Medellin-based multinational electric power transmission, telecom and highways-concessionaire giant ISA announced February 23 that its full-year 2022 net income rose 32% year-on-year, to COP$2.2 trillion (US$453 million), from COP$1.66 trillion (US$342 million) in 2021.

Gross income rose 14.4%, to COP$10.3 trillion (US$2.1 billion), while earnings before interest, taxes, depreciation and amortization rose 11.3%, to COP$8.56 trillion (US$1.7 billion), according to the company.

During 2022, ISA built seven new power-transmission projects as well as a large-scale battery-storage project in Brazil. “These projects generate a total annual remuneration of approximately US$167 million, and add more than 2,200 kilometers of circuit to the transmission network,” according to ISA.

On the other hand, power-tariff reductions mandated by the Colombian government cut operating income by approximately COP$60 billion (US$12.3 million), the company added.

As for Panama future operations, “ISA made a capital contribution to ICP Panama totaling COP$15 billion (US$3.1 million), which will be used to finance the expenses related to feasibility studies of the electrical interconnection” between Colombia and Panama.

As for fourth quarter (4Q) 2022 results, net income dipped 4% year-on-year, to COP $433 billion (US$89 million), but EBITDA rose 5%, to COP$2.1 trillion (US$432 million), according to the company.

“Excluding 2022 non-recurring expenses [including asset impairments hitting the Internexa interconnections between Brazil and Argentina] and 2021 re-profiling of Interchile's debt and the change in the income tax rate in Colombia, the profit for fourth quarter grew 15%,” the company added.

“This increase is mainly from boosts in contractual income from the operations in Colombia and Chile and the entry of new projects, which made it possible to mitigate the lower revenues in Brazil due to the behavior of the IPCA [inflation index], non-recurring income from the recognition of the cost of capital not received this year but recorded in 2Q 2021, and the higher expenses due to the effect of higher inflation rates, mainly in Chile,” according to ISA.

Net assets rose 28% year-on-year, to COP$78.7 trillion (US$16 billion), while consolidated financial debt rose 21%, to COP$34.1 trillion (US$7 billion), the company added.

In ISA’s highways-concessions businesses, the company expanded operations at the “Troncal Quinta” toll on Chile’s principal “Route 5,” while in Colombia, ISA marked a  first full year of revenue-generating operations of the “Ruta Costera” toll road.

In its telecommunications division, “in a year of great challenges in business and markets, the company achieved a customer satisfaction level of 8.41, improving two points compared to the previous year,” ISA added.

Medellin-based multinational foods giant Grupo Nutresa announced February 23 that its full-year 2022 net profit rose 30.4% year-on-year, to COP$883 billion (US$182 million).

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) rose 28.6%, to COP$1.97 trillion (US$405 million), while EBITDA margin came-in at 11.6% of sales.

Net post-operative expenses, at COP$245 billion (US$50 million) “reflected the increasing cost of debt due to higher financing rates,” according to Nutresa.

Consolidated revenues rose 33.8%, to COP$17 trillion (US$3.5 billion), the company added.

In Colombia, revenues rose 29.9%, to COP$10.1 trillion (US$2.08 billion), “based on positive dynamics across all channels and in the main categories where the company participates,” with Colombia representing 59.3% of total corporate revenues.

International sales as measured in Colombian pesos rose 39.7% year-on-year, totaling COP$6.9 trillion (US$1.4 billion), whereas sales measured in U.S. dollars rose 22.5% year-on-year, to US$1.6 billion, according to Nutresa.

“Exports from Colombia totaled US$445 million, which represented a growth rate of 33.9%,” according to the company.

While costs rose because of “global logistics disruptions and the increase in commodities costs,|” the company employed effective offsets with ”strategic hedging and timely and efficient sourcing strategies,” according to Nutresa.

“These actions resulted in a 21.7% growth rate in terms of gross profit, for a total of COP$6.2 trillion [US$1.27 billion],” the company added.

