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LOANS, FINANCING AND DEBENTURES | 12 Months Ended
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Dec. 31, 2021
Loans Financing And Debentures |
LOANS, FINANCING AND DEBENTURES |
| 22. | LOANS, FINANCING AND DEBENTURES
Schedule of loans financing and debentures
|  |  |  |  |  |  |  | 2021 |  | 2020
Financing source |  | Principal maturity |  | Annual financial cost % |  | Currency |  | Current |  | Non-current |  | Total |  | Total
FOREIGN CURRENCY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Banco do Brasil: Various Bonds (1) (4) |  |  | 2024 |  |  | Diverse |  |  | US$ |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 12 |
Eurobonds (2) (12) |  |  | 2024 |  |  | 9.25% |  |  | US$ |  |  |  | 42 |  |  |  | 5,581 |  |  |  | 5,623 |  |  |  | 7,854 |
(-)Transaction costs |  |  |  |  |  |  |  |  |  |  |  |  | — |  |  |  | (8 | ) |  |  | (8 | ) |  |  | (16 | )
(±) Interest paid in advance (3) |  |  |  |  |  |  |  |  |  |  |  |  | — |  |  |  | (14 | ) |  |  | (14 | ) |  |  | (25 | )
Debt in foreign currency |  |  |  |  |  |  |  |  |  |  |  |  | 42 |  |  |  | 5,559 |  |  |  | 5,601 |  |  |  | 7,825 |
BRAZILIAN CURRENCY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Caixa Econômica Federal (6) |  |  | 2021 |  |  | TJLP + 2.50% |  |  | R$ |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 17 |
Caixa Econômica Federal (7) |  |  | 2022 |  |  | TJLP + 2.50% |  |  | R$ |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 14 |
Eletrobrás (4) |  |  | 2023 |  |  | UFIR + 6.00% at 8.00% |  |  | R$ |  |  |  | 4 |  |  |  | 2 |  |  |  | 6 |  |  |  | 8 |
Sonda (8) |  |  | 2022 |  |  | 110.00% of CDI |  |  | R$ |  |  |  | 52 |  |  |  | — |  |  |  | 52 |  |  |  | 50 |
Debt in Brazilian currency |  |  |  |  |  |  |  |  |  |  |  |  | 56 |  |  |  | 2 |  |  |  | 58 |  |  |  | 89 |
Total of loans and financings |  |  |  |  |  |  |  |  |  |  |  |  | 98 |  |  |  | 5,561 |  |  |  | 5,659 |  |  |  | 7,914 |
Debentures - 3th Issue – 3rd Series (2) |  |  | 2022 |  |  | IPCA + 6.20% |  |  | R$ |  |  |  | 428 |  |  |  | — |  |  |  | 428 |  |  |  | 762 |
Debentures - 7th Issue – Single series (2) (11) |  |  | 2021 |  |  | 140.00% of CDI |  |  | R$ |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 289 |
Debentures - 3th Issue – 2nd Series (4) (5) |  |  | 2021 |  |  | IPCA + 4.70% |  |  | R$ |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 588 |
Debentures - 3th Issue – 3rd Series (4) |  |  | 2025 |  |  | IPCA + 5.10% |  |  | R$ |  |  |  | 323 |  |  |  | 824 |  |  |  | 1,147 |  |  |  | 1,035 |
Debentures - 7th Issue – 1st Series (4) |  |  | 2024 |  |  | CDI + 0.45% |  |  | R$ |  |  |  | 546 |  |  |  | 810 |  |  |  | 1,356 |  |  |  | 1,892 |
Debentures - 7th Issue – 2nd Series (4) |  |  | 2026 |  |  | IPCA + 4.10% |  |  | R$ |  |  |  | 4 |  |  |  | 1,756 |  |  |  | 1,760 |  |  |  | 1,588 |
Debentures – 4th Issue – 1st Series (9) |  |  | 2022 |  |  | TJLP+1.82% |  |  | R$ |  |  |  | 10 |  |  |  | — |  |  |  | 10 |  |  |  | 20 |
Debentures – 4th Issue – 2nd Series (9) |  |  | 2022 |  |  | Selic + 1,82% |  |  | R$ |  |  |  | 4 |  |  |  | — |  |  |  | 4 |  |  |  | 9 |
