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17 Borrowings and financing
 12 Months Ended
Dec. 31, 2020
Borrowings [abstract]  
Borrowings and financing
17 Borrowings and financing

 

 Borrowings and financing outstanding balance December 31, 2020 December 31, 2019
Financial institution Current Noncurrent Total Current Noncurrent Total
Local currency            
 10st issue debentures - - - 41,021 - 41,021
 12nd issue debentures 45,450 158,425 203,875 45,450 203,829 249,279
 14th issue debentures 51,873 24,205 76,078 41,940 63,012 104,952
 17th issue debentures 91,850 183,335 275,185 289,211 263,226 552,437
 18th issue debentures 45,918 135,105 181,023 34,239 133,679 167,918
 21st issue debentures 175,000 174,769 349,769 150,000 349,660 499,660
 22nd issue debentures 99,969 678,149 778,118 - 765,689 765,689
 23rd issue debentures - 864,678 864,678 - 864,603 864,603
 24th issue debentures - 414,994 414,994 - 395,855 395,855
 25th issue debentures 1,442,610 - 1,442,610 - - -
 26th issue debentures - 1,047,767 1,047,767 - - -
 27th issue debentures - 997,000 997,000 - - -
 Brazilian Federal Savings Bank 90,382 1,324,459 1,414,841 83,519 1,341,660 1,425,179
 Brazilian Development Bank - BNDES PAC 13,185 20,247 33,432 11,184 27,854 39,038
 Brazilian Development Bank - BNDES PAC II 9751 7,159 37,447 44,606 6,990 40,685 47,675
 Brazilian Development Bank - BNDES PAC II 9752 4,851 25,470 30,321 3,913 24,457 28,370
 Brazilian Development Bank - BNDES ONDA LIMPA 26,751 86,809 113,560 23,704 100,582 124,286
 Brazilian Development Bank - BNDES TIETÊ III 86,823 542,519 629,342 52,874 383,191 436,065
 Brazilian Development Bank - BNDES 2015 33,558 454,126 487,684 31,712 460,646 492,358
 Brazilian Development Bank - BNDES 2014 5,143 23,017 28,160 4,659 25,411 30,070
 Inter-American Development Bank - BID 2202 181,349 2,524,798 2,706,147 - - -
 Inter-American Development Bank - BID INVEST 44,815 898,060 942,875 - - -
 Leases (Concession Agreements, Program Contracts and Contract Assets) 28,847 399,896 428,743 27,314 432,357 459,671
 Leases (Others) 36,576 9,300 45,876 51,088 23,365 74,453
 Other 3,778 11,382 15,160 1,665 8,207 9,872
 Interest and charges 158,918 - 158,918 77,460 - 77,460
Total in local currency 2,674,805 11,035,957 13,710,762 977,943 5,907,968 6,885,911

 

 Borrowings and financing outstanding balance December 31, 2020 December 31, 2019
Financial institution Current Noncurrent Total Current Noncurrent Total
Foreign currency            
 Inter-American Development Bank - BID 1212  – US$51,390 thousand (US$61,668 thousand in December 2019) 53,412 213,649 267,061 41,428 207,140 248,568
 Inter-American Development Bank - BID 2202 – (US$510,573 thousand in December 2019) - - - 128,623 1,914,298 2,042,921
 Inter-American Development Bank - BID 4623 – US$10,220 thousand - 46,474 46,474 - - -
 International Bank of Reconstruction and Development -BIRDs 7662 e 8906 – US$82,792 thousand (US$88,871 thousand in December 2019) 31,594 393,949 425,543 24,505 330,898 355,403
 Eurobonds – (US$350,000 thousand in December 2019) - - - 1,409,921 - 1,409,921
 JICA 15 – ¥10,371,870 thousand (¥11,524,300 thousand in December 2019) 58,117 464,936 523,053 42,813 385,315 428,128
 JICA 18 – ¥9,325,440 thousand (¥10,361,600 thousand in December 2019) 52,253 417,846 470,099 38,493 346,237 384,730
 JICA 17 – ¥3,349,203 thousand (¥2,830,420 thousand in December 2019) 11,260 156,738 167,998 12,466 91,845 104,311
 JICA 19 – ¥29,923,047 thousand (¥31,736,565 thousand in December 2019) 91,456 1,415,683 1,507,139 67,372 1,109,644 1,177,016
 BID 1983AB – US$23,077 thousand (US$40,769 thousand in December 2019) 39,975 78,943 118,918 71,312 91,521 162,833
 Interest and charges 21,577 - 21,577 44,967 - 44,967
Total in foreign currency 359,644 3,188,218 3,547,862 1,881,900 4,476,898 6,358,798
             
