FIRST AMENDMENT TO AGREEMENT DATED 12-11-2001



 





Exhibit 4.7



State of São Paulo Government




	 	 	 
	 

	 	FIRST AMENDMENT TO THE INSTRUMENT OF ACKNOWLEDGMENT, PAYMENT COMMITMENT AND
OTHER COVENANTS, ENTERED INTO BETWEEN COMPANHIA DE SANEAMENTO BÁSICO DO ESTADO
DE SÃO PAULO – SABESP AND THE STATE OF SÃO PAULO, THROUGH ITS STATE DEPARTMENT
OF FINANCE.






The parties hereinbelow:






	1.	 	COMPANHIA DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO – SABESP, a private
legal entity and basic sanitation utility concessionaire, with head-office
at Rua Costa Carvalho, no 300, in the Capital of São Paulo State, enrolled
with the CNPJ (National Registry of Legal Entities) under no
43.776.517/0001-80, herein collectively represented by Mr. Dalmo do Valle
Nogueira Filho, Chief Executive Officer, and Mr. Rui de Britto Álvares
Affonso, Economic-Financial and Investor Relations Officer (hereinafter
referred to as SABESP); and
	 
	2.	 	STATE OF SÃO PAULO, a public legal entity, through its State Department
of Finance, herein represented by the State Secretary, Mr. Eduardo
Refinetti Guardia (hereinafter referred to as STATE);





WHEREAS




	 	 	 
	I

	 	on December 11, 2001 the STATE and SABESP entered into the
“Instrument for Acknowledgment and Restatement of Debts, Payment
Commitment and other Covenants” (hereinafter referred to as
INSTRUMENT OF ACKNOWLEDGMENT), the Department of Water and Electric
Power – DAEE being also an interested party to the agreement;
	 
	 	 
	II

	 	the INSTRUMENT OF ACKNOWLEDGMENT, among other things, restated the
STATE’s debt to SABESP, comprising the water supply and sewer
collection bills related to buildings and premises occupied by
several agencies of the direct, independent and foundation management
entities, overdue and unpaid until December 01, 2001, as well as the
amounts disbursed by SABESP by way of complementary retirement and
pension benefits granted under State Law no. 4819/58 and subject to
recovery by the STATE;
	 
	 	 
	III

	 	through Official Letter P-0389/2003, of April 29, 2003, SABESP
decided to rectify the amount of the consolidated debt mentioned in
the INSTRUMENT OF ACKNOWLEDGMENT, which as from them was three
hundred and twenty-four million, five hundred and sixty-three
thousand, forty-seven reais and seventy-one cents







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	 	(R$324,563,047.71)
relating to the water supply and sewer collection accounts overdue
and unpaid until December 01, 2001;
	 
	 	 
	IV

	 	the INSTRUMENT OF ACKNOWLEDGMENT set forth an exception allowing the
installments of the consolidated debt to be repaid by transfer of
rights over the areas and equipment related to the reservoirs owned
by the DAEE, which would then become a STATE creditor for the same
amount, for further settlement of accounts;
	 
	 	 
	V

	 	the assets owned by the DAEE were duly evaluated as three hundred
million, eight hundred and eighty thousand, one hundred and
sixty-eight reais and seventy cents), on reference date June 30,
2002, notwithstanding the fact that the assignment of the respective
rights to SABESP has not yet been formally carried out, nor the STATE
has started the payment of the consolidated debt installments;
	 
	 	 
	VI

	 	new debts owed by the STATE have arisen, by reason of the non-payment
of water supply and sewer collection occurred after the execution of
the INSTRUMENT OF ACKNOWLEDGMENT, the amounts thereof have been
already duly ascertained;
	 
	 	 
	VII

	 	payment has not been effected to the STATE of interests on the net
equity relating to fiscal years prior to 2003, already declared and
paid by SABESP to the other company’s shareholders;
	 
	 	 
	VIII

	 	SABESP decided to pay other amounts by way of interests on net
equity, on account of fiscal year 2003, the amount of which will be
available to the shareholders only on a date subsequent to the
general meeting of shareholders;
	 
	 	 
	IX

	 	it is convenient to give a specific treatment to the STATE’s debt
arising out of water supply and sewer collection services provided by
SABESP, by netting the same against part of the credits held by the
STATE with SABESP, on account of interests on net equity already
declared, however not yet necessarily payable;
	 
	 	 
	X

	 	the above referred specific treatment is in line with the “Memorandum
of Understanding” entered into between the STATE and SABESP on
September 30, 1997;
	 
	 	 
	XI

	 	it is also advisable to adopt a more equitable and uniform criterion
for monetary updating of the consolidated debt, thus allowing its
impact to be distributed along the period being considered;






NOW, THEREFORE, the parties have decided to enter into this instrument, called
“First Amendment”, which shall be governed by the following clauses and
conditions, being binding upon the parties themselves and/or their eventual
successors.



