Italy's Enel SpA on Friday, Nov. 7, began the sale of as much as 22% of Spanish utility Endesa SpA and said it had sold its stakes in two hydro electric units, setting up deals that could take in as much as €3.5 billion ($4.3 billion) to help pay down debt.
Enel is hoping to raise as much as €3.1 billion selling down its 92% stake in Endesa after setting a price of up to €15.535 per share for the sale of between 17% and 21.92% of the Madrid-headquartered utility. The maximum price represents a 6% premium to Endesa's Thursday closing price of €14.65. Enel did not provide a minimum price.
Separately, Rome-based Enel said that it had agreed to sell its 40% stake in SE Hydropower Sarl and 50% of SF Energy Sarl for €345 million and €55 million, respectively. The buyer is Società Elettrica Altoatesina SpA, an electricity company owned by the regional government of Bolzano in northern Italy.
SE Hydropower operates 18 hydroelectric plants with a total 618 megawatts of installed capacity. SF Energy operates a single hydro plant with 135 megawatts of installed capacity.
The hydro and share sales are part of Enel's plan, announced in March, to sell €4.4 billion of assets this year to cut net debt to about €37 billion by year-end. Most of that debt was raised in 2007 to fund the €42.5 billion acquisition of Endesa, a deal struck a year before Spain's economy collapsed along with its housing market.
Enel is hoping that Europe's ongoing economic woes, and subsequent low interest rates, will stoke demand for the Endesa sale. The stake in the Spanish utility has been pitched as a yield-play, with Enel promising to pay out a minimum 84.5% of the unit's earnings in dividends in 2015 and 80.6% in 2016.
State-controlled Enel flagged the Endesa stake sale in mid-September. as part of a deal with Endesa's minority shareholders to increase the company's liquidity in return for support for Enel's acquisition of Endesa's South American utility Enersis SA. Enel paid €8.25 billion for the 60.6% of Enersis owned by Endesa in October.
The retail part of the Endesa sale will run until Nov. 19. Bookbuilding for the institutional sale, which will account for 85% of the total, will begin on Nov. 13 and run to Nov. 20. The shares will be priced on Nov. 20 and are due to begin trading on Nov. 27.
Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, Credit Suisse Group, JPMorgan Chase & Co. are coordinating and underwriting the share offer. Goldman Sachs Group Inc., Morgan Stanley, UBS AG are also acting as underwriters.
Shares in Endesa traded Friday at €14.80, up €0.14, or about 1%, on their Thursday close. Shares in Enel traded at €3.88, down €0.06, or 1.4%.