Total borrowings and financing 3,034,449 14,224,175 17,258,624 2,859,843 10,384,866 13,244,709

 

Exchange rate as of December 31, 2020: US$5.1967; ¥0.05043 (as of December 31, 2019: US$4.0307; ¥0.03715).

As of December 31, 2020, the Company did not have balances of borrowings and financing, raised during the year, to mature within 12 months.

 

Local currency Guarantees Maturity Annual interest rates Inflation adjustment
         
10th issue debentures Own funds 2020 TJLP +1.92% (Series 1 and 3) and 9.53% (Series 2) IPCA (Series 2)
12nd issue debentures Own funds 2025  TR + 9.5%  
14th issue debentures Own funds 2022 TJLP +1.92% (Series 1 and 3) and 9.19% (Series 2) IPCA (Series 2)
17th issue debentures Own funds 2023 CDI +0.75% (Series 1) and 4.5% (Series 2) and4.75% (Series 3) IPCA (Series 2 and 3)
18th issue debentures Own funds 2024 TJLP 1.92 % (Series 1 and 3) and 8.25% (Series 2) IPCA (Series 2)
21st issue debentures Own funds 2022 CDI + 0.60% e CDI+ 0.90%  
22nd issue debentures Own funds 2025 CDI +0.58% (Series 1) and CDI + 0.90% (Series 2) and 6.0% (Series 3) IPCA (Series 3)
23rd issue debentures Own funds 2027 CDI +0.49% (Series 1) and CDI + 0.63% (Series 2)  
24th issue debentures Own funds 2029 3.20% (Series 1) and 3.37% (Series 2) IPCA (Series 1 and 2)
25th issue debentures Own funds 2021 CDI + 3.3%  
26th issue debentures Own funds 2030 4.65% (series 1) and 4.95% (series 2) IPCA (series 1 and 2)
27th issue debentures Own funds 2027 CDI +1.60% (Series 1) and CDI + 1.80% (Series 2) and 2.25% (Series 3)  
Brazilian Federal Savings Bank Own funds 2021/2042 5% to 9.5% TR
Brazilian Development Bank - BNDES PAC Own funds 2023 TJLP+1.82%  
Brazilian Development Bank - BNDES PAC II 9751 Own funds 2027 TJLP+1.72%  
Brazilian Development Bank - BNDES PAC II 9752 Own funds 2027 TJLP+1.72%  
Brazilian Development Bank - BNDES ONDA LIMPA Own funds 2025 TJLP+1.92%  
Brazilian Development Bank - BNDES TIETÊ III Own funds 2028 TJLP+1.66%  
Brazilian Development Bank - BNDES 2015 Own funds 2035 TJLP+2.18%  
Brazilian Development Bank - BNDES 2014 Own funds 2026 TJLP+1.76%  
Inter-American Development Bank – BID 2202 Government 2035 CDI+0.86%  
Inter-American Development Bank – BID INVEST Own funds 2034 CDI+1.90% and CDI+2.70%  
 Leases (Concession Agreements, Program Contracts and Contract Assets)   2035 7.73% to 10.12% IPC
 Leases (Others)   2023 4.24% to 9.29%  
Other Own funds 2025 3% (FEHIDRO) and TJLP + 1.5% (FINEP)  

 