SECTION ONE



The debt acknowledged by the STATE, arising out of water supply and sewer
collection services provided by SABESP, shall hereinafter be five hundred and
eighty-one million, seven hundred and seventy-eight thousand, eight hundred and
seventy-eight reais and seventy-five cents (R$581,778,878.75), including
therein all the amounts referred to in Section One of the INSTRUMENT OF
ACKNOWLEDGMENT, as well as other invoices due after December 01, 2001 and until
February 29, 2004, as listed in the table included in Annexes I and IA.


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Paragraph one



The water supply and sewer collection bills due until February 29, 2004 have
been monetarily adjusted also until February 2004, pursuant to the annual
variation of the Reference Rate – TR, by end of each calendar year.



Paragraph two



The STATE has the right, through accredited employees of the State Department
of Finance, to audit the amounts stated in Annexes I and IA, within one hundred
and eighty (180) days, and proceed to the applicable adjustments, for more or
less, should any inconsistency be found out.



SECTION TWO



SABESP acknowledges to owe to the STATE, as of this date, the total amount of
five hundred and eighteen million, seven hundred and thirty-two thousand, two
hundred and two reais and twenty-one cents (R$518,732,202.21), by way of
interests on net equity, which comprises the amount of one hundred and
fifty-eight million, sixty-four thousand, seven hundred and fifty-one reais and
thirty-four cents (R$ 158,064,751.34) related to the income for fiscal years
prior to 2003 and since now deemed to be payable, and the amount of three
hundred and sixty million, six hundred and sixty-seven thousand, four hundred
and fifty reais and eighty-seven cents (R$ 360,667,450.87) related to the
income for fiscal year 2003, which shall become payable on a date subsequent to
the next general meeting of shareholders.



Sole paragraph



The amount of one hundred and fifty-eight million, sixty-four thousand, seven
hundred and fifty-one reais and thirty-four cents (R$ 158,064,751.34) includes
the amounts due by way of interests on net equity relating to shares issued by
SABESP previously owned by the DAEE and transferred to the STATE by force of
State Law no. 6851, of May 03, 1990, having been monetarily adjusted pursuant
to the annual variation of the IPC/FIFE (Consumer Prices Index calculated by
the Economic Research Institute Foundation), as from December of the calendar
year in which it became payable, and until February 2004.



SECTION THREE



The STATE and SABESP and transferred to the STATE by force of State Law no.
6851, of May 03, 1990, having been monetarily adjusted pursuant to the annual
variation of the IPC/FIFE (Consumer Prices Index calculated by the Economic
Research Institute Foundation), as from December of the calendar year in which
it became payable, and until February 2004.



SECTION THREE



The STATE and SABESP shall give mutual and reciprocal release to each other for
their respective credits, up to the limit of three hundred and sixty million,
six hundred and sixty-seven thousand, four hundred and fifty reais and
eighty-seven cents (R$ 360,667,450.87), corresponding to interests on net
equity related to the income for fiscal year 2003, which shall become payable
on a date subsequent to the general meeting of shareholders.



Sole paragraph




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The mutual release up to the limit of three hundred and sixty million, six
hundred and sixty-seven thousand, four hundred and fifty reais and eighty-seven
cents (R$ 360,667,450.87) shall
be acknowledged by the parties, for accounting and budget purposes, in seven
monthly, equal and consecutive installments, from June to December 2004.



SECTION FOUR



The balance of two hundred and twenty-one million, one hundred and eleven
thousand, four hundred and twenty-seven reais and eighty-eight cents (R$
221,111,427.88) of the consolidated debt owed by the STATE, as herein
acknowledged, which is not settled under the terms of the preceding section,
shall be paid in sixty (60) monthly, equal and consecutive installments, in the
amount of three million, six hundred and eighty-five thousand, one hundred and
ninety reais and forty-six cents (R$ 3,685,190.46) each, the first one maturing
on May 30, 2004, and the other ones on the same day of the subsequent months
or, should that be a bank holiday, on the immediately following business day.



