Companhia Paranaense de Energia

BOVESPA:CPLE6

Q1-2025 Earnings Call

[Operator]

Good morning, ladies and gentlemen, and welcome to Companhia Paranaense de Energia - COPEL's video conference to discuss the earnings of the First Quarter of 2025. This video conference is being recorded and will be available on the company's website at ri.copel.com. The presentation is also available for download.

[Operator Instructions]

Before proceeding, I would like to note that the forward-looking statements are based on the beliefs and assumptions of Copel's management and on information currently available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore, depend on circumstances that may or may not occur.

Investors, analysts and journalists should consider that events related to the macroeconomic environment, the industry and other factors could lead results to differ materially from those expressed in such forward-looking statements.

The video conference will be presented by Mr. Daniel Slaviero, CEO of Copel; Mr. Felipe Gutterres, CFO of Copel as well as Directors of the subsidiaries that will be available for the Q&A session.

I would now like to turn the floor to Copel's CEO, who will begin the presentation. Please, Daniel, you may proceed.

[Daniel Slaviero, executive]

Good morning. I thank everyone for participating in our video conference. In line with what we presented in our Investors Day, we are focused on executing the second wave of our strategic plan called operational excellence. Right now, our priority is creating a culture of ownership with all of our employees with efficiency gains, extracting more value from our current assets and maximizing revenues by taking advantage of volatile energy prices.

In addition, we are fully focused on executing Copel Distribution investment plan, the largest in its history and preparing for the tariff review that will take place on June 2026. The essence of this phase is to prepare the company to make the most of the opportunities for expansion in the next cycle. Regarding this purpose, the General Shareholders' Meeting held on April 24 approved the composition of the new Board of Directors, now 100% independent with a multidisciplinary and strategic formation for the company with highly technical qualified professionals with complementary skills who will contribute to our sustainable growth.

Also at this meeting, the payout of another BRL 1.3 billion in dividends was approved related to the year 2024. With that, last year, our payout exceeded 86% with a dividend yield close to 9%. We have additionally announced the partial closing of the divestment of small generation assets receiving BRL 302 million. And the complete closing should take place in coming months, while meeting the precedent conditions. At the same time, we're also complying with the precedent conditions for the closing of the Baixo Iguaçu operation, and we expect this closing to take place in the second half of 2025.

As for the results of the first quarter, I also highlight another period of solid growth in EBITDA, reaching BRL 1.5 billion with excellent performance in all business units. On this slide, I'd like to highlight Copel's competitive advantages. First and foremost, I reinforce the essence of our thesis. It is simple with low risk and a huge potential to unlock value. We are an integrated company with premium assets and concessions renewed for the long term. We believe in focusing on the core business of electricity and gaining scale. We have a relevant presence in the segments of generation, transmission, distribution and trading of energy, which allows us to have a diversified composition of our EBITDA, balancing risk and return with strong resilience to market fluctuations.

We consider all of these points give us a very important strategic advantage or competitive edge. This integration allows us to capture synergies, optimize investments and operate efficiently across different industry cycles. In addition, we have strong cash generation and a robust balance sheet that allows us to take advantage of growth opportunities with responsibility and financial discipline. Copel, ladies and gentlemen, has a clear thesis, solid fundamentals, low risk, a team of excellence and a very consistent trajectory of deliveries.

We are facing a unique case with plenty of room to unlock and create value. I want to open an unprecedented chapter in our history as a corporation. As promised at our Investor Day, we announced today our optimal capital structure and new dividend policy. This work is a reflection of an in-depth study led by our CFO and his team. So Felipe, in addition to greeting you and complementing you on this excellent work, I would ask you to present the details of this work. The study considered several scenarios and variables, which allowed us to set a transparent, robust, consistent and predictable policy.