Foreign currency Guarantees Maturity Annual interest rates Exchange rate changes
         
Inter-American Development Bank - BID 1212  - US$51,390 thousand Government 2025 3.31% (*) US$
Inter-American Development Bank - BID 4623  - US$10,220 thousand Government 2044 1.12% (*)   US$
International Bank for Reconstruction and Development – BIRDs 7662 and 8906 - US$82,792 thousand Government 2034 2.85% (*) US$
JICA 15 – ¥10,371,870 thousand Government 2029 1.8% and 2.5% Yen
JICA 18 – ¥9,325,440 thousand Government 2029 1.8% and 2.5% Yen
JICA 17– ¥3,349,203 thousand Government 2035 1.2% and 0.01% Yen
JICA 19– ¥29,923,047 thousand Government 2037 1.7% and 0.01% Yen
BID 1983AB – US$23,077 thousand -  2023 2.08% to 2.38% (*) US$

(*)Rates comprising LIBOR + contractually defined spread.

 

(i)       Payment schedule – book value as of December 31, 2020

 

  2021 2022 2023 2024 2025 2026 2027 to 2044 TOTAL
LOCAL CURRENCY                
Debentures 1,952,670 582,192 681,272 918,988 485,012 378,849 1,632,114 6,631,097
Brazilian Federal Savings Bank 90,382 95,391 88,779 87,749 93,243 99,082 860,215 1,414,841
BNDES 177,470 177,472 171,350 164,288 144,093 134,841 397,591 1,367,105
BID 2202 181,349 181,349 181,349 181,349 181,349 181,349 1,618,053 2,706,147
BID INVEST 44,815 89,630 89,630 89,630 89,630 89,630 449,910 942,875
 Leases (Concession Agreements, Program Contracts and Contract Assets) 28,847 32,663 35,004 38,017 41,387 36,536 216,289 428,743
 Leases (Others) 36,576 8,892 408 - - - - 45,876
Other 3,778 4,038 3,977 1,757 1,610 - - 15,160
Interest and charges 159,918 - - - - - - 159,918
TOTAL IN LOCAL CURRENCY 2,674,805 1,171,627 1,251,769 1,481,778 1,036,324 920,287 5,174,172 13,710,762
FOREIGN CURRENCY                
BID 53,412 53,412 53,412 53,412 54,810 2,795 42,282 313,535
BIRD 31,594 31,594 31,594 31,594 31,594 31,594 235,979 425,543
JICA 213,086 213,086 213,086 213,086 213,086 213,086 1,389,773 2,668,289
BID 1983AB 39,975 39,975 38,968 - - - - 118,918
Interest and charges 21,577 - - - - - - 44,967
TOTAL IN FOREIGN CURRENCY 359,644 338,067 337,060 298,092 299,490 247,475 1,668,034 3,547,862
Overall Total 3,034,449 1,509,694 1,588,829 1,779,870 1,335,814 1,167,762 6,842,206 17,258,624

 

(ii)       Changes

 

  December 31, 2019 Foreign/local currency translation Addition (lease) Funding Borrowing costs Monetary and exchange variation Inflation adjustment / exchange variation and incorporated interest – Capitalized Interest paid Amortization Accrued interest Provision for interest and fees – Capitalized Expenses with borrowing costs December 31, 2020
                           
LOCAL CURRENCY                          
Debentures 3,711,228 - - 3,507,640 (52,328) 86,939 - (161,494) (572,871) 201,150 26,073 10,167 6,756,504
Brazilian Federal Savings Bank 1,429,250 - - 74,485 - - - (111,601) (84,821) 73,067 38,452 - 1,418,832
BNDES 1,201,411 - - 213,514 - - - (47,164) (81,213) 47,668 36,427 259 1,370,902
BID 2202 - 2,807,371 - - - - - (37,613) (90,674) 22,668 27,886 557 2,730,195
BID INVEST - - - 950,000 (7,125) - - - - 1,638 - - 944,513
 Leases (Concession Agreements, Program Contracts and Contract Assets) 459,671 - - - - - - (51,431) (30,928) 51,431 - - 428,743
 Leases (Others) 74,453 - 28,549 - - - - (9,108) (56,571) 8,553 - - 45,876
Other 9,898 - - 7,250 - - - (671) (1,962) 651 31 - 15,197
TOTAL IN LOCAL CURRENCY 6,885,911 2,807,371 28,549 4,752,889 (59,453) 86,939 - (419,082) (919,040) 406,826 128,869 10,983 13,710,762
                           
