Significant events in 2013

Significant events in 2013

8 January - LaGeo: Paris Court of Appeal upholds ruling of International Court of Arbitration

On January 8, 2013, the Court of Appeal of Paris upheld the ruling of the International Court of Arbitration (International Chamber of Commerce) concerning the international arbitration proceeding brought by Enel Green Power against Inversiones Energéticas (INE), its partner in LaGeo, a joint venture for the development of geothermal energy in El Salvador. The judges rejected the appeal lodged by INE asking for the ruling in favor of Enel Green Power to be voided, confirming that the ruling had been issued at the end of a fair trial. The decision of the Court of Appeal reaffirms Enel Green Power’s right to allocate investments in LaGeo to share capital through the subscription of newly issued shares in the joint venture.

11 February - Forward starting revolving credit facility

On February 11, 2013, Enel SpA signed a 5-year revolving credit facility amounting to about €9.4 billion, which will replace the €10 billion revolving credit facility (currently not drawn) scheduled to expire in April 2015.

The new forward starting revolving credit facility, which may be used by Enel and/or its Dutch subsidiary Enel Finance International (with a Parent Company guarantee), is intended to give the Group’s treasury operations a highly flexible instrument to manage working capital. Accordingly, the credit facility is not part of Enel’s debt refinancing program. A large group of national and international banks participated in the transaction, including Mediobanca in the role of Documentation Agent. The cost of the new credit facility will vary in relation to Enel’s credit rating. At the current rating level, it is equal to a spread of 170 basis points over Euribor, with commitment fees of 40% of the applicable spread.

26 March - Acquisition of PowerCrop

On March 26, 2013, Enel Green Power and SECI Energia signed the final agreement for the purchase of 50% of PowerCrop, the Maccaferri Group company dedicated to converting former Eridania sugar refineries to the production of energy from biomass.

With the acquisition, Enel Green Power has entered into a broad partnership with SECI Energia to develop the generation of energy from locally-sourced biomass with the construction of five high-efficiency plants (Russi, Macchiareddu, Castiglion Fiorentino, Fermo and Avezzano) with a total installed capacity of 150 MW. Once built, these plants will be capable of generating up to 1 billion kWh. These will provide employment for the former sugar refinery workers, restoring growth opportunities to some of the most important agricultural districts in Italy, which will have a significant economic impact on these areas.

27 March - Agreement with Eni on e-mobility

On March 27, 2013, Eni and Enel signed a letter of intent to collaborate on strategic, technological, logistical and commercial opportunities for e-mobility.

Through this agreement, Eni and Enel will develop a program for testing electric vehicle charging options, specifically the installation of charging stations using Enel technology at Eni service stations and locations.

The working group will have six months to find the best solutions for charging electric vehicles at service stations, with testing to begin in selected areas by the end of 2013.

The experiment will involve installing “fast charge” stations at certain Eni service stations. Fast charge stations are capable of recharging a vehicle using direct current and alternating current in 20-30 minutes. The agreement also provides for the study of possible applications of Enel technology used in smart grids to maximize the use of renewable energy for those Eni stations that have installed renewable energy generation systems (e.g. photovoltaic panels).

29 March - Enersis capital increase

On March 29, 2013, the capital increase of Enel’s Chilean subsidiary, Enersis, was successfully completed with the subscription of all of the 16,441,606,297 new shares issued, corresponding to a total of about $6 billion, of which around $2.4 billion in cash. As a result of the full subscription of the Enersis capital increase and the completion of the transaction, the subsidiary Endesa will continue to hold (directly and through the wholly-owned subsidiary Endesa Latinoamérica) around 60.6% of the share capital of Enersis. Following the operation, Enersis represents the Enel Group’s sole investment vehicle in Latin America for the generation, distribution and sale of electricity (with the exception of the assets currently held by Enel Green Power or any future assets the latter may develop in the renewable energy sector in that geographical area). Thanks to the successful capital increase, Enersis now has the resources necessary to pursue a major development plan, strengthening its presence in the markets in which it already operates.

8 April - Disposal of Buffalo Dunes Wind Project

On April 8, 2013, Enel Green Power North America (EGP-NA) signed an equity partnership agreement with EFS Buffalo Dunes, a subsidiary of GE Capital, to finance the development of the Buffalo Dunes wind farm, in Kansas (United States).

