Material Fact – Investment Agree with Eletropaulo Metropolitana Eletricidade de São Paulo S.A.


NEOENERGIA S.A.
Publicly-Held Company
Corporate Taxpayer´s ID (CNPJ/MF) No. 01.0823.200/0001-18
State Registry (NIRE) 33.3.0026600.3

NEOENERGIA S.A. (“Company”), publicly-held company, in accordance with the provisions of Article 157, Paragraph 4 of Law 6.404/76, of December 7, 1976, as amended, and of Instruction 358, of January 3, 2002, as amended, of the Brazilian Securities and Exchange Commission (“CVM”), hereby announces to its shareholders and to the market in general that, subject to the approval of its Board of Directors (as detailed in item 5 below):

1. On this date, the Company has entered into an investment agreement with Eletropaulo Metropolitana Eletricidade de São Paulo S.A. (“Eletropaulo”), through which it undertook, subject to certain conditions, to subscribe common shares issued by the Company that may be issued under the primary public offer of Eletropaulo’s shares, distributed with restricted placement efforts, in compliance with CVM Instruction 476, of January 16, 2009, as amended, detailed in the Material Fact disclosed today by Eletropaulo (“Investment Agreement” and “Eletropaulo’s Offer”, respectively), for the price of R$25.51 (“Offered Price”). Eletropaulo’s Offer will include the issue of 58,900,000 new common shares (“Shares”), with the possibility of an increase of up to 15% of the Shares initially offered, corresponding to 8,835,000 common shares (“Additional Shares” and, together with the Shares, the “Shares of the Offer”).

2. The Company will not participate in the bookbuilding procedure, under Eletropaulo’s Offer.

3. If the price established in Eletropaulo’s Offer is equivalent to the Offered Price, Eletropaulo undertook to allocate to the Company 80% of all Shares of the Offer, excluding the Shares of the Offer that may be acquired by the shareholders of Eletropaulo exercising their respective preemptive rights under the Eletropaulo Offer.

4. If the price established in Eletropaulo’s Offer is higher than the Offered Price after the bookbuilding procedure, the Company will have the option, but will not be mandatorily required, to subscribe up to 80% of the total Shares of the Offer, after complying with the preemptive rights exercised by the current shareholders of the Company, for the price per Share established in Eletropaulo’s Offer. If there are not enough requests to establish the price per Share at the Offered Price or higher after the bookbuilding procedure in Eletropaulo’s Offer, then the Company will subscribe all shares for a price corresponding to the Offered Price, after complying with the preemptive rights exercised by the current shareholders of Eletropaulo, for the price per Share established in Eletropaulo’s Offer.

5. Under the Investment Agreement, the Company also undertook to carry out a Concurrent Public Offer for the Acquisition of Control (“Concurrent Public Offer”) for the acquisition of control that will involve the acquisition of up to the total number of shares issued by Eletropaulo. The Concurrent Public Offer may be conditioned to the acquisition of control of Eletropaulo by the Company, except if Eletropaulo’s Offer is concluded and the Shares of the Offer have been allocated to the Company pursuant to the Investment Agreement, in which case the Company may amend the public notice of the Public Offer to remove the condition of acquisition of control.

6. The conclusion of the Concurrent Public Offer shall be subject to the conditions listed in items 2.7(ii)(a), (b), (d), (e), (f), (g), (h) and (i) of the Public Notice of the Public Offer for the Acquisition of Control of Eletropaulo published by Energisa S.A. (“Energisa” and “Energisa Public Offer”) on April 5, 2018 and available at the addresses and websites of Eletropaulo, Energisa, CVM, B3 and the intermediary institution of Energisa Public Offer, and also (i) declaration of war or start of an armed conflict in Brazil, which has a material effect on the trading of securities in Brazil; (ii) any investigation or conviction of Eletropaulo or any affiliate, or any of its executive officers or members of the Board of Directors, as a result of the violation of the applicable legislation related to corruption or acts against the government, including Law 12.529, of November 30, 2011, as amended, Law 12.846, of August 1, 2013, as amended, Decree 8.240, of March 18, 2015, the U.S. Foreign Corrupt Practices Act of 1977 and the UK Bribery Act of 2010, as applicable and Law 9.613, of March 3, 1998, as amended; and (iii) change in the rights and obligations assignable to the shares or to the capital structure of Eletropaulo, arising from (a) any person, universality, or group of persons acting under a common interest or bound by a voting agreement becoming the holder of the majority of Eletropaulo’s share capital (except if the Shares of the Offer have been allocated to the Company, pursuant to the Investment Agreement, and the Company has included such fact in the public notice of the Concurrent Public Offer); or (b) the issue of new shares or any securities and rights convertible into shares that lead to the dilution of the shareholding base by a percentage equal to or greater than five percent (5%) of the shares, even if the shareholders are granted preemptive rights in the subscription of the new shares, except for the Shares of the Offer.

