Endesa Plans LatAm Streamline

Spain’s Endesa plans to consolidate its LatAm holdings into its Enersis subsidiary, in a transaction structured as an $8.02bn equity capital increase, it says. In an attempt to simplify the structure of the Spanish energy company’s generation, transmission and distribution holdings in the region, Endesa plans to contribute to Enersis the stakes it holds in 13 South American businesses, including subsidiaries of Enersis as well as Endesa subsidiaries not held through Enersis. Other shareholders of Enersis would be invited to subscribe for a matching proportional increase, payable in either cash or by contributing their stakes. The value of Endesa’s position in Enersis was valued at $4.86bn, or 60%, by an independent audit. In addition to simplifying Enersis’ structure, Endesa is looking to reduce in the gap between its Ebitda and net income, as well as reduce dividend leakage within the Enersis group. The operation could also increase the liquidity of Enersis shares, and give it more cash to continue making acquisitions and developing projects in the region. Enersis plans to hold a shareholder meeting on September 13 to approve the plan, which could become the largest capital increase in the country’s history. Enersis’ shares dropped more than 13% Thursday on the news of the plan, with analysts questioning the company’s valuation of the assets and showing concern it might overpay.