SABESP Has Delayed in Filing Its Annual Report on Form 20-F for the Fiscal Year Ended December 31, 2008
July 01 2009 - 6:14PM
PR Newswire (US)
SAO PAULO, July 1 /PRNewswire-FirstCall/ -- Companhia de Saneamento
Basico do Estado de Sao Paulo - SABESP (NYSE: SBS; BM&FBovespa:
SBSP3), (the "Registrant") respectfully notifies the Securities and
Exchange Commission that it will not be able to timely file its
annual report on Form 20-F for the fiscal year ended December 31,
2008. Since the end of first quarter of 2008, the Registrant and
the State of Sao Paulo (the "State"), the major shareholder of the
Registrant, have been in discussions to settle the outstanding debt
owed by the State to the Registrant in respect of supplemental
retirement and pension benefits (the "Benefits") that the
Registrant paid from March 1986 up to December 2008 on behalf of
the State to the former employees of the State-owned companies
which merged to form the Registrant. On November 17, 2008, the
Registrant and the State entered into an agreement to settle the
outstanding debt relating to the Benefits. Pursuant to the
agreement, the State acknowledges a portion of the outstanding
debt, in the amount of R$915.3 million as of December 31, 2008,
which the State will pay the Registrant through (i) the transfer of
certain reservoirs to the Registrant, with an aggregate value of
R$696.3 million, and (ii) 114 successive monthly installments, in
the aggregate amount of R$219.0 million, as adjusted by inflation,
plus annual interest accruing at the rate of 6%, beginning in
November 2008. Despite the agreement, a portion of the outstanding
debt owed by the State to the Registrant remains unsettled,
totaling R$409.1 million (this amount does not include certain
applicable adjustments) as of December 31, 2008 (the "Unsettled
Amount"), because of divergent interpretations between the
Registrant and the Public Attorney's Office of the State of Sao
Paulo (the "Public Attorney's Office") relating to the calculation
and eligibility criteria applicable to the Benefits. The State will
not be able to finalize the discussions with the Registrant and
enter into an agreement regarding the Unsettled Amount until the
Public Attorney's Office issues a final interpretation of the
calculation and eligibility criteria applicable to the Benefits.
Based on opinions of external legal and accounting advisors,
management believes that the Unsettled Amount is due to the
Registrant by the State. Accordingly, the Registrant has not made
any provisions for losses relating to the Unsettled Amount in the
statement of income for the fiscal year ended December 31, 2008 in
its primary financial statements under Brazilian GAAP. The
Registrant's independent auditors disagreed with management and
issued a qualified report for the fiscal year ended December 31,
2008. The Registrant filed the financial statements for the fiscal
year ended December 31, 2008, containing the Registrant's
independent auditors' qualified report, with the Brazilian
Securities Commission (Comissao de Valores Mobiliarios) on March
27, 2009 and also furnished them to the Securities and Exchange
Commission under a report on Form 6-K on May 29, 2009. The
disagreement between the Registrant's independent auditors and
management does not affect the reconciliation of the financial
statements prepared under Brazilian GAAP to U.S. GAAP, since under
U.S. GAAP the Registrant has already made provisions for losses
relating to the Unsettled Amount in the statement of income for the
fiscal year ended December 31, 2008. Once the Public Attorney's
Office issues a final interpretation of the calculation and
eligibility criteria applicable to the Benefits and the Registrant
is able to finalize the discussions with the State and reach an
agreement regarding the Unsettled Amount, the Registrant expects
that its Registrant's independent auditors will have new facts to
review the qualification in their report for the fiscal year ended
December 31, 2008. However, the Registrant cannot assure that based
on the new facts the Registrant's independent auditors will be able
to issue a report without the qualification for the fiscal year
ended December 31, 2008. The Public Attorney's Office has recently
informed the Registrant that it expects to issue a final
interpretation of the calculation and eligibility criteria
applicable to the Benefits by the end of July 2009. The Registrant
believes that, after it is able to finalize the discussions with
the State and reach an agreement regarding the Unsettled Amount,
the Registrant will need additional work and time to restate its
financial statements for the fiscal year ended December 31, 2008
accordingly. In light of the above, the Registrant is unable to
timely file its annual report on Form 20-F for the fiscal year
ended December 31, 2008. In addition, at this stage, the Registrant
is not in a position to determine when it will be able to file its
2008 annual report on Form 20-F for the fiscal year ended December
31, 2008. Significant change to Registrant's net income The
Registrant anticipates that there may be a significant change in
the Registrant's results of operations for the fiscal year ended
December 31, 2008 if the State does not acknowledge that it owes to
the Registrant the Unsettled Amount or a portion thereof. In this
case, the Registrant may make provisions for losses accordingly in
the statement of income for the fiscal year ended December 31, 2008
in its primary financial statements under Brazilian GAAP, which may
cause a significant change in the Registrant's net income for the
fiscal year ended December 31, 2008. The State will not be able to
enter into an agreement with the Registrant regarding the Unsettled
Amount until the Public Attorney's Office issues a final
interpretation of the calculation and eligibility criteria
applicable to the Benefits. Thus, at this stage, the Registrant
does not know if it will reach an agreement with the State
regarding the Unsettled Amount or a portion thereof and, as a
result, if any provision for losses will be made accordingly.
Therefore, the Registrant is not in a position to make a reasonable
estimate of the significant change in the Registrant's net income,
if any. The Public Attorney's Office has recently informed the
Registrant that it expects to issue a final interpretation of the
calculation and eligibility criteria applicable to the Benefits by
the end of July 2009. IR Contact: Mario Arruda Sampaio (Ph.: 5511
3388-8664 / e-mail: ) Angela Beatriz Airoldi (Ph.: 5511 3388-8793 /
e-mail: ) DATASOURCE: SABESP CONTACT: Mario Arruda Sampaio,
+011-5511-3388-8664, ; or Angela Beatriz Airoldi,
+011-5511-3388-8793, , both of SABESP
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