7. The Investment Agreement will be automatically terminated if: (a) the settlement of Eletropaulo’s Offer is not concluded until, whichever occurs first: (i) the revocation of the Concurrent Public Offer by the Company (in the cases described above), or (ii) settlement of another public offer for the acquisition of shares issued by Eletropaulo in which a third party acquires the shares representing a majority of share capital; or (b) if Eletropaulo’s Offer is revoked by Eletropaulo, by decision of its Board of Directors, in the compliance with its fiduciary duties. The Investment Agreement may also be resolved by the Company if, before the date in which the price per Share will be established under Eletropaulo’s Offer, any person or group of persons, acting under common interest or bounded by a shareholders’ agreement, acquires or becomes the holder of directly or indirectly rights on shares representing 30% or more of the Company’s share capital.

8. It was established in the Investment Agreement that, for a period of ninety (90) days as of the date of the settlement of Eletropaulo’s Offer, the Company may not carry out certain transactions with the Shares of the Offer, such as offering, selling, contracting the sale, pledging, lending, giving as guarantee, granting any call option, carry out a purchase at risk or otherwise encumbering, disposing, selling or granting option or right in relation to the Shares of the Offer, subject to certain exceptions set forth in the Investment Agreement, including offering the shares as guarantee, assigning the economic rights of the Shares of the Offer or selling the Shares of the Offer in a public offer for the acquisition of, at least, shares representing the majority of Eletropaulo’s share capital.

9. The Concurrent Public Offer will initially be launched at the Offered Price, which shall be increased to equal any higher price that may be paid by the Company for the subscription of shares under Eletropaulo’s Offer. In addition, the Company clarifies that it is implementing immediate measures to carry out the Concurrent Public Offer, such as the contracting of service providers to operationalize the auction and its settlement.

10. The Company notifies its shareholders and the market in general that all obligations established under the Investment Agreement, including the obligation to subscribe the shares under Eletropaulo’s Offer and to launch the Concurrent Public Offer, are subject to the approval of its Board of Directors. The Company’s executive board assessed, approved and recommended to the Board of Directors the approval of the terms of the Investment Agreement, which were also approved by the Iberdrola group.
11. Considering the provisions of Item 4 above, pursuant to Paragraphs 2 and 3 of Article 4-A of CVM Instruction 361, of March 5, 2002, as amended (“CVM Instruction 361”), the Company discloses the following information on the Concurrent Public Offer, according to Items “i” to “m” of Section I of Annex II of CVM Instruction 361:

(i) number, class, kind and type of Eletropaulo’s securities held by the Company or by related parties: at the date of this Material Fact, the Company does not hold any common shares issued by Eletropaulo. The Company and related parties are not holders of securities issued by Eletropaulo. After the conclusion of Eletropaulo’s Offer, the Company may hold common shares issued by Eletropaulo, in an amount not yet established and that will be disclosed to the market in a timely manner.

(ii) number, class, kind and type of Eletropaulo’s securities taken or granted on loan by the Company or by related parties: at the date of this Material Fact, there are no securities issued by Eletropaulo that are granted or taken on loan by the Company or by related parties.

(iii) exposure of the Company and its related parties in derivatives referenced in Eletropaulo’s securities: at the date of this Material Fact, the Company and its related parties do not have exposure to derivatives referenced in securities issued by Eletropaulo.

(iv) information on agreements, pre-agreements, options, letters of intent or any other legal acts on the acquisition or sale of Eletropaulo’s securities under which the Company or its related parties are a party or beneficiaries: at the date of this Material Fact, besides the Investment Agreement and the Iberdrola Letter, there are no other agreements, pre-agreements, options, letters of intent or any other legal acts on the acquisition or sale of Eletropaulo’s securities under which the Company or its related parties are a party or beneficiaries.

(v) detailed description of agreements, pre-agreements, options, letters of intent or any other similar legal acts entered into in the last six (6) months between the Company or its related parties and Eletropaulo, its Management or holders of shares representing more than five percent (5%) of the shares under the Concurrent Public Offer or any related parties of the aforementioned persons: not applicable, since there is no agreements, pre-agreements, options, letters of intent or any other similar legal acts entered into in the last six (6) months between the Company or its related parties and Eletropaulo, its Management or holders of shares representing more than five percent (5%) of the shares under the Concurrent Public Offer or any related parties of the aforementioned persons, with the exception of the Investment Agreement detailed above.

12. The Company will keep the market and its shareholders up to date on the developments related to the Concurrent Public Offer, undertaking to disclose to the market the instrument of the Concurrent Public Offer, informing its terms and conditions, pursuant to CVM Instruction 361, as soon as the Investment Agreement is ratified by its Board of Directors.

13. Once the shares have been subscribed under Eletropaulo’s Offer or the Concurrent Public Offer, the Company will implement the necessary measures to obtain the consent of CADE and ANEEL, as applicable.

                                                Rio de Janeiro, April 16, 2018.

                                              Sandro Kohler Marcondes

                                                   Chief Financial Officer and Investor Relations Officer