The most important thing is that we want to reconcile a high capacity to pay dividends with the preservation of our ability to make good investments. We are raising the company to a new level that will allow us to generate even more value for our shareholders. So this update also demonstrates the management's commitment to discipline in capital allocation and once again, consolidates what has been Copel's hallmarks, consistency in our deliveries. With that said, I will now turn the floor to Felipe so that he can address more details about this work, but also the earnings of the first quarter. Thank you.

[Felipe Gutterres, executive]

Good morning, everyone. Thank you, Daniel. I'd like to start here by recalling a fundamental point. Discipline is the pillar of our management. Considering this on Copel Day last year, I presented our capital allocation manifesto, which demonstrates in an integrated way how we look at our capital allocation process, reinforcing the company's internal rate of return at the center of this process. And today, we present to you the result of our optimal capital structure study, which directly impacts our dividend policy.

You see that the study is connected with all of the perspectives of this year. The strategic cash reserve, investment grade were some of the central pillars adopted. While the result of the work allows us to have a greater scope to analyze new projects, optionalities and of course, a new perspective of dividends, which is what we'll present today. Now speaking specifically of the approach developed to define the optimal capital structure, it is important to start with the central concept behind the study. The optimal point of the capital structure is the one at which leverage maximizes the value of the company.

That is the limit zone in which the cost of indebtedness, especially the risk of financial distress begin to compromise that value. In other words, there is a value curve associated with leverage, and our goal was to identify exactly the inflection point before the increasing leverage started to negatively impact the value of the company instead of generating value. So for that, we structured a robust project in 2 major stages. The phase first was to construct deterministic models for each cash-generating unit. We defined a minimum strategic cash and added CapEx, debt service and dividends to reach the shareholders' cash flow with dividends.

We built a solid base of long-term projections with assumptions defined by our market area added to macroeconomic projections, taking the modeling to the end of the concession. We then connected this deterministic model to a probabilistic model, allowing us to have 78,000 possible paths of critical variables for our own business from which we defined 700 sample scenarios with a high degree of confidence with different combinations of critical operational, macroeconomical and financial variables. This approach allows us to capture the complexity and variability of the real business environment, which leads us to the optimal capital structure considering different contacts.

Here, it's worth highlighting the main assumptions that guided our stochastic simulations. We sensitize variables such as the price of energy and market of energy where we operate, costs, GSF, curtailments, interest rates, IPCA, among others. This allowed us to understand how different levels of leverage perform, not only in base scenarios, but also in adverse and stressed context. The model has clearly shown us where the limits of healthy leverage are and when value starts to be lost. Perfectly demonstrating the logic of the model was to capture the tax benefit generated by leverage in different scenarios of critical variables combined to the point that the cost linked to financial distress, such as the additional spread related to the debt rating and the stress of the leveraged beta reached the optimal point in each scenario.

These charts here in the slides summarize the consolidated view of the assumptions that supported the simulated scenarios in the probabilistic model. Our approach was comprehensive, incorporating both historical parameters and market projections. It is important to highlight here that all of these premises and assumptions and scenarios were built by our market area and deeply discussed internally. With this, we ensured first, the technical robustness of the study with assumptions adherent to the reality of our business and credible scenarios. And second, the independence and analytical impartiality, avoiding any construction bias in the model. We carefully segmented scenarios from the most conservative to the most optimistic, ensuring that the final result reflected not only an internal point of view, but a broad reasons and representative view of the real dynamics we face. And this reinforces the reliability of the results that I'll show you on the next slide.

So with that, based on all the modeling presented, considering deterministic projections and simulations of probabilistic scenarios, we've reached a solid conclusion with 99% confidence that the leverage of 2.8x net debt over EBITDA is the capital structure that maximizes the company's value. The study shows that there's an optimal leverage range that preserves our financial flexibility, our ability to absorb shocks, maintain access to financing on competitive terms and sustain our growth agenda to invest with discipline and generate value on an ongoing basis.

This range includes 95% of capitalization scenarios in the range between 2.5x and 3.1x net debt over EBITDA. It is important to say that the structure holds up even in adverse and stressed scenarios such as those simulated in the stochastic models that I already mentioned, and it intelligently and dynamically balances the benefit of debt with the risk of financial stress, taking into account the profile of our cash generation, our future commitments and the company's long-term strategy.

