Enel Plans EU8 Billion Share Sale to Cut Debt

By Adam L. Freeman

March 12 (Bloomberg) -- Enel SpA, whose 2007 purchase of Endesa SA made it Europe’s most indebted utility, will sell up to 8 billion euros ($10.2 billion) of new shares to reduce borrowings and protect its investment-grade credit rating.

Enel, Italy’s biggest utility, will sell the shares in a rights offering by the end of this year, the Rome-based company said today in a statement distributed by the Italian stock exchange.

The utility was saddled with 55.8 billion euros of debt after buying Endesa with Spanish builder Acciona SA in October 2007. While it cut borrowings to 50 billion euros by last year, an agreement last month to take full control of Endesa will increase debt by 11.7 billion euros.

Standard & Poor’s may cut Enel’s A- rating before the end of the year, it said in January, citing the company’s debt burden.

The company today said it will sell 10 billion euros in assets by the end of 2010 to reduce debt.

Enel has fallen 21 percent in Milan trading since Feb. 26, the day before newspaper Il Sole 24 Ore reported that the utility may sell as much as 7 billion euros of new shares.

Earnings Climb

The company will hold 92 percent of Madrid-based Endesa once it completes the acquisition of Acciona’s 25 percent interest for about 11 billion euros, the Italian company said Feb. 21.

Enel also reported profit rose 35 percent in 2008 after earnings from Endesa were incorporated into full-year results for the first time.

Net income climbed to 5.29 billion euros from 3.92 billion euros a year earlier. Analysts had expected profit of 5.3 billion euros, according to the median of seven estimates in a Bloomberg News survey.

To contact the reporter on this story: Adam L. Freeman in Rome at afreeman5@bloomberg.net