FOREIGN CURRENCY                          
BIDs 2,316,190 (2,807,371) - 52,141 (6,635) 845,246 48,246 (45,010) (121,088) 10,490 24,695 398 317,302
BIRD 357,880 - - - (2,029) 102,029 1,217 (7,572) (31,216) 5,659 752 140 426,860
Eurobonds 1,413,956 - - - - 457,931 - (104,170) (1,868,676) 90,941 9,195 823 -
JICA 2,106,908 - - 40,830 (117) 715,956 17,841 (43,758) (200,597) 40,172 6,897 189 2,684,321
BID 1983AB 163,864 - - - (152) 59,078 - (7,033) (103,482) 5,843 618 643 119,379
TOTAL IN FOREIGN CURRENCY 6,358,798 (2,807,371) - 92,971 (8,933) 2,180,240 67,304 (207,543) (2,325,059) 153,105 42,157 2,193 3,547,862
TOTAL 13,244,709 - 28,549 4,845,860 (68,386) 2,267,179 67,304 (626,625) (3,244,099) 559,931 171,026 13,176 17,258,624

 

  December 31, 2018 Addition as per IFRS 16 Funding Borrowing costs Monetary variation and exchange rate changes Inflation adjustment / exchange rate changes - Capitalized Interest paid Amortization Accrued interest Provision for interest and fees - Capitalized Amortization of borrowing costs December 31, 2019
                         
LOCAL CURRENCY                        
Debentures 3,486,861 - 1,266,755 (11,814) 42,692 - (234,307) (1,055,623) 195,586 17,233 3,845 3,711,228
Brazilian Federal Savings Bank 1,345,684 - 162,767 - - - (109,128) (79,404) 74,421 34,910 - 1,429,250
BNDES 1,072,605 - 256,981 (628) 2,082 826 (83,419) (131,026) 60,644 23,112 234 1,201,411
 Leases (Concession Agreements, Program Contracts and Contract Assets) 568,666 - - - 1,765 3,761 (47,663) (123,880) 49,160 7,862 - 459,671
 Leases (Others) (*) - 113,233 - - - - (1,141) (42,646) 5,007 - - 74,453
Other 9,571 - 1,683 - 28 - (655) (1,383) 652 2 - 9,898
TOTAL IN LOCAL CURRENCY 6,483,387 113,233 1,688,186 (12,442) 46,567 4,587 (476,313) (1,433,962) 385,470 83,119 4,079 6,885,911
                         
FOREIGN CURRENCY                        
BID 2,399,985 - - - 40,594 49,387 (83,602) (171,892) 26,332 54,431 955 2,316,190
BIRD 356,420 - 2,540 (2,540) 12,575 1,657 (10,627) (12,273) 8,548 1,561 19 357,880
Deutsche Bank 292,872 - - - 13,255 - (18,562) (303,866) 12,929 1,240 2,132 -
Eurobonds 1,358,412 - - - 54,565 - (102,883) - 94,095 8,943 824 1,413,956
JICA 2,036,128 - 117,861 (112) 104,027 3,675 (35,001) (155,064) 32,194 3,013 187 2,106,908
BID 1983AB 225,592 - - (105) 8,943 - (10,338) (71,141) 9,111 870 932 163,864
TOTAL IN FOREIGN CURRENCY 6,669,409 - 120,401 (2,757) 233,959 54,719 (261,013) (714,236) 183,209 70,058 5,049 6,358,798
Overall Total 13,152,796 113,233 1,808,587 (15,199) 280,526 59,306 (737,326) (2,148,198) 568,679 153,177 9,128 13,244,709

(*) The amount presented in Funding for Leasing (IFRS 16) includes R$ 64,955 referring to the initial adoption of the standard on January 1, 2019.