In the end, what we have here is a clear direction for decision-making based on a strict methodology, consistent data and a well-founded and technical parameter that increasingly guides our capital positioning to maximize the company's value. And as a direct consequence of the study of the optimal capital structure, I announced one of the main developments of this work, the definition of Copel's no dividend policy, which will be one of the instruments to achieve the optimal leverage.

The policy takes into account the target leverage of 2.8x, band of more or less 30 bps, and thus, we can be between 2.5x or 3.1x net debt over EBITDA on leverage as long as there's the expected convergence to 2.8x within 24 months, minimum payout of 75%, payment frequency of at least 2x a year, and we also foresaw totally exceptional situations such as a pandemic, a catastrophic event or even a relevant high-return investment strategy in which the Board of Directors may decide on a payout below the minimum. To conclude the session of the presentation, I reinforce that our policy reflects an integrated view of our business model, our capacity to generate cash and above all, our commitment to creating sustainable value, balancing 3 fundamental pillars, predictability. We started to adopt a clear structure with objective parameters that allow investors to understand that what to expect in terms of remuneration is central to increase the attractiveness of the stock and reduce perception of risk.

Financial discipline. This means that the return to shareholders will always occur within a context of solidity and responsibility without compromising the company's financial health. Flexibility to growth, keeping room to make the necessary moves for good capital allocations as long as these are clearly generators of value in excess of the cost of capital.

Now talking about the quarter's results, we delivered recurring EBITDA of BRL 1.5 billion in the first Q '25, of which BRL 783 million came from Copel GeT and BRL 693 million from this. This result was 13% higher than the BRL 1.3 billion of the first quarter of last year, mainly due to the largest payment of sale at Copel debt, the increase in the volume of energy sold, the lower generation deviation with a reduction of 30.5% or BRL 15 million compared to the previous period caused by a higher wind volume, partially offset by the curtailment of 6.1% compared to 1.9% in the first quarter of '24 and the increase of almost 1% in the grid market build in the distribution company, offset by the higher volume of energy from the MMGD at BRL 164 million.

I'd like to point out that our network business, our grid business stood out with an EBITDA efficiency of 46.4% and in the line of results, we presented growth of 6.4% in recurring net income. A series of combined factors affected this variation in addition to better operational performance, registering an increase of BRL 19 million in the equivalent of our shares. These components were partially neutralized by the lower financial results, more negative by BRL 174 million due to the increase in financial charges due to the higher interest rates and the increase in debt volume.

Shifting the focus to investments we executed a CapEx of BRL 678 million in the first quarter with distribution representing 87% of the total realized with a focus on the regulatory remuneration base, efficiency and quality of services. For the year, we expect to make BRL 3 billion in investments with an obligation in distribution of BRL 2.5 billion. Giving color to our indebtedness, we closed the quarter with a leverage of 2.3x, 0.3x lower than what we closed in '24. So this shows the balance and the consistency of our balance sheet and our ability to generate cash. Speaking of leverage, I conclude my presentation by highlighting the study of the optimal capital structure, which we have just seen, which pointed to leverage of 2.8x and the new dividend policy whose minimum payout will be 75%.

This work and the consequent dividend policy is a milestone in our journal of financial maturity. We are confident in the solidity of the capital structure and in the balanced policy we have adopted, ensuring consistent returns to investors and preserving the company's ability to continue to invest in growth with discipline. As we have said, we are a unique case capable of aligning relevant sustainable dividends with growth. And we are very confident that our long-term strategy focused on efficiency, quality and results will continue to advance and deliver more and more value to all our stakeholders.

Before opening for the Q&A, I thank each and every one of the Copelians for their hard work, commitment and continued dedication. Thank you once again for attending. We can now move on to the Q&A session.

