Enel SpA hopes to sell around 70% of its gas distribution network for some €800-900 million($1.14-1.28 billion) in cash, a source close to the operation said on Tuesday, as it strives to reduce its debt pile.
The deal would also include the buyer taking on some €400-500 million in debt from the Italian power company, the source added. Enel’s debt burden rocketed after its acquisition last year, together with Spain’s Acciona, of Spanish energy group Endesa, reaching €51.4 billion ($72.91 billion) at the end of September. The group is committed to reducing it to below €50 billion by the end of this year.
Analysts have expressed concern that delays in asset disposals and the possible exercise next year by Acciona of the put option on its 25% stake in Endesa could complicate Enel’s balance sheet, pressuring credit ratings and dividend. “Enel has said the RAB (regulated asset base) of the whole grid is around €1.6 billion and so the asking price looks a bit high to me,” one analyst said.
He said some Italian regional energy players had told him interest in the grid was limited because the regulatory framework for the network was not attractive. “I don’t expect them therefore to get a premium to the RAB,” he said. Enel has received 12 expressions of interest for the network, the source said, seven from financial players and five from companies.
The chief executive of Italy’s gas transmission grid operator Snam Rete Gas told Reuters in December his group is not interested in the grid since Enel intended to retain management control and only wanted a financial partner. Italian investment fund F2i expressed its interest in the network in November.
In 2007 Enel’s gas grid distributed some 3.5 billion cubic meters of gas to around 2 million customers across Italy. It has a 12% share of the domestic gas distribution market. The shares were up 0.34% at €4.425 at 1250 GMT. The DJ Stoxx utilities index was 1.56% firmer.
Enel is being advised on the sale by Banca IMI and Morgan Stanley. The data room will be open towards the end of January or beginning of February and Enel expects to close the deal by the end of March. (Reuters)