Paragraph One – Exceptionally, the twelve installments shall be due for their
respective face value, in the total amount of forty-four million, two hundred
and twenty-two thousand, two hundred and eighty-five reais and eighty-five
cents (R$ 44,222,285.58), without any addition whatsoever by way of monetary
adjustment or interests.



SECTION FIVE



The amount of one hundred and fifty-eight million, sixty-four thousand, seven
hundred and fifty-one reais and thirty-four cents (R$ 158,064,751.34), related
to interests on net equity stated in fiscal years prior to 2003 and since now
deemed to be payable, shall be entailed to the settlement of the total amount
of forty-four million, two hundred and twenty-two thousand, two hundred and
eighty-five reais and fify-eight cents (R$ 44,222,285.58), referred to in the
second paragraph of the preceding clause, which shall be deemed to be paid, for
accounting and budget effects, in seven monthly, equal and consecutive
installments, from June to December 2004.



Sole paragraph



The balance of the amount related to interests on net equity stated in fiscal
years prior to 2003 and since now deemed to be payable, and not used for
settlement of the amounts referred to in Section Five, shall be subject to
monetary adjustment in accordance with the monthly variation of the IPCA-IBGE,
added by 0.5% per month, relating to the period from March 2004 until the month
of the respective payment or netting, whether total or partial, and shall be
allocated to the settlement of invoices arising out of water supply and sewer
collection services provided by SABESP to the STATE, which become due after
this date and are not paid in cash by the STATE.



SECTION SIX



The debt acknowledged by the STATE pursuant to Section Two of the INSTRUMENT OF
ACKNOWLEDGMENT, referring to the recovery of complementary retirement and
pension benefits provided for in State Law no. 4819/58, shall continue being
subject to the ascertainment, adjustment and payment conditions set forth
therein, save as otherwise expressly agreed to between the parties.




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SECTION SEVEN



All other clauses and conditions of the INSTRUMENT OF ACKNOWLEDGMENT not
expressly amended hereby shall continue in full force and effect.



Sole paragraph



This instrument does not affect the rights and obligations undertaken by the
DAEE under the INSTRUMENT OF ACKNOWLEDGMENT, which shall be entirely complied
with as set forth therein.



SECTION EIGHT



The STATE shall adopt the applicable actions in order to ensure sufficient
budget availability, in such a way as to enable the settlement of the
consolidated debt installments payable by the STATE.



In witness whereof, the parties execute this instrument, called as “First
Amendment”, in two counterparts of the same contents and form, in the presence
of the two undersigned witnesses.



São Paulo, March 22, 2004.




COMPANHIA DE SANEAMENTO BÁSICO DO

ESTADO DE SÃO PAULO – SABESP




	 	 	 
	[signature]

	 	[signature]
	Dalmo do Valle Nogueira Filho

	 	Rui de Britto Álvares Affonso
	Chief Executive Officer

	 	Economic-Financial and Investor Relations
Officer







STATE OF SÃO PAULO




[signature]

Eduardo Refinetti Guardia

State Finance Secretary




	 	 	 
	[signature]

	 	[signature]
	First Witness

	 	Second Witness
	Name: Daniel Sonder

	 	Name: Iassuo Hagy
	I.D.: 24.448.000

	 	I.D.: 5.377.233







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Annex I




COMPANHIA DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO – SABESP




GESP X SABESP AGREEMENT

Adjustment pursuant to the Latest BTN/TR of the Yearly Total Debts




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Adjustment Base
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total up to	 	Adjusted Total
	 	 	1994
	 	1995
	 	1996
	 	1997
	 	1998
	 	1999
	 	2000
	 	12/01/2001
	 	12/01/2001
	 	until 02/2004