[Operator]

[Operator Instructions]

Our first question, Maria Carolina Carneiro at Safra.

[Maria Carolina Carneiro, analyst]

I have 2 questions. First, about the period to apply -- start applying the new dividend policy. Just to make it clear, you gave us the breakdown of the policy and the horizon you're thinking for 24 months. But just to be sure, are we speaking already of including the payment of dividends as of 2025 within these parameters? Or is it something that's going to start in 2026? And also within this scope to try and understand the metrics that you place to reach the optimal leverage of 2.8x, we would probably be talking about more frequent payouts and doing some analysis here of sensitivity. And you even mentioned it in your policy, the possibility of payout extraordinary dividends. So just to know whether I'm understanding this correctly.

And a second question about the energy market. You've been able to get interesting results at the trading and generation transmission was also good results. And we've been seeing a bigger concern of disconnecting the spot price from the market. The price in the South was a little bit separate and going up compared to other markets. So to know what your view is and how you're preparing for this horizon where the prices are detached considering what we have today in the South and the portfolio that you have in the Northeast. There are some people who are expecting the disconnection to be closer or longer in the spot price lower in the Northeast.

[Daniel Slaviero, executive]

Thank you very much for your question. So first, it is valid effective immediately starting today. So the second point, Felipe, I think there's something relevant on Carol's question here is how these ranges are going to work on this convergence period of 24 months. And then we'll go into the market prices, and I would ask you and Mano to add. Well, first, Carol, thank you. You asked about the frequency of payout. What the policy says is that it should be at least 2 payments a year, minimum. So that gives us liberty to practice more than that, depending on the company's strategy and the space that we see.

As for the ranges, the way they work give us flexibility to operate 30 bps up or down as long as in 24 months, we get the convergence to 2.8x. So it should be understood that if there's room within that period, we can operate at 3.1, for example, as long as we see convergence to 2.8 in this time horizon that we established here in the policy. So that opens up room to use dividends as a tool to get to the optimal structure. Just an addendum before I turn the floor to Rodolfo. I think this is very important here. The first 2.8 is a reflection, as I said here, of a very robust work, 28,000 scenarios, 700 samples.

There's a lot of details there and the stress test for the company as well, which shows the robustness of a company like Copel. And the second point is that this range aims to provide predictability and stability to the dividend policy, either operating at a higher range -- higher end of the range or the lower end to avoid hiccups. And the second point is considering that we have a contracted deleverage condition for '26, '27 with the tariff review and with the improvement in prices that we already perceived this quarter as well as the work and efficiency and cost reduction. And I think that the second main reason here for this range, Felipe and I work here is to provide us flexibility to navigate economic cycles as we see with perspectives of improvement or worsening in this universe.

And third and last point is also to leave some significant flexibility for us to be able to make good investments, as Felipe already said. So we have -- we are very happy and confident that this policy is an important step, as Felipe mentioned, in the maturity and financial growth and the appreciation of the value of the company. But Rodolfo, please go ahead and the price aspect and the market. If you can also talk about the sales for the quarter as well, please.

[Rodolfo Lima, executive]

This first quarter was very interesting in terms of price and volatility. But with that pace of long-term growth maintained as we saw in the last quarter. So speaking a little bit of strategy and price. The price, we've been -- when the price goes up, we've been contracting long-term energy. We have contracted energy, especially for '26 onwards. So we made the most of that high price window. And this is something we've been doing since last year. And the result of those hedging is what we could see throughout this quarter. So we do have a long position in the Northeast, considering the contracts we buy there. And this position was hedged during 2024, the strategy proved to be very interesting during this year.

So at some point, when the price was detached in more than BRL 300, we were on the opposed point. We were selling more energy than buying, and we captured that advantage. And then another relevant point in your question about the market price is this difference between the South and Southeast. Considering the low fluence we saw in the third quarter, the South started to be a lot more expensive than the Southeast. There was a lot of positive impact because of that.

