Equatorial Energia (EQTL3) Investor update summary

Strategic rationale and transaction overview

• Acquisition of a reference investor position in Copasa aligns with long-term growth and disciplined capital allocation strategy, representing 11% of market cap and the second largest in Brazilian sanitation.

• Investment may range from BRL 5.6 billion for a 30% stake to BRL 7.95 billion for a 42.62% stake at R$49.03 per share, with transfer restrictions and lockup periods until 2030/2033.

• Transaction funded via debt, with a 0.3x short-term leverage impact, fully reversed over the medium term, and preserves flexibility for future investments.

• Timeline includes bid submission, pricing, funding, settlement in June 2026, and subsequent regulatory and governance steps.

• Sector offers significant growth potential and aligns with existing regulatory expertise.

Copasa business highlights

• Copasa operates 637 water and 308 sewage concessions, mostly in Minas Gerais, with an average remaining term of 28 years and renewals extending to 2073.

• Net regulatory asset base of R$15.7 billion, adjusted net revenue of R$2.93 billion LTM, and net income of R$1.36 billion LTM.

• Water coverage at 99% and sewage coverage at 80.4%, serving 5.8 million water and 4.3 million sewage connections.

• Incentives for municipal adherence include cash advances, tariff relief, and legal certainty.

• Copasa has BRL 3.6 billion in reserves and a protected regulatory asset base.

Corporate governance and regulatory framework

• Bylaws grant the state of Minas Gerais a golden share with veto rights and voting caps, with robust board representation.

• Poison pill provisions apply for ownership above 45% for the reference shareholder and 20% for others.

• Shareholders' agreement requires state consent for key management matters, includes lock-up and non-compete clauses, and can be terminated with a R$50 million penalty.

• Non-compete agreements apply within Minas Gerais for sanitation opportunities.

• CADE approval and EGM are required to finalize governance and management structure.