The project, which will involve a total investment of about $370 million, of which EGP-NA will contribute about $180 million, is scheduled to be completed by the end of 2013.

The plant will have a total installed capacity of 250 MW and the project is supported by a long-term power purchase agreement.

Under the provisions of the accord, EFS Buffalo Dunes subsequently acquired 51% of the project from EGP-NA, which retains the remaining 49% stake. EGP-NA, which will also be the project manager for Buffalo Dunes, has an option to increase its holding by 26%, which can be exercised on specific dates by 2014.

The exercise of that option would not necessarily involve the acquisition of control, which is also linked to possible changes in the absolute value of share capital and dilutive effects.

18 April - Agreement with UNCEM for the development of energy efficiency

On April 18, 2013, Enel Sole and the National Union of Mountain Communities (UNCEM) signed a protocol of understanding in Rome for the development of energy efficiency practices. The agreement provides for direct cooperation between Enel Sole and UNCEM to identify and implement activities connected with energy savings and efficiency in the participating mountain communities, including projects for the refurbishment and enhancement of public lighting with a view to reducing energy consumption and CO2 emissions, such as the installation of smart lighting systems using innovative technologies and energy audits. The cooperation initiative will also involve artistic lighting and design projects to enhance the historical and artistic heritage of mountain communities using sustainable systems.

2 May - Protocol of understanding with the Region of Tuscany for the development of geothermal energy

On May 2, 2013, the Region of Tuscany and Enel signed a new protocol of understanding to further develop geothermal energy in Tuscany, with a view to addressing issues concerning the green economy and reducing energy costs. The agreement, which follows up on the framework agreement on geothermal energy of December 20, 2007, and the implementing agreement of April 20, 2009, is a major step forward in fostering the social and economic growth of the areas with geothermal resources, including both the traditional area of Larderello and the Amiata area, where the new Bagnore 4 plant will complete the plans for the addition of 112 MW of new capacity provided for in the 2007 agreement.

The protocol devotes particular attention to the use of geothermal heat, to support the creation of value in the heating sector, with opportunities for the establishment of new business zones in geothermal areas. The agreement also provides for the creation of a geothermal energy hub that, drawing on the experience of local authorities in geothermal areas and existing resources such as the Geothermal Area Development Consortium (COSVIG), the Enel Research Center, universities, the Tuscan Regional Economic Planning Institute (IRPET) and the regional renewable energy technology district, can transfer know how and pursue research projects and advanced specialized initiatives aimed at creating competence centers in both the geothermal areas and the Enel experimental area in Livorno.

9 May - Framework agreement regulating the provisions of Article 4, paragraphs 1-7-ter, of Law 92/2012 in the Enel Group

On May 9, 2013, Enel SpA and the representatives of the FILCTEM, FLAEI and UILTEC trade unions signed an agreement governing the implementation of the provisions of Article 4, paragraphs 1-7-ter, of Law 92/2012 (the “Fornero Act”) within the Enel Group. The agreement, taking account of the role that the Company plays in the Italian economy and the cost reduction targets set out in the business plan, provides for the activation of the measures envisaged in Article 4 in order to reduce personnel to an appropriate level without undue disruption.

In application of the agreement, the Group has begun to seek expressions of interest among its personnel whose seniority and contribution history potentially qualify them for the mechanism envisaged under Article 4, with the survey completed by August 31, 2013. At the completion of that phase, each Group company conducted an assessment of the appropriateness of the expressions of interest in terms of their number and geographical and organizational distribution.

Following these assessments, on September 6, 2013, the main Italian companies of the Group signed an agreement with the unions FILCTEM, FLAEI and UILTEC implementing the framework agreement of May 9, 2013, in which Enel and the unions set out the procedures for implementing the measures provided for in Article 4, paragraphs 1-7-ter, of the Fornero Act. The company-level implementing agreements specify, for each company, the number of employees potentially eligible for early retirement, which for the Group as a whole came to 5,328. Meanwhile the Group is completing the formal checks, with the competent social security entities, to ascertain eligibility for the benefit scheme. At December 31, 2013, the plan saw the exit from employment of 1,911 employees.

