of CELG D to Eletrobras.
On December 21, 2011, the state of Goiás published State Law 17.495/2011 thereby authorizing it to divest of CELG D. On December 27, 2011, the State of Goiás entered into a loan agreement with Caixa Economica Federal, guaranteed by the Federal Government and with Eletrobras, Celgpar and CELG D as intervening parties.
The necessary federal legislative authorization was granted through Provisional Measure 559 of March 5, 2012, which authorized Eletrobras to acquire the share control of CELG D. The mentioned Provisional Measure was converted into Law 12.688/2012.
The acquisition of the share control of CELG D by Eletrobras was structured by means of a "Management Agreement", entered into by the State of Goiás, Eletrobras, Celgpar and CELG D, with CELG GT intereving, on April 24, 2012, without, however, the acquisition of the CELG D shares.

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Eletrobras and Celgpar and have been working towards the completion of the conditions precedent for this operation and intend to enter into a share purchase agreement for the acquisition of the shares of CELG G, which will be signed once the proceedures provided for in Article 253 of Brazilian Corporate Law are completed, as well as the completion of a capital increase to be made by the Celgpar in the CELG D in order to make CELG stockholders' equity positive. Such capitalization shall be made with funds obtained by the State of Goiás with Caixa Economica Federal in the amount of R$ 1.9 billion, with the "Delimited Plan for Use of Fund" which intends to settle CELG G's outstanding debts in relation to certain sector charges such as CCC, CDE and RGR. It is important to highlight that this allocation of resources was planned from the beginning of the operation, due to CELG G's default in relation to these sector charges.
The transaction is subject to completion of an independent due diligence exercise that will determine the valuation of CELG D. This exercise is subject to a schedule established by the parties. It is expected that the share purchase agreement will be signed by June of this year, further to the capital increase of R$ 1.9 billlion, which will serve the purposes highlighted above.

Rio de Janeiro, April 17, 2014.

Armando Casado de Araújo

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