International Power announced today that it had agreed with Union Electrica Fenosa (UEF), to sell back its 25 per cent equity ownership in Spanish electricity generating and retail company Union Fenosa Generacion (UFG) to UEF for Pts100.5 billion (�372 million). UEF already owns the other 75 per cent of UFG.

The sale will result in an estimated profit on disposal in excess of �30 million and International Power expect that the transaction will be earnings) neutral in the current year.

In a statement, International Power said that the agreement reinforced its “three pillar” growth strategy by freeing capital and increasing flexibility to pursue opportunities in Europe and elsewhere that better met its investment criteria for economic return and operating control.

The transaction will increase International Power’s net megawatts under development in Europe since UEF will withdraw from the Italian greenfield programme it has jointly launched with Ansaldo Energia.

The stake in UFG was acquired by National Power in 1999, prior to the demerger, which led to the creation of International Power. International Power’s strategy has been to capitalize on the interrelationship between r power plant operation where it has operational control, and trading. The company said that the sale of the minority stake in is a natural consequence of implementing this strategy.

The sale will reduce International Power’s installed generating capacity by 1350 MW (net) to 8850 MW (net), but will increase the proportion of operating assets over which we have full or joint control from 77 per cent to 90 per cent. This will increase to 92 per cent within twelve months time, when generating capacity currently under construction comes online.

“The sale is fully consistent with our strategy of focusing on assets where

we can create value via operational control,” said Peter Giller, International Power’s Chief Executive Officer. “It means we can retain full value from our development expertise in Southern Europe for International Power shareholders,” he added.

Following completion of the transaction, Jos�aria Amustegui will resign

as a director of International Power and International Power representatives on the boards of UEF and UFG will also resign.