Debentures – 4th Issue – 3th Series (9) |  |  | 2022 |  |  | TJLP + 1,82% |  |  | R$ |  |  |  | 11 |  |  |  | — |  |  |  | 11 |  |  |  | 22 |
Debentures – 4th Issue – 4th Series (9) |  |  | 2022 |  |  | Selic + 1,82% |  |  | R$ |  |  |  | 5 |  |  |  | — |  |  |  | 5 |  |  |  | 10 |
Debentures – 7th Issue – Single series (9) |  |  | 2023 |  |  | CDI + 1.50% |  |  | R$ |  |  |  | 20 |  |  |  | 20 |  |  |  | 40 |  |  |  | 60 |
Debentures – 8th Issue – Single series (9) |  |  | 2031 |  |  | IPCA + 5.27% |  |  | R$ |  |  |  | 19 |  |  |  | 968 |  |  |  | 987 |  |  |  | 890 |
(-) Discount on the issuance of debentures (10) |  |  |  |  |  |  |  |  |  |  |  |  | — |  |  |  | (15 | ) |  |  | (15 | ) |  |  | (18 | )
(-) Transaction costs |  |  |  |  |  |  |  |  |  |  |  |  | (3 | ) |  |  | (25 | ) |  |  | (28 | ) |  |  | (41 | )
Total, debentures |  |  |  |  |  |  |  |  |  |  |  |  | 1,367 |  |  |  | 4,338 |  |  |  | 5,705 |  |  |  | 7,106 |
Total |  |  |  |  |  |  |  |  |  |  |  |  | 1,465 |  |  |  | 9,899 |  |  |  | 11,364 |  |  |  | 15,020 |
| (1) | On June 18, 2021, Cemig D made early settlement of the debt under the Debt Confirmation and Consolidation Agreement, in the principal amount of US$45, considering the guarantees constituted in the amount of US$43, by payment in cash, of roughly US$2. The total amount disbursed, comprising the basic cash amount, interest and fees, is R$10 on the date of payment.
| (2) | Cemig Geração e Transmissão;
| (3) | Advance of funds to achieve the yield to maturity agreed in the Eurobonds contract.
| (4) | Cemig Distribuição;
| (5) | In February 2021 Cemig D amortized the Second Series of its Third Debenture Issue.
| (6) | Central Eólica Praias de Parajuru. Early payment of the entire debt was made on July 23, 2021, in the amount of R$5,320. Until the settlement of the contracts, guarantees were maintained and the contractual obligations complied with;
| (7) | Central Eólica Volta do Rio. Early payment of the entire debt was made on July 23, 2021 in the amount of R$8,766. Until the settlement of the contracts, guarantees were maintained and the contractual obligations complied with;
| (8) | Arising from merger of Cemig Telecom.
| (9) | Gasmig. The proceeds from the 8th debenture issue, concluded by Gasmig on September 10, 2020, in the amount of R$850, were used to redeem the Promissory Notes issued on September 26, 2019, with maturity at 12 months, whose proceeds were used in their entirety for payment of the concession grant fee for the gas distribution concession contract.
| (10) | Discount on the sale price of the 2nd series of the Seventh issue of Cemig Distribuição.
| (11) | On February 02, 2021, the Company made the mandatory early redemption of this debentures, in the amount of R$264, with 20% discount of the funds obtained by the sale of the Company’s interest in Light. For more information about the sale of the Company’s interest in Light, see Note 32.
| (12) | In August 2021, Cemig GT carried out a partial buyback of its Eurobonds issue, in the principal amount of US$500. There are more details on this transaction later in this Note.