“All the expense categories grew at a lower rate than the revenues, which as a result resulted in an operating profit of COP$1.5 trillion [US$208 million], a 36.3% growth compared to the previous year,” according to Nutresa.

Medellin-based electric power giant Celsia – a division of Grupo Argos – on February 21 announced an 18.7% year-on-year decline in 2022 net income --at COP$442.8 billion (US$89.6 million), versus COP$544 billion (US$110 million) in 2021.

Gross revenues rose 36% year-on-year, to COP$5.58 trillion (US$1.13 billion) in 2022, versus COP$4.1 trillion (US$830 million) in 2021.

Earnings before interest, taxes, depreciation and amortization (EBITDA) also rose 30% year-on-year, to COP$1.7 trillion (US$344 million), versus COP$1.28 trillion (US$259 million) in 2021.

The decline in net income came from “higher financial costs and a higher level of taxation,” according to Celsia.

The boost in revenues came from “a greater amount of energy sold” in Colombia, although Panama sales suffered from a decline in hydropower at its Celsia Dos Mares complex.

During fourth quarter (4Q) 2022, revenues rose 46% year-on-year, with Colombia representing 92% of the total, according to Celsia.

“The fourth quarter was framed by short-term events in the sector, especially the related to the reduction of electricity tariffs promoted by the Colombian national government,” according to Celsia.

“Celsia’s energy customers in Valle del Cauca and Tolima received a reduction in electricity rates on the bill they received from the months of November and December 2022.

“With the accumulated reduction of both months, the rate in these regions decreased between 2.5% and 8%, depending on the particular conditions of each market.

“As a generator, Celsia made an average decrease in the price of close to 9% to the marketers with whom it has contracts for the sale of energy,” the company added.

Medellin-based multinational gold miner Mineros SA announced February 20 that its full-year 2022 net income fell 88% year-on-year, to COP$19 billion (US$3.8 million), from COP$$162 billion (US$32.6 million) in 2021.

“The net result was significantly impacted by COP$196 billion [US$39.5 million] of asset impairment expenses, mainly on the Gualcamayo mine property in Argentina due to higher exploration expenses and an increase in current and deferred taxes,” according to Mineros.

Corporate-wide revenues rose 21% year-on-year, to COP$39 billion (US$7.8 million), boosted by an increase in gold production along with a 7% devaluation of the Colombian peso versus the U.S. dollar, “partially offset due to lower coverage income,” the company added

Cash cost per ounce of gold sold dipped 5%, while all-in-sustaining-costs (AISC) per ounce of gold sold likewise declined 9% year-on year, according to the company.

Those declines are “explained by the greater number of ounces of gold sold, thanks to operating efficiencies at the Nechí [Antioquia] alluvial property in Colombia. and the Hemco property in Nicaragua and the reduction in sustaining capital expenditures, which were partially offset by the increase in cost of sales excluding depreciation and amortization,” according to the company.

For full-year 2022, Mineros boosted gold production 10% year-on-year, to 287,152 ounces. The Nechi alluvial operation by itself saw gold recoveries rise 26% year-on-year.

“The increase in production in 2022 over the prior year is a result of increased operating efficiencies, the approval of environmental permits that were delayed in 2021, and additional gold production from our artisanal mining formalization program,” according to Mineros.

In Nicaragua, total 2022 production rose 4%, to 132,520 ounces, while in Argentina, gold production at the Gualcamayo mine rose 1% year-on-year, to 62,247 ounces, according to the company.

Medellin-based multinational cement/concrete giant Cementos Argos – a division of Grupo Argos – announced February 21 that its full-year 2022 profits fell 59% year-on-year, to COP$215 billion (US$33 million), from COP$524 billion (US$115 million) in 2021.

Gross revenues rose 19%, to COP$11.7 trillion (US$2.37 billion), up 23% year-on-year, compared to COP$9.8 trillion (US$1.98 billion) in 2021.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 6.6% year-on-year, to COP$2.08 trillion (US$421 million), but adjusted EBITDA  in U.S. dollars fell 6.2% year-on-year, to US$520 million in 2021.

