EPM Finances Crimped by Prior Board’s Mass Exit over Arbitrary Management Moves; Mayor Quintero Announces New EPM Board Members
Medellin-based electric power giant EPM admitted in an August 17 filing with Colombia’s Superfinanciera oversight agency that its lenders are alarmed over the mass resignation of its Board of Directors following EPM management’s decision to sue Hidroituango contractors and insurers this month without first consulting with the Board.
In the latest filing with Superfinanciera, EPM recounts the decision by Wall Street bond rater Fitch Ratings to cut its credit rating to “BBB-“ with “negative observation” because of EPM management’s contemptuous bypassing of its own Board.
“The reduction of one notch in the international rating of EPM by the rating agency Fitch Ratings, presented on August 13, has not generated, to date, acceleration of financial obligations, the breach or activation of financial covenants, nor has it implied the requirement of additional guarantees by the current financial creditors,” according to the EPM filing.
“On the other hand, since Tuesday, August 11, a series of teleconferences [organized by EPM] have been attended with financial creditors responding to concerns about the corporate governance situation.
“In relation to the events that led to the reduction of the risk rating, EPM has received notification from some local and international financial entities regarding the temporary suspension of commercial relations, which reduces the quotas in operations such as loans, exchange risk hedges and bank guarantees, without, to date, this having had a material effect on EPM’s liquidity and operations,” the filing concludes.
New EPM Board Members
On a related front, Medellin Mayor Daniel Quintero – who like all prior Medellin Mayors is by EPM corporate statutes the automatic chairman of city-owned EPM’s Board – announced August 18 several more new members of the EPM Board, replacing prior Board members.
The new members include:
1. Luis Fernando Rico Pinzón, former General Manager of Medellin-based electric power giant Isagen (16 years) and a member of civic promotion group Proantioquia.
2. Luis Fernando Mejía, current executive director of Colombia’s prestigious Fedesarrollo economic think-tank; former director of Colombia’s National Planning Department (2017-2018) and a former board member of Colombia’s Commission for Regulation of Energy and Gas (CREG, which has crucial oversight over all power generators).
3. Omar Flórez Vélez, former Mayor of Medellín (1990-1992) and a former EPM Board President during his term as Mayor.
4. Sandra Suárez Pérez , former Colombia Minister of the Environment, Development and Housing (2013-2016) and currently the managing director of Colombia’s top news magazine, Semana.
5. Jorge Iván Palacio, former President of Colombia’s Constitutional Court (2013-2015) and a former Magistrate of the Supreme Court.