The debentures issued by the subsidiaries are non-convertible, there are no agreements for renegotiation, nor debentures held in treasury. Partial repurchase of Eurobonds – Tender Offer On July 19, 2021 Cemig GT launched a Cash Tender Offer to acquire its debt securities issued in the external market, maturing in 2024, with 9.25% annual coupon, up to a principal amount of US$500. The price to be paid in the Cash Tender was 116.25%, or US$1,162.50 per US$1,000 of the principal amount. On July 30, 2021, offers had been received from holders of Notes representing a total of US$774. Since the aggregate principal of all the Notes validly offered, until the Early Offer Date, exceeded the maximum amount, Cemig accepted the Notes offered on a pro rata basis until the ceiling amount of U$500. In addition to the total acquisition amount, holders of validly offered notes that were accepted for purchase also received accumulated interest not yet paid since and including the last interest payment date, until but not including the Initial Settlement Date (August 5, 2021). The financial settlement and cancellation of notes occurred on August 05, 2021 and the offers closing date is scheduled for August 13, 2021. The effects related to the repurchase of bonds are described below: Schedule of financial settlement and cancellation
|  | % |  | US$ |  | R$
Principal Amount |  |  | 100.00 |  |  |  | 500 |  |  |  | 2,569 |
Premium to the market price + Tender |  |  | 16.25 |  |  |  | 81 |  |  |  | 417 |
Accrued interests |  |  | 1.54 |  |  |  | 8 |  |  |  | 40 |
|  |  |  |  |  |  | 589 |  |  |  | 3,026 |
IOF (‘financial operations tax’) levied on premium |  |  | 0.38 |  |  |  | 1 |  |  |  | 2 |
Income tax on premium |  |  | 17.65 |  |  |  | 14 |  |  |  | 73 |
Income tax on accrued interests |  |  | 17.65 |  |  |  | 1 |  |  |  | 7 |
Financial settlement income tax on accrued interests |  |  |  |  |  |  | 16 |  |  |  | 82 |
Total of payments |  |  |  |  |  |  | 605 |  |  |  | 3,108 |
Partial disposal of hedge |  |  |  |  |  |  | — |  |  |  | (774 | )
NDF positive adjustment (*) |  |  |  |  |  |  | — |  |  |  | (24 | )
Total |  |  |  |  |  |  | 605 |  |  |  | 2,310 |
(*) Difference between the dollar PTAX on the purchase date (R$5.137) and the financial instrument – NDF, protecting against foreign exchange, with the dollar purchase cap of R$5.0984. Guarantees The guarantees of the debt balance on loans and financing, on December 31, 2021, were as follows: Schedule of guarantees of the debtor balance on loans and financings
|  | 2021
Promissory notes and Sureties |  |  | 7,177 |
Guarantee and Receivables |  |  | 3,094 |
Receivables |  |  | 36 |
Shares |  |  | 52 |
Unsecured |  |  | 1,005 |
TOTAL |  |  | 11,364 |
The composition of loans, financing and debentures, by currency and index, with the respective amortization, is as follows: Schedule of consolidated composition of loans, financings and debentures, by currency and indexor, with the respective amortization
|  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | 2026 |  | Total
Currency |  |  |  |  |  |  |  |  |  |  |  |
US dollar |  |  | 42 |  |  |  | — |  |  |  | 5,581 |  |  |  | — |  |  |  | — |  |  |  | 5,623 |
Total, currency denominated |  |  | 42 |  |  |  | — |  |  |  | 5,581 |  |  |  | — |  |  |  | — |  |  |  | 5,623 |
Index |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
IPCA (1) |  |  | 774 |  |  |  | 275 |  |  |  | 377 |  |  |  | 1,261 |  |  |  | 1,635 |  |  |  | 4,322 |
UFIR/RGR (2) |  |  | 4 |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6 |
CDI (3) |  |  | 628 |  |  |  | 560 |  |  |  | 270 |  |  |  | — |  |  |  | — |  |  |  | 1,458 |
URTJ/TJLP (4) |  |  | 21 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 21 |
Total by index |  |  | 1,427 |  |  |  | 837 |  |  |  | 647 |  |  |  | 1,261 |  |  |  | 1,635 |  |  |  | 5,807 |
(-)Transaction costs |  |  | (3 | ) |  |  | (1 | ) |  |  | (11 | ) |  |  | (5 | ) |  |  | (17 | ) |  |  | (37 | )