 

  December 31, 2017 Funding Borrowings costs Monetary variation and exchange rate changes Inflation adjustment / update incorporated interest - Capitalized Interest and fees paid Amortization Accrued interest Interest and fees – Capitalized (*) Borrowings costs - expenses December 31, 2018
                       
LOCAL CURRENCY                      
Debentures 3,576,842 750,000 (3,021) 62,676 - (259,175) (905,080) 226,810 34,409 3,400 3,486,861
Brazilian Federal Savings Bank 1,236,674 194,244 - - - (102,772) (85,515) 75,668 27,385 - 1,345,684
BNDES 1,042,036 131,000 - 3,438 4,001 (90,397) (102,314) 28,909 55,725 207 1,072,605
Leases 561,616 - - - 6,366 (38,196) (17,427) 40,290 16,017 - 568,666
Other 10,977 - - 69 - (772) (1,470) 763 4 - 9,571
TOTAL IN LOCAL CURRENCY 6,428,145 1,075,244 (3,021) 66,183 10,367 (491,312) (1,111,806) 372,440 133,540 3,607 6,483,387
                       
FOREIGN CURRENCY                      
BID 1,743,257 484,690 (2,365) 237,433 53,208 (55,391) (130,520) 26,910 41,878 885 2,399,985
BIRD 303,278 - - 48,279 3,462 (7,607) - 6,945 2,044 19 356,420
Deutsche Bank 496,726 - - 62,918 - (35,207) (268,508) 28,862 4,454 3,627 292,872
Eurobonds 1,158,642 - - 198,380 - (97,952) - 85,072 13,448 822 1,358,412
JICA 1,700,448 80,196 (191) 329,638 6,787 (33,519) (82,608) 33,992 1,209 176 2,036,128
BID 1983AB 270,470 - - 39,241 - (11,060) (85,306) 9,681 1,488 1,078 225,592
TOTAL IN FOREIGN CURRENCY 5,672,821 564,886 (2,556) 915,889 63,457 (240,736) (566,942) 191,462 64,521 6,607 6,669,409
Overall Total 12,100,966 1,640,130 (5,577) 982,072 73,824 (732,048) (1,678,748) 563,902 198,061 10,214 13,152,796

 (*) amount related to accrued interest which as part of the contract assets.

 

(a)        Main events in 2020

 

  (i) Funding

 

On January 2020, the Company amortized the last installment of series 2 of the 17th issue debentures, totaling R$ 291.8 million.

 

On April 2020, the 25th issue debentures was carried out, in the amount of R$ 1,450,000, as follows:

 

  Value Maturity Remuneration
Single series R$ 1,450,000 10/2021 CDI + 3.3 p.a.

 

On July 2020, the 26th issue debentures was carried out, in the amount of R$ 1,045,000, as follows:

 

  Value Maturity Remuneration
Series 1 R$ 600,000 07/2027 IPCA+ 4.65% p.a.
Series 2 R$ 445,000 07/2030 IPCA+ 4.95% p.a.

 

On December 2020, the 27th issue debentures was carried out, in the amount of R$ 1,000,000, as follows:

 

  Value Maturity Remuneration
Series 1 R$ 300,000 12/2023 CDI+ 1,60 p.a.
Series 2 R$ 400,000 12/2025 CDI+ 1,80 p.a.
Series 3 R$ 300,000 12/2027 CDI+ 2,25 p.a.

 

  • The covenants agreed for the 25th, 26th and 27th issue debentures are:

 

Calculated on a quarterly basis, when disclosing the interim financial information or annual financial statements:

 

- Net debt/adjusted EBITDA lower than or equal to 3.50;

 

- Adjusted EBITDA/paid financial expenses equal to or higher than 1.5;

 

- Disposal of operating assets, termination of license, loss of concession or loss of the Issuer’s capacity to execute and operate public sanitation services in areas of the São Paulo State which, individually or jointly during the term of the agreement, result in a reduction of the Issuer’s net sales and/or service revenue of more than twenty- five percent (25%). The above limit will be calculated on a quarterly basis, taking into consideration the Issuer’s net operating revenues during the twelve (12) months prior to the end of each quarter and using the financial information disclosed by the Issuer.