9 May - Launch of Enel Lab project

On May 9, 2013, six young Italian companies and one Spanish company were selected to join the first clean technology business incubator established by Enel. The seven companies selected proposed projects involving renewable energy, smart grids, energy storage, automation, digitalization and communication system and energy efficiency. The winning start-ups were chosen from a list of 13 Italian and Spanish finalists after a selection process that started in July 2012, with the participation of 215 companies.

The winning companies, in addition to receiving financial assistance of up to €650,000 to help develop their projects, will be able to grow within the Enel Group, which will support them with the engineering, technological, legal and market skills that only a leading industry multinational can offer. After an initial stage of development, the most promising companies can bring their projects to full maturity and possibly become part of the Enel world.

22 May - Acquisition of a controlling interest in Chisholm View and Prairie Rose

On May 22, 2013, Enel Green Power North America (EGPNA) signed an agreement to purchase an additional 26% of the Class A shares of the Chisholm View Wind Project, a company that operates the 235 MW Chisholm View wind farm, from the GE Capital Group for about $47 million. EGPNA also signed an agreement to purchase an additional 26% of the Class A shares of the Prairie Rose Wind Project, a company that operates the 200 MW Prairie Rose wind farm, from the same group for $34 million.

The option to acquire the additional interests was envisaged in the original agreements between EGP-NA and the GE Capital subsidiaries. After closing, which came following approval by the Federal Energy Regulatory Commission, EGP-NA owns 75% of the Class A interest in both of the companies that operate the wind farms, while GE Capital retains a 25% stake.

3 June - Accord for the implementation of smart grids in Saudi Arabia

On June 3, 2013, Advanced Electronics Company (AEC), ICT Europe and Enel signed a memorandum of understanding for smart grid implementation in the Kingdom of Saudi Arabia and the Gulf Cooperation Countries, namely Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman. With decades of experience in Advanced Meter Infrastructures (AMI) and excellent working relationships with local utility companies, AEC has joined forces with ICT Europe and Enel (which has field-proven technology and international expertise in smart metering and smart grids) to support this evolving technology with local capabilities. The memorandum has been signed with a prime focus on delivering world class performance in smart grids and power distribution capabilities.

19 June - Agreement for the development of marine power generation

On June 19, 2013, Enel Green Power and 40South Energy, a group of highly innovative companies operating in the field of marine energy at the international level, began the installation and commissioning of an initial R115 generator, with a nominal capacity of 150 kW and installed capacity of about 100 kW, generating electricity from the energy produced by the waves of the sea around Punta Righini (Livorno). The new generator – designed and built by 40South Energy – ensures full integration into the marine environment and ease of maintenance, and according to initial estimates will enable the generation of about 220 MWh per year.

After testing and assessment by the partners of the performance of the system in the marine environment, Enel Green Power plans to strengthen collaboration with 40South Energy on the international stage. In fact, in addition to the sale of the first R115 generator to the Enel renewables company and technological cooperation on testing, the agreement envisages the possibility of installing more generators in different marine environments.

21 June - Letter of intent for disposal of Marcinelle Energie

On June 21, 2013, Enel and Gazprom signed a non-binding letter of intent for the sale to the Russian company of 100% of Marcinelle Energie, which owns a 420 MW combined-cycle gas turbine power plant in Belgium, for €227 million, with the price to be adjusted for net financial debt at closing. The letter of intent paves the way for a binding final agreement, whose final terms and conditions were to be agreed by the end of September 2013. The agreement was subsequently extended for a further six months in order to settle a number of details in the negotiations. As with similar transactions, the execution of the transaction is subject to the approval of the competent corporate bodies of the parties involved, as well as to the authorization of the competition and other authorities provided for by law.

27 June - Joint agreement for the security of the electrical infrastructure of the Ministry of Defense

On June 27, 2013, Enel, the Ministry of Defense and Cassa Depositi e Prestiti reached an agreement for the establishment of a working group tasked with conducting an analysis over the next 12 months of the security of the electrical infrastructure of a number of sites selected by the Ministry.

