By Elisa Martinuzzi and Adam L. Freeman
Feb. 27 (Bloomberg) -- Enel SpA said a capital increase is among “possible options” after Il Sole 24 Ore reported today that Italy’s biggest utility may sell as much as 7 billion euros ($8.9 billion) of shares.
The company’s board has yet to discuss the plan, which could help sustain Enel’s international growth, according to a stock exchange statement.
Enel plunged to the lowest since the shares were first sold in November 1999 in Milan. The Rome-based company is seeking to reduce debt after buying Acciona SA’s 25 percent stake in Endesa SA last week for 11.1 billion euros to take full control of Spain’s biggest hydropower generator.
“At this moment going to the markets to ask for money isn’t easy,” said Salvatore Provinzano, an analyst at IlNuovoMercato in Rome. “It scares investors and almost seems like the company has an immediate need of cash.”
Enel fell as much as 40 cents, or 9.3 percent, to 3.86 euros. The shares traded at 3.91 euros as of 1:04 p.m. local time, giving the company a market value of 24.2 billion euros.
The company’s board will meet as scheduled on March 11 to approve full-year results and business strategy, a spokeswoman said.
The fundraising plan, along with the sale of Enel Rete Gas, will be announced by March 12, the financial daily reported earlier today, without saying how it obtained the information. Mediobanca SpA may advise on the share sale and put together a group of banks to underwrite the offering, Il Sole said.
Favorite
Italian infrastructure fund F2i is the favorite to acquire the grid for about 1.2 billion euros, while Valiance Capital together with Goldman Sachs Group Inc. and Deutsche Bank AG are still in the running, according to the report.
Enel became Europe’s most indebted utility following the original joint purchase of Endesa with Acciona in 2007. Enel said it will finance the new transaction with 8 billion euros in loans from 12 banks. Of the total, 5.5 billion euros falls due in 2014 and the rest matures in 2016. Enel will receive 4.2 billion euros from a special Endesa dividend that will be used to pay down debt.
Enel was saddled with 55.8 billion euros of debt after the original takeover, and cut that to 51 billion euros by Sept. 30 through asset sales. The latest deal will increase Enel’s debt by 11.7 billion euros. The 2009 cost of servicing debt will be close to last year’s level, Chief Executive Officer Fulvio Conti has said. Enel has 13.8 billion euros in debt maturing next year, according to UBS AG.
To contact the reporters on this story: Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net; Armorel Kenna in Milan at akenna@bloomberg.net
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