Today, almost 90% of our energy is sold in the Southeast. Our hydro generation is mostly in the South. So this difference was in the portfolio of the trading company. So starting in February, we start to see this separation that's now close to BRL 40. And a lot of the results of trading come from the strategy to maximize the swaps. So whenever there is this difference, this disconnection, we make -- we take the opportunity to capture that in the medium and short-term contract as well.

[Operator]

Next question, Bruno Amorim, Goldman Sachs.

[Bruno Amorim, analyst]

Congratulations on your new policy, very clear, very objective. So I have a question related to the policy and capital allocation. Daniel, if you can talk about this today, what are the main fronts you're working on in terms of growth and capital allocation from now on? You're putting together a very senior Board, very competent C-level, preparing the company for a journey of efficiency and growth, as you have been saying. So if you can update us in terms of priorities and how you see the growth agenda from now on. And a follow-up going back to what you said in the Investor Day, correct me if I'm wrong, but you said in 2025, you were not foreseeing any huge capital allocation movements or M&A.

So the question is, considering the new policy that gives you certain flexibility and there's a contracted relevant increase of EBITDA for coming years with the tariff review coming next year, would it make sense to think that the case should be a leverage slightly above 2.8x since this deleveraging is already contracted for coming years? These are my questions.

[Daniel Slaviero, executive]

Bruno, thank you for the question. We'll start from the last one going back. So Felipe, please feel free to add as well to my answer. The possibility that you mentioned is very reasonable for us to end 2025 with a leverage close to or slightly above what we're saying with the capital structure and working on keeping or maintaining that within the 30 bps range because we see a deleveraging perspective that's very strong in coming years. So it's a possibility, and we'll discuss it. The range is precisely to give us this flexibility to be able to navigate it considering the company's circumstances. As you said, and everyone knows, this contracted deleveraging with the tariff review or the beginning of the new investment cycle of the distribution company that will follow a normal curve. more traditional curve starting in the first cycle, lower and growing during the 5 years.

So I think this is a point, and this is an actual possibility. And in our view, it doesn't make sense to have hiccups in the payment of dividends and high, medium, low, high. Our idea is to have predictability, stability to reach this maybe exceeding double-digit yields, which seems for us a feasible, reasonable scenario considering the characteristics and perspectives of Copel. So that's the first point. In terms of M&A and all that, what I want to tell you is, Bruno, our view is a long-term view. We are talking about and presenting, and we're going to do that at the Investor Day at the end of this year, a view for 2035, what we expect for the next 10 years, what are the avenues and what can happen in 3, 5, 10 years.

So we don't have any anxiety or perspective or anything feasible or concrete in the very short term. You saw our first slide was really to reinforce the second wave of '25, '26, which is still a wave where we're cleaning house, operational efficiency, executing the investment plan, as I said, and also to do an important derisking with a tariff review that in our mind will be impeccable, and we're working for that, a process where the internal review of our processes and our structure to develop, as we said, the ownership culture, have a transition of our internal systems, in particular, our ERP system.

There's a capacity bid as well that's not defined when exactly it's going to happen, but there's strong indication that this may happen by the end of this year. So I think there's still a lot of things, a lot of steps before we start thinking about any relevant capital allocation. And finally, I mean, we have -- we must be attentive and always aligning, and not -- we don't put together such a high-level excellence team just to sit down and wait for things to happen. That's not the idea. That's what we always say. Every day has its own priorities. So we'll be mindful. There's still a lot of space.

And today, it's like our baptism of this new phase as a corporation, which is to rerate the company with the predictability and the capacity to pay dividends, shareholder remuneration. So there's still room. And just to conclude my thoughts, time is on our side in the sense of valuing, appreciating the company, and we believe that it's still very cheap.

[Operator]

Next question, Fillipe Andrade with Itau BBA.

