By Hillary Durgin
Nov. 2, 2000à‚–Enel, the Italian power group, said yesterday that Erga, its renewable energy unit, had agreed to acquire CHI Energy for $170 million in cash, marking the Italian utility’s first U.S. investment.
The company said purchase of Connecticut-based CHI, a leading owner, operator and developer of renewable power projects in the U.S. and Canada, complemented the company’s strategy for worldwide growth in its core electric business and created additional expansion opportunities throughout the U.S. and Latin America.
Big investors in CHI include Morgan Stanley and UBS in London. Under the terms of the deal, about $142 million in CHI debt will remain outstanding.
“With this acquisition we will gain the global positioning of both Erga and CHI Energy,” said Paulo Pietrogrande, chief executive officer of Erga.
In 1999, Enel established Erga as a wholly-owned subsidiary to grow its holdings in the renewable energy segment of its business. Erga, which owns 30 geothermal plants, 273 hydroelectric plants and four wind farms with total generating capacity of about 1,700 MW, is one of the world’s largest companies dedicated exclusively to renewable energy.
The unit has committed $800 million to expand its capacity in Italy. With this acquisition, Erga will have a total of 389 power plants and combined generating capacity of about 2,000 MW.
Pietrogrande said that as a result of growing interest in renewable energy sources, 22 states in the U.S. now offer their customers the opportunity to purchase energy from renewable sources. Twelve states have set specific standards regarding the quantity of power sales that must come from so-called renewables.
Lazard acted as financial adviser to Enel in the transaction. Morgan Stanley Dean Witter advised CHI Energy.
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