Net profit from continuing operations dipped 14.4% year-on-year, to COP$403 billion (US$81.6 million), “mainly affected by the notable increase in financial expenses due to the increase in Interest rates,” according to Cementos Argos.

“On a consolidated basis, Argos shipped 16.2 million tons of cement, a slight decrease of 3.7% compared to 2021, mainly caused by effects on the industrial business in Central America and the Caribbean,” according to the company. On the other hand, concrete volumes rose 6.3%, to 7.5 million cubic meters, “highly leveraged by the good performance of the market in Colombia,” according to the company.

U.S. Operating Highlights

During 2022, U.S. cement shipments rose 4.4% year-on-year, to 6.1 million tons, while concrete shipments grew 1%, to 4.5 million cubic meters. Prices increased 16% in cement and 18% in concrete.

U.S. revenues rose 16.4%, to US$1.5 billion, but EBITDA dipped 4%, to US$256 million, “mainly due to significant increases in the variable costs of the operation as a result of the high inflation in energy prices,” according to Argos.

Colombia Highlights

In Colombia, cement volumes dipped 0.8% year-on-year, to 6 million tons, “as a result of the price recovery strategy in a context in which cement prices in Colombia continue significantly below the parity prices of imports,” according to Argos.

“Export volumes set a record at 1.2 million tons, with growth of 28.2%. Concrete volumes reached 2.7 million cubic meters, presenting a growth of 13.6%, driven by the construction of formal housing and the good dynamics of infrastructure projects. Local cement prices grew 19% and concrete prices increased 13%.”

As a result, Colombia operating income rose 11.8% year-on-year, to COP$2.7 trillion (US$546 million), while EBITDA rose 5.7%, to COP$605 billion (US$122 million), according to the company.

Central America, Caribbean and Trading

In Central America and Caribbean operations, cement shipments fell 18% year-on-year, to 4 million tons, but concrete shipments rose 42.5%, to 273,000 cubic meters.

“Prices increased an average of 14% in concrete and 29% in cement, due to the global dynamics of trade that led to the highest values of import parity in markets with high exposure to international supply,” according to Argos.

Central America and Caribbean region revenues rose 3.1% year-on-year, to US$541 million, while EBITDA dipped 8.1% year-on-year, to US$123 million.

“With higher price levels and more stable inflation, Cementos Argos expects to be able to capture the opportunities that arise in the Central America, Caribbean and trading regions in 2023,” the company added.

Colombia President Gustavo Petro and his Health Minister Carolina Corcho on February 13 unveiled a massive national health system “reform” proposal that is already setting off alarm bells in Congress, among health-system providers, health insurance networks, insurance buyers and future patients.

According to the proposal – now facing weeks of debate in Colombia’s splintered Congress – most of the existing “Entidades Prestadoras de Salud” (EPS) health-insurance networks here would be abolished -- and the few remaining (seven in total) would be gutted and gradually transformed into vaguely-defined service providers, rather than health-network organizers and service payers.

Still unclear in the proposal is what would happen to existing or future private-sector prepaid health insurance (PHI) and “complementary” health-insurance policies and programs -- the latter of which are just appendages to current EPS policies.

The issue: If the EPS networks eventually die, then so could the “complementary” policies -- and maybe even the PHI programs, according to some analysts.

Ominous language in the new Petro proposal potentially could gut the value of such policies by forcing all PHI or “complementary” policyholders to use the new, government-monopoly health system, at government-dictated service prices -- with all the inherent bureaucracy, availability constraints, political corruption and horrendous service delays that Colombians had suffered decades ago, under the old, pre-EPS health system.

Under a similarly disastrous government-monopolized health-care system now operating in Brazil, one-third of the entire Brazilian population has already fled the bureaucratic public health system, opting instead for private, PHI networks – fortunately still allowed by law there, but at relatively high cost.

Petro’s public unveiling of the “reform” proposal drew pathetically small crowds of a few hundred supporters at government-organized rallies this week (February 13 and 14) -- in contrast to the massive anti-Petro, anti-health-reform protest marches in many Colombian cities today (February 15).