[Filipe Andrade, analyst]

I'd like to ask you for better visibility of the sales strategy now of energy trading in the quarter, especially for the longer fortes in 2027 onwards. What was the price level of these contracts, considering that we see a lot of volatility and increasing pressure in the quarter. And also, the company has a portfolio that should benefit from this price volatility in the intraday and I'd like to know if you have an estimate that you can share with us on the general profile of generation and how much it contributed to the results of the first quarter of '25.

[Daniel Slaviero, executive]

Talking about that, the prices are actually higher. If we look at 2027 and compare its behavior with all A+ 2 that we talk about, it's at the historical highest level. So we've been capturing prices close to 190 in '27, above 170 in '28, and this maintains looking forward. Now talking a little bit about the benefit of seasonality in a day, that's one of the points that we talked about in our Investor Day, we've been seeing that already materializing. It started in January with the discrepancy day-to-day was not that big. And in February, we see already an improvement of BRL 10 million in the result of Copel as a whole.

And in March, that was 100% materializing, reaching BRL 20 million. That equals to about BRL 18, 2 megawatt hour more than the energy that we sell. And we imagine with the hydro stress in the second half and the entry of the wind harvest that tends to converge more. So that could get to as much as BRL 60, BRL 70, BRL 80 per megawatt hour, depending on the affluences and the solar and wind powers. An additional point here, Felipe, higher price volatility that's also a reflection of this new pattern of hydro generation and so on. And we understand this is very positive and healthy despite some impact in the industry overall because it approximates or brings the models closer to the real-life operation that we see.

it doesn't make sense to have falsely smaller prices in the first half and then that gets too separated later and that becomes a cost of charges and service, and that ends up affecting the general cost. So every time we have a model where we bring it closer to the real operation with all the complexities and challenges that ANS has, for us, this is a healthy discussion to evaluate this event, and it would be a step back. And it was discussed and debated for a long time, for years, actually. And we're only just beginning this 5 months of this new operation with the new hybrid way.

[Operator]

The next question, Pimentel João from Citi.

[João Pimentel, analyst]

I'd also like to congratulate you on your dividend policy. I have a question about the reserve auction, and I'd like to take your view on 2 points. Considering the postponement, what do you see in terms of a perspective of a deadline or if you expect any change in the products related to the hydro plants if it's a good point.

And the second point is your view on participating on the auction, including for us to think about leverage and so on, considering that this bidding process allows the anticipation of hydro projects. So I'd like to see if you have any estimates in terms of CapEx for these projects and what would be the spacing idea of this disbursement over the years? And if you're thinking about working with the advance or not, it depends on the approval of the CMSA, but how -- what are you thinking about this CapEx allocation?

[Daniel Slaviero, executive]

Excellent question. So what do we see? First, was a decision in our view that was correct at this cancellation because of the level of judicialization even before the bidding process, can you imagine if it was -- if they went forward, the trend was that it would remain. So that was a decision that the ministry had and our view is correct. Our expectation is that this will come back soon and the bidding will take place by the end of the year, November, maybe or December at the latest, especially because the system needs. So I don't think there's a lot -- hydro product would be the most affordable in the auction and more than 5 gigabytes of interested projects. And so if it's fully renewable and it's majority with national products. So there's a lot of benefit for consumers and perhaps guarantees if this is persistence, it will happen with hydro and thermal plants.

As for our participation, we have 2 projects that are very advanced, the F project with 860 mega and in the segment also with 1.2 gigawatts to put in. So it will greatly depend on the conditions and prices and the conditions to see which will have the best conditions. But we'll be, in our view, prepared with these 2 projects. And as for CapEx and price, we are being more cautious because this ends up being a strategic piece of information. We don't have a lot of civil construction you have a little bit more and that could affect our competitiveness and tolerance.

As for a potential anticipation of 2030, we'll see how the rules will unfold. But I think this is part of the competitive edge of each of the players. And if they can deliver it ahead, then we'll certainly look at that very cautiously, but this will bring benefits to the system because this will definitely be part of this value will definitely be captured at lower prices, benefiting the consumer. And that's why we have a strong confidence in the hydric plant, has a strategic role, but it has a relevant role in the safety of the system.

