Regulators Say Not so Fast to Enersis Increase

Chilean regulators have found a conflict of interest in Enersis’ planned equity capital raise of up to $8.2bn and have imposed conditions on the operation, according to a regulatory filing. In the transaction announced last week aimed at stremlining holdings int LatAm, shareholders can subscribe with assets rather than cash. Enersis’ parent Endesa was expected to participate with up to $4.86bn in assets, a valuation arrived at by an outside source. Shareholders and analysts have opposed the planned capital increase, saying the Endesa assets are overvalued. The proposed transaction is a deal between two related parties, regulators found, and should be approved by an absolute majority of board members excluding those directors who represent Endesa. Regulators have ordered the electricity company to seek a new valuation of the Endesa assets, and have given the company five working days to inform how it plans to proceed. Enersis had hoped to have a shareholder vote on the process September 13. Enersis may go ahead with the capital increase if it complies with the conditions, and also may appeal against them. Even with Endesa’s 60% stake, Enersis could struggle to get enough minority shareholder votes to reach the two-thirds approval it needs. Enersis plans to use proceeds from the capital increase to fund merger and acquisition opportunities, advance greenfield projects and buy minority interests.