Italy’s Enel set out terms for Eurogen sale

Enel, the Italian utility has published the terms and conditions for the sale of its second and largest generating company, Eurogen, which has a generating capacity of 7008 MW, reports Dow Jones. It is expected that the sale could raise up to €4 bn.

Put together by Enel’s advisors, Merrill Lynch, Lehman Brothers and CSFB, and published in Italian newspapers on Wednesday, the terms are similar to the ones for the sale of the first genco, Elettrogen, which was bought by Spanish power company Endesa for €2.63 bn.

The expressions of interest for Eurogen, due by Sept. 7, must include, among other things: an industrial plan for Eurogen; details of the structure of the company or group interested in the genco, with a list of all shareholders who have more than 2 per cent in any group; and a list of all power plants held directly or indirectly by an interested company or group.

Enel said in the statement that it reserves the right to change any of the terms of the sale at its discretion.

An Enel spokesperson said the first part of the Eurogen sale will be via private negotiations with all parties who put forward an expression of interest.

The sale of Elettrogen was carried out via private negotiations at first but ended with an auction process.

“Enel reserves the right to accept, partially or in full, any form of payment different to cash for the purchase (of Eurogen),” Enel said in the statement.

An asset swap could therefore be another possible form of payment for Eurogen, analysts said.

Enel’s spokesperson said the consortia who bid for Elettrogen didn’t have to present all the documentation again for Eurogen and could directly pass to the second part of the race, which is the presentation of binding bids.

The deadline for binding bids is expected to be around mid-November. The sale of Eurogen is expected to be completed by the end of the year or early next year.

Yesterday, Enel refuted accusations that it was hampering the progress of liberalization within the power market by manipulating Italy’s electricity distribution system.

The accusations came from the country’s Electricity and Gas authority who say that Enel’s electricity distribution subsidiary Enel Distribuzione has been blocking the liberalization by hampering access by power producers other than Enel to the national electricity distribution network.

Enel Distribuzione owns 90 per cent of Italy’s electricity distribution system.

At times, the connection fees were hiked up to four times higher than normal, discouraging smaller producers from accessing the network, Italian daily Il Sole-24 Ore reported Tuesday.

Enel said in its statement that the authority’s regulations weren’t specific enough and that it hadn’t acted in a discriminatory way but had treated other electricity producers like any other network customer.

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