The same committee of the Medellin Council, which two months ago had scuttled the request from the Mayor’s Office and EPM to sell the shares in UNE, returned to deny this Tuesday in the first debate the new launch of the municipal government for taking off a business which has been bottled up for a year and for which he expects to receive between $2.3 and $2.8 billion.
The First Commission is made up of seven councilors, however, since the beginning of the debate the capacity was incomplete because councilman Carlos Andrés Ríos was approved an impediment to intervene in the discussion because a brother of his works at Tigo.
For this reason, at the time of voting, the charges remained the same: Babinton Flórez, Aura Marleny Arcila and Carlos Mario Romero said yes; but Sebastián López, Daniel Duque and Simón Pérez denied the guarantee for the sale.
After the tie, the vote was repeated with the same balance: 3-3. When this happens, according to the regulations of the Council, it is understood that the draft agreement is denied.
The Mayor’s Office, following the new setback, announced at the head of the Secretary of the Treasury, Óscar Hurtado, who will appeal the decision before the plenary.
According to the regulations of the Council, if the plenary considers the arguments that gave rise to the denial of the project to be well-founded, it is archived.
On the contrary, if the plenary decides that the project be considered once more, the president of the Council refer the project to a different standing committee to the one who knew him so that the first debate arises once more.
A repeated debate
Amid the reiteration of reasons on both sides, the opponents once once more put on the table distrust in the administration of Mayor Daniel Quintero as the main reason for voting once morest the initiative; while the councilors of the coalition and EPM once once more expressed the urgency for the sale to be completed so as not to put the assets of the public services company at risk.
Opposition councilor Daniel Duque said that EPM only comes to the Council to ask for the sale of public assets, but not to render accounts, in reference to the absence on July 28 of Javier Lastra, manager of Afinia, the EPM subsidiary on the Caribbean Coastwho did not accept the call for a political control debate with which they sought answers regarding the complaints that have been aired for alleged irregularities in the entity he manages.
“They say not to use distrust as a criterion to make a decision, but I ask you if you were the board of directors of a very prosperous company and you realize that the person who runs the company, in this case the mayor, has fired the suitable personnel, has made the entity more indebted, has told lies, would they give them authorization to sell?”, he criticized.
Sebastián López seconded Duque’s argument and affirmed that it is not the fault of the councilors “the state of political distrust generated by the mayor and his officials. EPM is managed as an office secretariat that receives direct orders from the mayor”.
The coordinator of the draft agreement, Aura Marleny Arcila, stated that the market conditions imply a risk for EPM, because in the future it will be necessary to make capitalizations important to maintain the competitiveness of Une.
What did EPM say?
Before the double tie in the vote, the manager of EPM, Jorge Carrillo, spoke, who responded without eagerness explaining the reasons for the urgency of the business. He indicated that the sale has all the logic from the business point of view, because the resources are needed to undertake EPM’s investment plan in the coming years.
“We have publicly committed ourselves to the creation of specific destination accounts so that the resources do not go to costs and expenses,” he indicated, in response to the initial doubts that arose regarding the direction that the money that enters through a future sale would have.
Carrillo reiterated that the company must leave the telecommunications sector due to the higher level of risk it has compared to the field of home public services provided by EPM.
Furthermore, he noted, it would avoid possible capitalization requirements and would allow the resources invested in UNE to be redirected to initiatives that are managed by EPM and become part of your strategic businesses.
He mentioned once more that it is the last opportunity to exercise the right of exit from UNE due to the expiration of the clause, for which he said that it is not a decision that can be postponed.
“Mistrust for some is worth more than $2.5 trillion. Reinforcing the element of distrust is worth more than EPM losing that amount and the assets continue to lose value”, he responded to the reasons expressed by the opponents.
The clause, the key point
The official reasons for selling now have to do with the position in which EPM ended up with respect to Millicom in the merger process held in 2014. The company relinquished control of the company, which for Guillermo Maya, a professor at the National University who has followed up on this process, he left the company a prisoner.
“That was a bad deal. EPM does not receive higher performance. And although the times of the clause are added to the problem, the solution is not to stay. If control cannot be regained, it must be terminated. The company has nothing else to do there, ”he said.
The clause to which Maya refers was the one that the councilors knew under confidentiality last week. What is known is that the figure will be active until 2024 and it works as a wild card so that EPM can exercise its right to leave the company.
The mechanism allows EPM to offer its participation to Millicom on a preferential basis. If this does not happen, EPM will lose a tax that is not minor: putting 100% of the company’s shares up for sale. That would force both companies to sell the entire company together before August 2024.
This scenario might have a negative impact on the assessment made of the business so far, so what happens in the next nine days will be key in this city debate. “The credibility problem that Quintero has caused has him facing the Council, but delaying the sale is not the best way out, given the circumstances. There are people who mourn the exit of the business, when there is no way to remedy it”, concluded Maya.
