CIOXY Cielo SA (PK)

CIELO S.A.

Corporate
Taxpayer’s ID no. 01.425.787/0001-04

Corporate
Registry no. 35.300.147.073.

 

 

Notice to Shareholders

Management Proposal for the Capital
Budget

 

CIELO S.A. (“Company”) (BOVESPA:
CIEL3 / OTC: CIOXY) announces to its shareholders that, as provided in Article
196 of Law no. 6,404/76, as amended by Law no. 10,303/01 (Brazilian Corporation
Law), as well as the Company's Bylaws, the Board of Directors, in a General
Meeting held on February 6, 2013, approved “ad referendum” of the General
Meeting to be held on April 26, 2013, the following capital budget for the 2013
fiscal year:

 

Due to the Company’s continued growth
expectations and business projections for the current year, the Company
believes it necessary to retain 30% (thirty percent) of its Net Income for the
2012 fiscal year, totaling R$680,214,830.95 (six hundred eighty million, two
hundred fourteen thousand, eight hundred thirty reais and ninety-five
centavos), in addition to the profit reserve constituted in the previous fiscal
year in the amount of R$472,036,120.73 (four hundred sevety-two million,
thirty-six thousand, one hundred twenty reais and seventy-three centavos), for
a total reserve of R$1,152,250,951.68 (one billion, one hundred fifty-two
million, two hundred fifty thousand, nine hundred fifty-one reais and
sixty-eight centavos) to be allocated to reinforce working capital to provide
significant support for the receivables operation – ARV. Management believes
that strengthening working capital via this retention will provide increased
stability and speed in financing its operations, especially the prepayment of
sales receivables ("ARV”) operation.

 

Moreover, the Company believes that
should this proposal be approved by the General Meeting, a portion of the
retained profits should be used for a capital stock increase such as to make
the Company’s capital stock compatible with its operations and industry,
providing an increased return on investment and greater possibility for payment
of Interest on Equity.

 

The capital budget for the current
year is R$1,152,250,951.68 (one billion, one hundred fifty-two million, two
hundred fifty thousand, nine hundred fifty-one reais and sixty-eight centavos),
with the proposed capital stock increase in the amount of R$500,000,000.00
(five hundred million reais) which, should it be approved, would increase the
Company’s capital stock to R$1,000,000,000.00 (one billion reais).

 

The Company proposes that said
capital stock increase be carried out through the issue of 131,019,245 (one
hundred thirty-one million, nineteen thousand, two hundred forty-five) new
common shares with no par value distributed to shareholders free of charge as
bonus shares, as per Article 169 of Law no. 6.404/76, in the proportion of 1
(one) new common share for each 5 (five) common shares held as of April 20,
2013. 

 

Should said proposal be approved by
the Annual and Extraordinary General Meeting, the shares issued by the Company
will be traded “ex-rights” of the bonus on the BM&FBOVESPA as of April 29,
2013. As per the provisions in Article 25, paragraph 1 of Federal Revenue
Service (SRF) Normative Instruction no. 25/2001, the unit cost attributed to
the bonus shares is R$3.82 (three reais and eighty-two centavos). If approved,
the bonus shares will be attributed to shareholders by May 2, 2013 and will
entitle shareholders to preference in the subscription of shares and will enjoy
full dividends and/or interest on equity payments that declared after said
date.

 

The bonus will be attributed in whole
numbers, so that, according to the terms of Article 169, paragraph 3 of Law no.
6.404/76, any shares remaining from the fractions will be sold on the
BM&FBOVESPA – São Paulo Stock, Commodities and Futures Exchange
(“BM&FBOVESPA”). The net value earned in this operation will be made
available to shareholders who have any fractions, and all information related
to this producedure will be announced by the Company via a Notice to
Shareholders when available.

 

Should it be approved, the capital
budget will be effective un the Annual General Meeting that approves the
accounts for the fiscal year ended December 31, 2013. Moreover, the allocation
hereby proposed is reflected in the Financial Statements elaborated by the
Company's Management, which will be widely disclosed as per current
legislation.

 

Considering the reasons above, the
propose approval of the proposed capital budget above.

 

 

Barueri,
February 6, 2013

 

Board of Directors

CIELO
S.A.