SABESP Slashes Legal Claim Estimate by R$143B in 20-F/A Amendment

TL;DR

**SABESP's massive R$143 billion legal claim reduction is a huge win, but watch the pending Eldorado appeals.**

AI Summary

SABESP filed an amended 20-F/A for the fiscal year ended December 31, 2024, primarily to correct the total estimated amount of claims in its legal proceedings and add a new lawsuit. The total estimated amount of claims was significantly rectified from R$167.7 billion (net of R$24.6 million in court deposits) to R$24.7 billion (net of R$167.7 million in court deposits). This represents a substantial reduction in the reported potential financial exposure from legal claims. Additionally, lawsuit No. 2263215-97.2021.8.26.0000, filed by Subcondominio Eldorado Business Tower, was added to the civil claims. This lawsuit, concerning the revision of charging schemes for commercial users, has seen initial dismissals in SABESP's favor, with appeals and an Incident of Repetitive Demands (IRDR) also resolved favorably for SABESP. However, Special and Extraordinary Appeals are currently pending before the Superior Court of Justice (STJ) and Supreme Federal Court (STF), respectively. The amount involved in the Eldorado lawsuit cannot be reliably estimated, and the risk of loss is assessed as 'possible.' The amendment also includes new certifications from the CEO, Carlos Augusto Leone Piani, and CFO, Daniel Szlak, as required by Sections 302 and 906 of the Sarbanes-Oxley Act.

Why It Matters

This amendment significantly impacts SABESP's perceived financial health and risk profile. Reducing the estimated legal claims from R$167.7 billion to R$24.7 billion drastically lowers the company's contingent liabilities, which could improve investor confidence and potentially lead to a re-evaluation of its stock. For employees, a more stable financial outlook reduces uncertainty. Customers, particularly commercial users, might see the ongoing Eldorado lawsuit as a precedent for future billing disputes, though SABESP has prevailed thus far. In the competitive landscape, a lower risk profile could enhance SABESP's ability to secure financing and pursue growth initiatives compared to peers facing higher litigation exposure.

Risk Assessment

Risk Level: medium — While SABESP significantly reduced its total estimated legal claims from R$167.7 billion to R$24.7 billion, a substantial R$24.7 billion in potential liabilities remains. The addition of lawsuit No. 2263215-97.2021.8.26.0000, with an 'unreliably estimated' amount and 'possible' risk of loss, introduces an unknown but potentially significant financial exposure, especially with appeals pending before the STJ and STF.

Analyst Insight

Investors should view the R$143 billion reduction in estimated legal claims as a positive de-risking event for SABESP. However, closely monitor the progress of lawsuit No. 2263215-97.2021.8.26.0000, as an adverse ruling in the higher courts could introduce new, unquantified liabilities. This amendment suggests a more favorable risk-reward profile, but the 'possible' risk of loss in the new lawsuit warrants caution.

Key Numbers

• R$167.7 billion — Original estimated legal claims (Significantly reduced in the amendment)
• R$24.7 billion — Rectified estimated legal claims (Represents a R$143 billion reduction from original estimate)
• R$24.6 million — Original court deposits (Net of claims, also rectified)
• R$167.7 million — Rectified court deposits (Net of claims, increased from original estimate)
• 683,509,868 — Common Shares outstanding (As of December 31, 2024)
• 1 — Preferred Share outstanding (As of December 31, 2024)

Key Players & Entities

• COMPANHIA DE SANEAMENTO BASICO DO ESTADO DE SAO PAULO-SABESP (company) — Registrant filing the 20-F/A amendment
• R$167.7 billion (dollar_amount) — Original estimated amount of claims in Item 8.A
• R$24.6 million (dollar_amount) — Original court deposits net of claims
• R$24.7 billion (dollar_amount) — Rectified estimated amount of claims in Item 8.A
• R$167.7 million (dollar_amount) — Rectified court deposits net of claims
• Subcondominio Eldorado Business Tower (company) — Plaintiff in lawsuit No. 2263215-97.2021.8.26.0000
• Carlos Augusto Leone Piani (person) — Chief Executive Officer of SABESP
• Daniel Szlak (person) — Chief Financial Officer and Investor Relations Officer of SABESP
• Superior Court of Justice (STJ) (regulator) — Higher court reviewing Eldorado's Special Appeal
• Supreme Federal Court (STF) (regulator) — Higher court reviewing Eldorado's Extraordinary Appeal

FAQ

Risk Factors

• Significant Reduction in Estimated Legal Claims [high — legal]: SABESP amended its 20-F/A to significantly reduce the total estimated amount of claims in its legal proceedings from R$167.7 billion to R$24.7 billion. This represents a R$143 billion reduction in potential financial exposure. The amendment also adjusted court deposits from R$24.6 million to R$167.7 million.
• New Lawsuit Filed by Subcondominio Eldorado Business Tower [medium — legal]: A new lawsuit (No. 2263215-97.2021.8.26.0000) has been added concerning the revision of charging schemes for commercial users. While initial dismissals and appeals were in SABESP's favor, Special and Extraordinary Appeals are pending before the Superior Court of Justice (STJ) and Supreme Federal Court (STF). The amount involved is not reliably estimable, with a 'possible' risk of loss.

