Endesa sells gas distribution assets to Goldman funds

Madrid: Endesa SA, a Spanish utility controlled by Enel SpA of Italy, agreed to sell 80 per cent of its natural gas distribution assets to two infrastructure funds managed by Goldman Sachs Group Inc. as it cuts debt.

The sale will have a "positive impact" of about 450 million euros (Dh2.23 billion) on Endesa's pre-tax profit and 800 million euros on Endesa's net debt, the Madrid-based company said yesterday in a regulatory filing. The transaction values the transportation and distribution assets at about 1 billion euros, Endesa said.

Enel, Italy's biggest utility, owns 92 per cent of Endesa after gaining control of the Spanish power company in 2007. As part of that deal, Endesa transferred some renewable-energy units to builder Acciona and sold assets to Germany's E.ON AG. The company is selling more units to increase savings and lower debt after the takeover.

Endesa expects to close the sale of the gas distribution assets this year, according to yesterday's statement. It has an option to buy back the stake that can be exercised between five and seven years after the transaction announced on Monday.

The assets include a 3,800 kilometres gas distribution network, 600 kilometres of transportation and 355,000 supply points, Endesa said.

Gas Natural SDG SA also announced the sale of a 35 per cent stake in unit Gas Aragon for at least 70 million euros, it said in a separate filing on Monday.

Barcelona-based Gas Natural is Spain's biggest gas distributor.

Rome-based Enel will meet a target to cut debt by 6 billion euros to 45 billion euros after completing an initial public offering of renewable-energy unit Enel Green Power, and selling the Spanish gas distribution assets and a stake in a Bulgarian coal-fired plant, Enel Chief Executive Officer Fulvio Conti said in a September 21 interview.

Endesa shares have dropped 16 per cent in Madrid this year, cutting the company's market value to 21 billion euros. Enel has declined 2.6 per cent in Milan trading this year, giving the utility a market value of 37 billion euros.

Red Electrica Corp. SA, the manager of Spain's power grid, on July 1 said it agreed to pay Endesa 1.27 billion euros for electricity transportation assets in regions including the Balearic and Canary Islands. Earlier this year, Endesa sold its stake in the Sagunto regasification plant to Osaka Gas Co.

Endesa had power generation capacity of 39,108 megawatts at the end of June, including 34 per cent in hydropower plants.