 

The failure to comply with the covenants for at least two consecutive quarters, or for two non-consecutive quarters within a twelve-month period, will cause the early termination of the agreement (in which case the 30-day cure period does not apply).

 

The contracts have a cross acceleration clause, i.e. the early maturity of any of the Company’s debts, in and individual or aggregate amount equal to or higher than R$ 155 million, for the 25th and 26th issues and R$ 160 million for the 27th issue, adjusted by the IPCA inflation index as of the issue date, constitutes a default event and may result in the early maturity of the obligations arising from the Debentures.

 

  (ii) BID

 

On May 2020, the company exchanged foreign currency for local currency related to BID 2202 contract, in the amount of R$ 2,810,907 (US$ 494,617 thousand) using the exchange rate of R$ 5.683 to compose the debt balance. The interest rate is CDI + 0.86% p.a., with semi-annual payment of principal and interest, beginning on September 3, 2020.

 

On December 2020, BID INVEST was raised, in the amount of R$ 950,000, as follows:

 

  Value Maturity Remuneration
Tranche – Medium Term R$ 442,000 08/2029 CDI+ 1.90 p.a.
Tranche - Long Term R$ 508,000 08/2034 CDI+ 2.70 p.a.

 

  • The covenants agreed for the BID INVEST are:

 

- Net debt/adjusted EBITDA lower than or equal to 3.50;

 

- Adjusted EBITDA/paid financial expenses equal to or higher than 2.35;

 

The Company should maintain for two (2) consecutive quarters or not, for any four (4) consecutive quarters.

 

  (iii) Eurobonds

 

As of September 30, 2020, the early full amortization of the loan, in the amount of R$ 1,910,124 (US$ 357,763 thousand), referring to principal plus charges, initially maturing in December 2020, was carried out.

 

(b)       Leases

 

The Company has work service agreements which includes specific assets under lease terms. During the construction period, works are capitalized to intangible assets in progress and the lease amount is recorded at the same proportion.

 

After startup, the lease payment period starts (240 monthly installments), whose amount is periodically restated by contracted price index.

 

The amounts payable for the right of use of assets are also recorded in this line (Note 15 (j)).

 

(c)       Financial commitments - Covenants

 

The table below shows the more restrictive covenants ratios as of December 31, 2020.

 

  Restrictive Ratios
Adjusted EBITDA / Adjusted Financial Expenses Equal to or higher than 2.80
Adjusted Net Debt / Adjusted EBITDA Equal to or lower than 3.80
Adjusted Total Debt / Adjusted EBITDA Lower than 3.65
Other Onerous Debt(1) / Adjusted EBITDA Equal to or lower than 1.30
Adjusted Current Ratio Higher than 1.00
EBITDA / Paid Financial Expenses Equal to or higher than 2.35
Net Debt / Adjusted EBITDA Equal to or lower than 3.50
(1)   “Other Onerous Debts” correspond to the sum of pension obligations and health care plan, installment payment of tax debts and installment payment of debts with the electricity supplier.

 

As of December 31, 2020 and 2019, the Company met the financial debt covenants as set forth by its borrowing and financing agreements.

 

(d)        Borrowings and financing – Credit Limits

 

Agent   December 31, 2020
    (in millions of reais (*))
Brazilian Federal Savings Bank   1,485
Brazilian Development Bank – BNDES   708
Japan International Cooperation Agency – JICA   85
Inter-American Development Bank – BID   1,506
International Bank for Reconstruction and Development - IBRD   1,296
Other   51
TOTAL   5,131

 

(*) Brazilian Central Bank’s exchange sell rate as of December 30, 2020 (US$ 1.00 = R$ 5.1967; ¥ 1.00 = R$ 0.05043).

 

Financing resources contracted have specific purposes, which have been released for the execution of their respective investments, according to the progress of the works.