[Operator]

Next question, Mr. [indiscernible]. He says, since the company sold shares, what has been the main difficulty that you found in the current format? And what do you consider to be the Copel's greatest clients? I'm referring to the management operation. And in the call of the fourth quarter of '24, I remember you mentioned the energy generation bidding processes. Is this expectation maintained?

[Daniel Slaviero, executive]

No. Okay. So I believe that Copel have any huge triumph for anything spectacular. I mean it has a work and consistence that is done brick by brick. So what are we doing? And I think that's our main strength, as I mentioned. At our roadshow and the follow-on, we sold shares in August '23, and we had a series -- made a series of promises that we were going to renew our 3 main plants that we were going to have works and efficiency gains because Copel was already very efficient. There was an EBITDA above 20 was the regulatory, and today, it closed at 46, but there was things that were inherent to the restrictions and ties of a state-owned company.

We said we were going to divest in assets that we didn't consider to be core assets and that we saw closing 100% of the matrix. So the sale of WEG, Compagas that we were going to focus on large assets so that we could have a main -- I mean, not a plant of 10, 12 megawatts. We use this to recompose the technical team. We said we were going to have a lot of discipline in capital allocation and that we would conduct a study of a new capital structure and dividend policy and that we would be mindful of opportunities that could come up.

For now, what we saw recently was an opportunity to sell Baixo Iguaçu within this context that simply reinforces I mean the company is focused on disciplined capital allocation either for divestment or investments. And I believe that the next main step to conclude this, and I appreciate your question, that was in our follow-on and we'll begin the debate and initiatives now after the general shareholders meeting will be the discussion of new market O Novo Mercado. And it was a factor that made it feasible with the discussions that we are able to move forward. And if everything goes well, to bring some clarity on that for coming months.

[Operator]

This next question, [ Luis Batista ] and he says, congratulations to all the team and the efficiency of the management. I'd like to know if this is to migrate to Novo Mercado, if you could expect an effect in transforming the shares from CPLE6 to CPLE3 once it has higher market value

[Daniel Slaviero, executive]

As I just mentioned, the coincidence between your question and what I was just saying, I think this is a major step to unlock value that was on hold with the discussions that I mentioned. But I think that now we can start this debate with all stakeholders and Felipe will also lead this process. So I see this as a very relevant opportunity. And as I said, to unlock value. I think that the combination of the class of shares is something that brings benefits to everyone to the preferred and the common shareholders and for the attraction of international investors, this is also a very relevant factor.

About this premium or rating in this exchange is a very preliminary discussion still very early. There's a difference of 10% between one and the other ordinary shares and preferred shares. But if you see the vast majority of operations, almost the totality of operations over the last 30 years, it's always been 1:1. But I believe that for us and the debate and the balance, we tend to think there are paths for the greater good to exceed the smaller good as a more valued company with a single class of shares and more liquidity will certainly bring benefits to everyone.

Our advantage is that this is not, the rating specifically is not a management issue to discuss. It's something that's up to the shareholders. The shareholders should -- are the ones to make a big position and try to get to an understanding to benefit the greater good for the company.

[Operator]

Question-answer session is concluded. I will now turn the floor to Mr. Daniel for his closing remarks.

[Daniel Slaviero, executive]

Such an amount of participants and the level of the questions and especially the consistency and quality of delivery shows how Copel is a reference company in the electricity sector. So I thank all of my partners, all of my colleagues, all Copelians who are with us in this work in this journey. I'm very happy with the new formation of the Board, the quality of its members, the quality and competence of this excellent team that we have here at Copel, both the ones who were already here and the ones who arrived or who are coming in now recently. And we are convinced and confident that Copel's case is simple, low risk and with a lot of opportunity to unlock and create value. Thank you all very much. Today, we consider this to be a very important day, not to say historical, in the recent life of Copel as a corporation. Thank you.

[Operator]

Copel's conference call is now closed. We thank you all for your participation. Have a great day.