(±)Interest paid in advance |  |  | — |  |  |  | — |  |  |  | (14 | ) |  |  | — |  |  |  | — |  |  |  | (14 | )
(-) Discount |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (8 | ) |  |  | (7 | ) |  |  | (15 | )
Overall total |  |  | 1,466 |  |  |  | 836 |  |  |  | 6,203 |  |  |  | 1,248 |  |  |  | 1,611 |  |  |  | 11,364 |
(1) Expanded National Customer Price (IPCA) Index. (2) Fiscal Reference Unit (Ufir / RGR). (3) CDI: Interbank Rate for Certificates of Deposit. (4) Interest rate reference unit (URTJ) / Long-Term Interest Rate (TJLP) The US dollar and index used for monetary updating of loans and financings had the following variations: Schedule of the principal currencies and indexors used for monetary updating of loans and financings
Currency |  | Accumulated change in 2021, % |  | Accumulated change in 2020, % |  | Indexer |  | Accumulated change in 2021, % |  | Accumulated change in 2020, %
US dollar |  |  | 7.39 |  |  |  | 28.93 |  |  |  | IPCA |  |  |  | 10.06 |  |  |  | 4.52 |
|  |  |  |  |  |  |  |  |  |  | CDI |  |  |  | 4.39 |  |  |  | 2.77 |
|  |  |  |  |  |  |  |  |  |  | TJLP |  |  |  | 16.92 |  |  |  | (18.31 | )
The changes in loans, financing and debentures are as follows: Schedule of changes in loans, financings and debentures
Balance at December 31, 2018 |  |  | 14,772 |
Loans and financing obtained |  |  | 4,510 |
(–) Transaction costs |  |  | (10 | )
(–) Discount in the issues of securities |  |  | (23 | )
Financing obtained, net |  |  | 4,477 |
Monetary variation |  |  | 142 |
Exchange rate variation |  |  | 226 |
Financial charges provisioned |  |  | 1,250 |
Amortization of transaction cost |  |  | 38 |
Financial charges paid |  |  | (1,265 | )
Amortization of financing |  |  | (4,883 | )
Subtotal |  |  | 14,757 |
FIC Pampulha: Marketable securities of subsidiary companies |  |  | 20 |
Balance at December 31, 2019 |  |  | 14,777 |
Liabilities arising from business combination |  |  | 10 |
Initial balance for consolidation purposes |  |  | 14,787 |
Loans and financing obtained |  |  | 850 |
(–) Transaction costs |  |  | (24 | )
Monetary variation |  |  | 187 |
Exchange rate variation |  |  | 1,742 |
Financial charges provisioned |  |  | 1,211 |
Amortization of transaction cost |  |  | 15 |
Financial charges paid |  |  | (1,212 | )
Amortization of financing |  |  | (2,531 | )
Reclassification to “Other obligations” |  |  | (8 | )
Subtotal |  |  | 15,017 |
FIC Pampulha: Marketable securities of subsidiary companies |  |  | 3 |
Balance at December 31, 2020 |  |  | 15,020 |
Liabilities arising from business combination (1) |  |  | 13 |
Monetary variation |  |  | 331 |
Exchange rate variation |  |  | 353 |
Financial charges provisioned |  |  | 1,162 |
Premium on repurchase of debt securities (Eurobonds) |  |  | 491 |
Amortization of transaction cost |  |  | 20 |
Financial charges paid |  |  | (1,589 | )
Amortization of financing |  |  | (4,437 | )
Balance at December 31, 2021 |  |  | 11,364 |
| (1) | This refers to the debt of SLTE to the BNDES, settled in December 2021 with funds from the company’s cash position plus a cash injection, of R$7, from Cemig H.
Borrowing costs, capitalized The subsidiaries Cemig D and Gasmig considered the costs of loans and financing linked to construction in progress as construction costs of intangible and concession contract assets, as follows: Schedule of transferred to intangible assets the costs of loans and financings linked to working in progress
|  | 2021 |  | 2020 |  | 2019
Costs of loans and financing |  |  | 1,162 |  |  |  | 1,211 |  |  |  | 1,250 |
Financing costs on intangible assets and contract assets (1) (Notes 17 and 21) |  |  | (15 | ) |  |  | (33 | ) |  |  | (23 | )
Net effect in Profit or loss |  |  | 1,147 |  |  |  | 1,178 |  |  |  | 1,227 |
| (1) | The average capitalization rate p.a. in 2021 was 9.44% (5.39% in 2020 and 6.79% in 2019).