That’s not a favorable sign for Petro’s proposed health legislation, despite Petro’s well-known reputation for inciting angry divisions, chaos and violence (as in the “Primera Linea” riots of 2021) with extremist, demagogic oratory, typically featuring straw-man “enemies” along with clever use of factual distortions and outright lies.

Colombia’s existing EPS-network system arose from the “Law 100” legislation of 1993 – promoted and led by Petro’s long-time nemesis, former Colombian President Alvaro Uribe. That 1993 law replaced what had been an historically chaotic, corrupt, vastly underfunded, government-monopoly Social Security health system.

Under that prior Social-Security system, only 22% of Colombia’s salaried workers were covered for health care services, while another 40% of the population had to stand in line for government-subsidized services, many suffering or even dying long-before getting any help.

In contrast, today 99% of Colombians are covered by various EPS health insurance networks – a system that would be replaced by a new version of government monopoly, accompanied by new local/territorial health-service “districts” that would be vulnerable to becoming new centers of political corruption, huge waste and lengthy service delays, according to Colombia’s National Academy of Medicine (“ANM” in Spanish initials).

In a public letter to Colombian Health Minister Corcho this month – signed by ANM and 13 other Colombian health-sector associations – ANM warned that under Petro’s proposal to replace EPS systems with new health-system “territorial entities,” these new entities “do not have the capacity to audit and review accounts or to review billing by event prior to payment, which constitutes an imminent risk of overbilling by some IPS [hospitals and clinics] that can lead to a depletion of resources, compromising the financial viability of all IPS and the guarantee of the right-to-care for all residents in Colombia.”

Colombia’s existing Administrator of Resources for Social Security Health Care (“ADRES” in Spanish initials) currently sends all collected health premiums from employers, workers and government welfare agencies to the EPS networks for subsequent payments to hospitals and clinics for patient services.

But under the Petro proposal, ADRES would replace all EPS payment systems, creating a government-payment monopoly, eliminating private-sector competition, hence stifling innovation and economy – and creating great risk of political corruption, ANM warns.

Under the new scheme of local health-system “territorial entities,” ADRES would pay hospitals and clinics only as directed by these new “territorial entities” -- members of which would be appointed or nominated by people who could be connected to corrupt Mayors and other local politicians, as in the prior, pre-1993 Colombian health system.

“Decentralization/deconcentration [of medical-service reimbursements to hospitals and clinics], which implies the appointment of managers, the formation of boards of directors and functional overseers of spending, must be carried out with the guarantee of preventing regional politicking and corruption. Audits should not be a function of ADRES. This must be done by an administrator/regulator,” according to ANM’s public letter.

“The forms of payment to health service providers must be defined, whether involving direct payment, or prospective global payment, etcetera. Other forms of contracting must be analyzed and arranged with the providers, including evaluation of health results,” the ANM letter warns.

Another section of the Petro proposal would require the creation of tens of thousands of new, territorial medical teams, currently non-existent. “The country must know the plan to meet the proposed goals in terms of the 20,000 territorial interdisciplinary medical teams,” ANM’s letter warns.

“A policy and resources for professional training and continuing education must be defined. A reform to the health system that does not contemplate a transformation of health education is incomprehensible,” the letter adds.

Currently, Colombia’s EPS organizations collect health-insurance premiums paid by companies and workers (the “contributory” sector) as well as government welfare payments designed to cover unemployed and unaffiliated workers (the “subsidized” sector). The EPS subsequently sends payments to hospitals and clinics to cover bills for services for both sectors.

But replacing the EPS networks with new, territorial health networks will cost at least COP$52 trillion (US$10.6 billion) under the Petro proposal, with nearly half of that cost hike (COP$25 trillion/US$5.1 billion) resulting from the creation of new primary-care health centers around the country.

Another COP$11 trillion (US$2.2 billion) would be required for new health-center infrastructure and COP$9 trillion (US$1.8 billion) for “formalization” and upgrading of health-care workers, under the Petro proposal.