Industry Context

SABESP operates in the essential public utility sector of basic sanitation, providing water and sewage services in the state of São Paulo, Brazil. The industry is capital-intensive and heavily regulated, with significant ongoing investment required for infrastructure maintenance and expansion. Trends include increasing focus on water resource management, efficiency improvements, and meeting evolving environmental standards.

Regulatory Implications

The substantial reduction in estimated legal claims suggests a potentially improved risk profile regarding contingent liabilities. However, the ongoing appeals in the Eldorado lawsuit highlight continued legal and regulatory scrutiny, particularly concerning commercial user charging schemes. Compliance with SOX certifications underscores adherence to U.S. financial reporting and governance requirements.

What Investors Should Do

1. Monitor the outcomes of the pending Special and Extraordinary Appeals in the Eldorado lawsuit.
2. Analyze the drivers behind the significant reduction in total estimated legal claims.
3. Review SABESP's full financial statements for the fiscal year ended December 31, 2024, when available.

Key Dates

• 2024-12-31: Fiscal Year End — The period covered by the amended 20-F/A filing.
• 2025-04-30: Original Annual Report Filing — The initial filing date of the Form 20-F for the fiscal year ended December 31, 2024.
• 2025-08-27: Amendment No. 1 Filing Date — The date this amendment to the 20-F was filed, primarily to correct legal claim estimates and add a new lawsuit.

Glossary

20-F/A

An amended annual report filed by foreign private issuers with the U.S. Securities and Exchange Commission (SEC). (This filing is an amendment to SABESP's annual report, indicating corrections or additions to previously disclosed information.)

Sarbanes-Oxley Act (SOX)

A U.S. federal law that mandates certain practices in financial record keeping and reporting for public companies. (The amendment includes new certifications from the CEO and CFO as required by Sections 302 and 906 of SOX, demonstrating compliance with U.S. corporate governance standards.)

Incident of Repetitive Demands (IRDR)

A procedural mechanism in Brazilian law aimed at harmonizing case law on recurring legal issues. (This mechanism was initiated in the Eldorado lawsuit, and its resolution in SABESP's favor is a key development in that legal proceeding.)

Superior Court of Justice (STJ)

The highest court of ordinary federal jurisdiction in Brazil, responsible for interpreting federal law. (A Special Appeal filed by the plaintiff in the Eldorado lawsuit is pending before the STJ.)

Supreme Federal Court (STF)

The highest court in Brazil, responsible for constitutional matters. (An Extraordinary Appeal filed by the plaintiff in the Eldorado lawsuit is pending before the STF.)

res judicata

A matter that has been judged by a competent court and cannot be retried between the same parties. (The dismissal of Eldorado's initial appeal became final (res judicata), indicating a definitive ruling on that specific matter.)

Year-Over-Year Comparison

This filing is an amendment to the previous 20-F, specifically addressing a significant reduction in the estimated total amount of legal claims, from R$167.7 billion down to R$24.7 billion. Additionally, a new lawsuit has been disclosed. The amendment also includes updated SOX certifications from the CEO and CFO. No direct comparison to the prior year's financial metrics is provided within this amendment, as its purpose is to correct and supplement existing disclosures for the fiscal year ended December 31, 2024.

Key Financial Figures

• $167.7 billion — elated to our legal proceedings, from "R$167.7 billion (net of R$24.6 million in court deposit
• $24.6 million — eedings, from "R$167.7 billion (net of R$24.6 million in court deposits)", to "R$24.7 billion
• $24.7 billion — $24.6 million in court deposits)", to "R$24.7 billion (net of R$167.7 million in court deposi
• $167.7 million — deposits)", to "R$24.7 billion (net of R$167.7 million in court deposits)". This Amendment No

Filing Documents

• sbsform20fa_2024.htm (20-F/A) — 29KB
• ex12-1.htm (EX-12.1) — 7KB
• ex12-2.htm (EX-12.2) — 7KB
• ex13-1.htm (EX-13.1) — 2KB
• ex13-2.htm (EX-13.2) — 2KB
• 0001292814-25-003200.txt ( ) — 49KB

SIGNATURES

SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A or amendment thereto and that it has duly caused and authorized the undersigned to sign this Amendment No. 1 to its Annual Report on its behalf. COMPANHIA DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO - SABESP By: Name: Carlos Augusto Leone Piani Title: Chief Executive Officer By: Name: Daniel Szlak Title: Chief Financial Officer and Investor Relations Officer Date: August 27, 2025

View Full Filing

View this 20-F/A filing on SEC EDGAR