The amounts of the capitalized borrowing costs have been excluded from the statement of cash flows, in the additions to cash flow of investment activities, as they do not represent an outflow of cash for acquisition of the related asset. Restrictive covenants There are early maturity clauses for cross-default in the event of non-payment by Cemig GT or by the Company, of any pecuniary obligation with individual or aggregate value greater than R$50 (“cross default”). The Company has contracts with financial covenants as follows: Schedule of restrictive covenants
Title - Security | Covenant | Ratio required – Issuer | Ratio required Cemig (guarantor) | Compliance required
7th Debentures Issue Cemig GT (1) | Net debt / (Ebitda + Dividends received) | The following or less: 2.5 in 2021 | The following or less: 2.5 in 2021 | Semi-annual and annual
Eurobonds Cemig GT (2) | Net debt / Ebitda adjusted for the Covenant (3) | The following or less: 2.5 on/after Dec. 31, 2021 | The following or less: 3.0 on/after Dec. 31, 2021 | Semi-annual and annual
7th Debentures Issue Cemig D | Net debt / Ebitda adjusted | The following or Less than 3.5 | The following or Less than 3.0 | Semi-annual and annual
Debentures GASMIG (4) | Overall indebtedness (Total liabilities/Total assets) | Less than 0.6 | - | Annual
Ebitda / Debt servicing | 1.3 or more | - | Annual
Ebitda / Net finance income (expenses) | 2.5 or more | - | Annual
Net debt / Ebitda | The following or less: 2.5 | - | Annual
8th Debentures Issue Gasmig Single series (5) | EBITDA/Debt servicing Net debt/EBITDA | 1.3 or more 3.0 or less | - - | Annual Annual
Financings Caixa Econômica Federal (CEF) Parajuru and Volta do Rio (6) | Debt servicing coverage index Equity / Total liabilities Share capital subscribed in investee / Total investments made in the project financed | 1.20 or more 20.61% or more (Parajuru) 20.63% or more (Volta do Rio) 20.61% or more (Parajuru) 20.63% or more (Volta do Rio) | - - - | Annual (during amortization) Always Always
| (1) | 7th Issue of Debentures by Cemig GT, as of December 31, 2016, of R$2,240.
| (2) | In the event of a possible breach of the financial covenants, interest will automatically be increased by 2% p.a. during the period in which they remain exceeded. There is also an obligation to comply with a ‘maintenance’ covenants – that the consolidated debt, shall have a guarantee for debt of 1.75x Ebitda (2.0 as of December 31, 2017); and a ‘damage’ covenant, requiring real guarantee for debt at Cemig GT of 1.5x Ebitda.
| (3) | Ebitda is defined as: (i) Profit before interest, income tax and Social Contribution tax on profit; depreciation; and amortization, calculated in accordance with CVM Instruction 527, of October 4, 2012; – less: (ii) non-operational profit; any non-recurring non-monetary credits or gains that increase net profit; any payments in cash made on consolidated basis during the period relating to non-monetary charges that were newly added in the calculation of Ebitda in any prior period; and any non-recurring non-monetary expenses or charges.
| (4) | If Gasmig does not achieve the required covenants, it must, within 120 days from the date of notice in writing from BNDES or BNDESPar, constitute guarantees acceptable by the debenture holders for the total amount of the debt, subject to the rules of the National Monetary Council (CMN), unless the required ratios are restored within that period. Certain contractually specified situations can cause early maturity of other debts (cross-default).
| (5) | Non-compliance with the financial covenants results in automatic early maturity. If early maturity is declared by the debenture holders, Gasmig must make the payment after receipt of notification.
| (6) | The financing contracts with Caixa Econômica Federal for the Praias de Parajuru and Volta do Rio wind power plants have financial covenants with compliance relating to early maturity of the debt remaining balance. Compliance with the debt servicing coverage index is considered to be demandable only annually and during the period of amortization, which begins in July 2020. Early payment of the entire debtor balance was made on July 23, 2021, in the amount of R$5 (Central Eólica Praias de Parajuru) and R$9 (Volta do Rio). Until the settlement of the contracts, guarantees were maintained and the contractual obligations complied with.
On December 31, 2021, the Company was compliant with the covenants. The information on the derivative financial instruments (swaps) contracted to hedge the debt servicing of the Eurobonds (principal, in foreign currency, plus interest), and the Company’s exposure to interest rate risks, are disclosed in Note 31.

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