Nowhere in the proposal is there any explanation of how to pay for these spending increases, although certain vague language in the proposal would authorize President Petro to make unilateral decisions to fund whatever programs he would like – a provision likely to provoke opposition in Congress.

Meanwhile, while Petro claims that too many Colombians suffer from poor service under the existing EPS networks, his massive, government-monopoly “reform” scheme eventually would destroy the entire existing system – its good parts along with the not-so-good parts -- rather than surgically remove or replace diseased portions with cures.

That’s like bringing a reckless, incompetent knucklehead as the surgeon into the operating room, using a sledge-hammer rather than a scalpel.

So: Welcome to Petro Health Care, where many fear the ideologically inspired “cure” could become worse than the disease.

Colombia-based multinational cement/concrete producer Cemex LatAm Holdings (CLH) on February 13 posted a full-year 2022 net loss of US$185 million -- far worse than the US$28 million full-year net loss posted in 2021.

Despite the worsening losses, sales actually increased 4% year-on-year. On the other hand, operating earnings before interest, taxes, depreciation and amortization (EBITDA) declined 21% year-on-year, to US$131 million, according to the company.

Free cash flow also fell into the red, at a negative US$83 million for full-year 2022. “The decline on a year-over-year basis was mainly due to lower EBITDA, higher capex, working capital investment and taxes, as well as a negative effect from discontinued operations,” according to the company .

On the other hand, CLH “received an approximate total consideration of US$325 million related to the divestment of its aggregate majority ownership of Costa Rica and El Salvador operations during the third quarter of 2022. The proceeds of the divestments are not shown in the free cash flow lines.”

Corporate net debt declined by 41% year-on-year -- by a total of US$238 million -- mainly due to the divestment of Costa Rica and El Salvador operations, the company added.

As for fourth quarter (4Q) 2022 results, net loss worsened year-on-year, to US$115 million, compared with a loss of US$17 million in 4Q 2021.

Consolidated net sales during 4Q 2022 rose 10% year-on-year. “Higher prices and increased ready-mix volumes were the main drivers of the improvement,” according to CLH.

Cost of sales as a percentage of net sales increased by 5 percentage-points, from 63.6% in 4Q 2021 to 68.7% in 4Q 2022. “The increase was primarily due to higher variable costs, mainly in kiln fuel,” according to the company.

As for Colombia operations, "our domestic gray cement prices in local-currency terms improved by 11%, and our volumes increased by 2%, during the fourth quarter on a year-over-year basis,” the company explained.

“In the ready-mix business, our prices and volumes improved by 7% and 5%, respectively, during the fourth quarter on a year over year basis. Our volume growth during the quarter and the full year was supported by increased market demand in the formal sector, and the recent investments to increase our ready-mix footprint.”

As for Panama operations, “our volumes for domestic gray cement and ready-mix increased by 5% and 74%, respectively, during the fourth quarter on a year-over-year basis. Despite the improvement, domestic industry volumes in 2022 were still below those of 2019,” the company added.

As for its remaining operations in Guatemala and Nicaragua, “our domestic gray cement volumes declined by 7% during the fourth quarter on a year-over-year basis,” according to the company.

“In Guatemala, our cement volumes declined by 4% during the fourth quarter on a year-over-year basis. Our cement volumes declined due to a slowdown in the construction sector and challenging competitive dynamics.

“In Nicaragua, our cement volumes declined by 12% during the fourth quarter on a year-over-year basis. The decline was largely attributable to reduced activity in the construction sector and heavy rains,” the company added.

Corporate-wide, CLH foresees cement volume sales in 2023 essentially unchanged from 2022, although ready-mix volumes are likely to rise in the “high single digits” in Colombia, by more than 25% in Panama and by “mid-teens” hikes in its remaining Central America markets.

On a related front, sister company Cemex Spain recently proposed to acquire the outstanding shares of CLH, with closing expected later this year.