	(1) Unadjusted Value to
Date of Debts
	 	 	9,485,166.41	 	 	 	13,312,301.45	 	 	 	14,366,659.30	 	 	 	21,041,738.47	 	 	 	36,024,480.51	 	 	 	41,453,179.22	 	 	 	63,199,480.89	 	 	 	125,680,131.46	 	 	 	324,563,047.71	 	 	 	 	 
	(2) BTN/TR Value on 12/31
	 	 	0.6640	 	 	 	0.8872	 	 	 	0.9768	 	 	 	1.0676	 	 	 	1.1573	 	 	 	1.2291	 	 	 	1.2574	 	 	 	1.2849	 	 	 	 	 	 	 	 	 
	(3) Amount of BTN/TR
	 	 	14,284,889.17	 	 	 	15,004,848.34	 	 	 	14,707,790.03	 	 	 	19,709,384.11	 	 	 	31,128,039.84	 	 	 	33,726,449.62	 	 	 	50,262,033.47	 	 	 	97,813,161.69	 	 	 	276,636,596.27	 	 	 	 	 
	(4) BTN/TR Value in
02/2004
	 	 	1.3868	 	 	 	1.3868	 	 	 	1.3868	 	 	 	1.3868	 	 	 	1.3868	 	 	 	1.3868	 	 	 	1.3868	 	 	 	1.3868	 	 	 	 	 	 	 	 	 
	(5) Amount Adjusted until
02/2004
	 	 	19,810,284.30	 	 	 	20,808,723.68	 	 	 	20,396,763.22	 	 	 	27,332,973.88	 	 	 	43,168,365.65	 	 	 	46,771,840.33	 	 	 	69,703,388.02	 	 	 	135,647,292.63	 	 	 	—	 	 	 	383,639,631.71	 







     Calculation Criteria





	 	(1)	 	Unadjusted value to date ascertained from the data base transmitted by
the CSI through the FTP of the accounts cadastradas as State Public
Entities;
	 
	 	(2)	 	BTN/TR Value on 12/31 for the respective years
	 
	 	(3)	 	Amount of BTN/TR on 12/31 of the respective years: (1) divided by (2) =
(3)
	 
	 	(4)	 	BTN/TR Value on 02/29/04
	 
	 	(5)	 	Amount ascertained in (1) divided by the BTN/TR of 12/31 of the
respective years (2), and multiplied by the BTN/TR of 02/2004 (4): (3)
multiplied for (4) = (5)





	 	 	 	 	 
	Total Face Value
	 	 	521,530,274.20	 
	Adjustment pursuant to BTN/TR
	 	 	60,248,604.55	 
	Total
	 	 	581,778,878.75	 







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Annex I A




COMPANHIA DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO – SABESP




GESP X SABESP AGREEMENT

Adjustment pursuant to the Latest BTN/TR of the Yearly Total Debts




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total 2001 to	 	Adjusted Total
	Adjustment Base
	 	2001
	 	2002
	 	2003
	 	2004
	 	02/2004
	 	until 02/2004

	(1) Unadjusted Value to Date of Debts
	 	 	29,565.99	 	 	 	13,519,500.69	 	 	 	148,476,969.75	 	 	 	34,941,190.06	 	 	 	196,967,226.49	 	 	 	 	 
	(2) BTN/TR Value on 12/31
	 	 	1.2849	 	 	 	1.3188	 	 	 	1.3824	 	 	 	1.3868	 	 	 	 	 	 	 	 	 
	(3) Amount of BTN/TR
	 	 	23,010.34	 	 	 	10,251,365.40	 	 	 	107,405,215.39	 	 	 	25,195,550.95	 	 	 	142,875,142.08	 	 	 	 	 
	(4) BTN/TR Value in 02/2004
	 	 	1.3868	 	 	 	1.3868	 	 	 	1.3868	 	 	 	1.3868	 	 	 	 	 	 	 	 	 
	(5) Amount Adjusted until 02/2004
	 	 	31,910.74	 	 	 	14,216.593.54	 	 	 	148,949,552.70	 	 	 	34,941,190.06	 	 	 	—	 	 	 	198,139.247.04	 






Calculation Criteria






	(1)	 	Unadjusted value to date ascertained from the data base transmitted by
the CSI through the FTP of the accounts cadastradas as State Public
Entities;
	 
	(2)	 	BTN/TR Value on 12/31/2001, 2002 and 2003, to 02/29/2004
	 
	(3)	 	Amount of BTN/TR for the respective years: (1) divided by (2) = (3)
	 
	(4)	 	BTN/TR Value on 02/29/04
	 
	(5)	 	Amount ascertained in (1) divided by the BTN/TR of the respective years
(2), and multiplied by the BTN/TR of 02/2004 (4): (3) multiplied for (4) =
(5)





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Annex I




COMPANHIA DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO – SABESP




GESP X SABESP AGREEMENT

Adjustment pursuant to the Latest BTN/TR of the Yearly Total Debts




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