Medellin’s city-owned EPM utility claimed in a September 19 filing with Colombia’s Superfinanciera oversight agency that an investigative report published September 18 in the local El Colombiano newspaper -- citing potentially corrupt Hidroituango contract manipulation – ought not to be considered as accurate.

The El Colombiano report reveals that EPM recently changed the US$5 billion Hidroituango hydroelectric-plant construction contract bidding in a way that presumably would solely favor China’s Yellow River construction company via partnership with a previously unqualified Colombian construction company.

This alleged scheme follows Medellin Mayor Daniel Quintero’s years-long efforts to eliminate Hidroituango’s current construction contractors in favor of a Chinese company that has been cuddling-up to Quintero (see Medellin Herald September 3, 2020).

While Quintero failed in his lawsuit attempting to revoke the current Hidroituango contractors, the Chinese Communist Party’s official People’s Daily newspaper published a fawning report on Mayor Quintero in its August 19, 2020 edition, under the headline: “Daniel Quintero, Mayor of Medellín: ‘We Have Seen in China a Strong Investment Ally.’”

In the new El Colombiano report -- citing EPM’s recent contract “addendum 7” -- EPM “did the Chinese three favors: first, they reduced the required volume [of prior construction experience] to 28,350 cubic meters. Second, they included that the [new] company could accredit that experience in the construction of ‘framed structures.’ In other words, they no longer had to have experience in more complex structures such as bridges, but building houses or buildings was enough.

“And third, if the Colombian partner did not have a way to accredit that experience in two prior works, as required in the original specifications, now it can accredit it in four works. That is, the company can add 28,350 cubic meters [of experience] in several houses or buildings,” instead of 94,500 cubic meters of experience as originally required, according to the report.

The amended contract also lowered the experience requirement for excavations and construction of wells, tunnels, or caverns to 57 square meters, rather than 80 square meters as specified originally.

José Fernando Villegas, president of the Colombian Chamber of Infrastructure in Antioquia, is quoted in the El Colombiano report as asking why EPM cut the experience requirements to very specific numbers, rather than roundabout numbers. “When one puts an indicator that is not a round figure, it means that someone in particular wants to win [the contract]. It's what they call tailor's sheet,” Villegas was quoted as saying.

Likewise, “in the case of tunnels, the natural thing [in a contract amendment] would be to go down from 80 square meters to 55 or 60, but not 57,” he added.

In response to those charges, EPM issued the following statement to Superfinanciera:

“The fundamental purpose of the public request for bids [via the new contract amendments] is not to change the construction firm, but rather to guarantee the continuity of the civil works of generation units 5 to 8 of the Ituango Hydroelectric Project, under a unit-price payment methodology. in accordance with the development of the work and the current state of the risks, seeking optimization in costs and control of the execution schedule of the project in its final stage,” according to EPM.

“This process has had seven addenda (modifications), among which are extension of the date for receipt of bids, updating of the readjustment formula and provision of complementary documentation to interested parties, information meeting with bidders, inclusion of construction plans of the exterior works and modification to the requested experience.

“As a result of an interdisciplinary analysis, EPM identified the need to modify the experience requested to encourage the participation of Colombian companies and seek a greater plurality of bidders. EPM clarifies that one of the fundamental requirements stipulated in the contracting process is the presentation of offers from national and foreign legal entities, under associative forms, which may not be made up of more than three members and at least one of them must be Colombian. EPM insists that the reason why it modified the experience was due to serious analysis and not at the request of one of the participants in the process (Yellow River).

“The reopening of the process, that is, the opportunity for new interested parties to acquire the right to participate, is not an alien or foreign matter to the contracting of EPM, since precisely to guarantee the principles of equality and plurality of bidders, the specifications of conditions establish the obligation to carry out a new opening of the process when participation requirements are modified. In this particular case, as the experience was modified in some aspects, it was imperative to once again exhaust the stage of reopening the process.

“EPM reiterates that the selection process to build the final civil works of Hidroituango is carried out in a transparent manner,” the statement concludes.

The Medellin City Council on September 29 decided to reverse an earlier vote that would have approved the sale of city-owned utility EPM’s 50% stake in telecom-internet giant UNE to Millicom Spain, which holds the other 49.9% of shares.

Following an earlier provisional vote to approve the sale, on September 29 some Council members stated that they had subsequently lost faith in promises that the estimated COP$2.8 trillion (US$633 million) proceeds from the sale would be dedicated exclusively to “strategic investments.”

Instead, a last-minute change to the deal -- inserted by Medellin Mayor Daniel Quintero – stated that part of the funds would go toward paying EPM debt and part for other city projects, such as stream-maintenance. That broke the back of the tentative deal.

For more than 18 months, the long-expected deal had been held-up over concerns of misuse of UNE sale proceeds by Medellin’s politically embattled Mayor Quintero, who has been hit by numerous charges of corruption as well as illegal meddling in the recent election of President Gustavo Petro.

Under the earlier, tentative deal, an academic committee was supposed to oversee and verify that all UNE sale proceeds would indeed go into a strategic investment fund at EPM rather than being diverted to political projects of Mayor Quintero.

Earlier this year, UNE (popularly known as “Tigo”) posted a COP$572 billion (US$150.5 million) net loss for full-year 2021, more than twice the COP$212 billion (US$55.8 million) net loss in 2020.

Beside posting net losses in 2021 and 2020, the UNE-EPM venture also posted another net loss in 2018, while its 2019 net profit came-in at just COP$519 million (US$128,000).

Medellin-based multinational supermarket and dry-goods retailer Éxito and its principal Brazilian shareholder GPA simultaneously announced September 5 that GPA soon will offer 83% of its shares in Éxito to more than 50,000 current GPA shareholders.

The deal ultimately means that tens of thousands of investors in the U.S., Brazil and Colombia collectively would become Éxito’s biggest shareholders – that is, holding 53% of the total -- during the first half of 2023, according to the companies.

“The transaction is expected to consist of the segregation of GPA and Éxito through a capital reduction of GPA with the objective of distributing approximately 83% of the shares of Éxito currently held by GPA to its shareholders,” according to the companies.

“Therefore, following the closing of the transaction, GPA would retain a minority stake of approximately 13% in Éxito, with a potential for monetization in the future,” while France-based Groupe Casino would continue holding a 34% share via its GPA shareholdings, according to the companies.

“As a result of this project, the company's shareholding base would be substantially expanded, in such a way that the floating capital tradable on the stock markets would increase from 3% to 53%, approximately,” according to a separate Exito press release.

“Casino and GPA (Grupo Pão de Açúcar), would jointly maintain a shareholding of approximately 47%.

“Grupo Éxito will continue to strengthen its investment in Colombia and will continue executing its strategy of omnichannel, commercial expansion and innovation, and traffic monetization, fulfilling its higher purpose of nurturing ppportunities in Colombia,” the company added.

“The transaction will take place through the pro rata delivery to GPA’s shareholders of Éxito common shares -- including in the form of Level II Brazilian Depositary Receipts (“BDRs”) or Level 2 American Depositary Receipts (“ADRs”) -- both representing Éxito’s common shares, in the manner to be disclosed to the market in due course,” according to GPA.

“GPA’s Board of Directors considers that the transaction, which has the objective of enhancing the market value of the shares of GPA and Éxito separately, has the potential to unlock the value to be captured equally by all GPA’s shareholders.

“GPA’s securities will continue to trade in Brazil on the B3 S.A.– Brasil, Bolsa, Balcão (“B3” exchange) and in the United States on the New York Stock Exchange (“NYSE”).

“Éxito’s securities will continue to trade in Colombia, and Éxito will file the necessary documentation with the CVM [Comisión de Valores Mobiliarios of Brazil] and the U.S. Securities and Exchange Commission to in order to have the BDRs and ADRs listed for trading in Brazil and the United States, respectively, in accordance with high levels of corporate governance and regulation applicable in each of the markets,” according to the announcements.