The aim of the agreement is to begin a collaborative effort at the strategic and operational level among the parties to conduct research and analysis to minimize risks, reduce vulnerabilities and enhance the reliability of the electrical infrastructure present at the selected sites. Subsequently, the parties will assess the possibility of extending the initiative to other sites of strategic interest.

The Ministry of Defense and Cassa Depositi e Prestiti will be responsible for the financial aspects of the accord, for the subsequent definition of the mechanisms for financing the projects developed, including through the involvement of the subsidiaries of Cassa Depositi e Prestiti.

1 July - Sale of Enel.si by Enel Green Power to Enel Energia

Following an agreement signed on June 17, 2013, between Enel Green Power and Enel Energia, on July 1, 2013 the sale to the latter of the entire share capital of Enel.si took effect. Enel.si operates in Italy, offering products and integrated solutions in the retail market for the installation of distributed renewable generation systems and for energy savings and efficiency for end users, working through a network of franchises, composed of more than 700 specialized installers.

The price paid by Enel Energia for the entire share capital of Enel.si amounted to about €81 million and was set, subject to a price adjustment mechanism, on the basis of the enterprise value as of December 31, 2012 and the net financial position of the company at the same date.

The sale of the business forms part of the medium/longterm strategy of the Renewable Energy Division, which is increasingly focused on expanding its business of developing, building and operating renewable generation plants. For the Sales Italy sector, which has a leading position in the sale of electricity and gas to households and businesses in the free and regulated markets in Italy, the acquisition is part of its strategy of broadening its commercial product range to the energy efficiency sector, covering the entire spectrum of retail and business customers’ energy use needs.

9 July - Capital contribution agreement between Enel Green Power and EFS Buffalo Dunes with a syndicate headed by JP Morgan

On July 9, 2013, Enel Green Power North America Development (EGPD), a US subsidiary of Enel Green Power, and EFS Buffalo Dunes, a GE Capital subsidiary, signed a capital contribution agreement with a syndicate led by JP Morgan. Under the agreement, the syndicate will provide about $260 million in financing for the Buffalo Dunes wind project in Kansas, which will have an installed capacity of 250 MW. The syndicate also includes Wells Fargo Wind Holdings, Metropolitan Life Insurance Company and State Street Bank and Trust Company.

When the syndicate disbursed the financing – subject to compliance with the specific requirements in the capital contribution agreement – the parties entered into a tax equity agreement for the Buffalo Dunes wind plant. The project is supported by a long-term power purchase agreement.

EFS Buffalo Dunes holds 51% of the wind project and EGPD holds the remaining 49%, as well as an option to acquire an additional 26% on specified dates by the end of 2014.

11 July - Standard & Poor’s revises long-term rating to “BBB” and confirms short-term rating at “A-2”

On July 11, 2013, Standard & Poor’s announced that it had revised its long-term rating for Enel to “BBB” (from “BBB+”). The agency also maintained its short-term rating of “A-2” for the Company. The outlook is stable.

The downgrade follows the similar action recently taken by Standard & Poor’s for Italy’s sovereign debt rating, which reflected, among the other factors, the deterioration in macroeconomic conditions in the country.

The stable outlook reflects the agency’s expectations that Enel will achieve and maintain performance and financial targets commensurate with its current rating, as a result of its continued deleveraging efforts, the large contribution of regulated activities and its good geographical and technological diversification outside Europe.

The downgrade did not have a significant impact on either the cost of outstanding debt or of new borrowing, partly due to the low volatility of spreads in the secondary market for bonds issued by Enel, whose prices already reflect the rating issued by Moody’s (“Baa2”), which is now in line with that of Standard & Poor’s (“BBB”).

With regard to loans granted by the EIB, only some of them (in the total amount of about €2 billion) contain covenants requiring the beneficiary companies of the Group to renegotiate the agreements or, alternatively, provide specific bank guarantees. The parties opted for the former solution, which did not have a major impact on the cost of borrowing or result in the early repayment of the debt.

With regard to other major loan agreements, none have early redemption clauses directly linked to the level of the rating.

9 August - Conversion of Finale Emilia sugar beet refinery

On August 9, 2013, Enel Green Power and COPROB, the leading sugar beet producer in the country, assisted by the financial advisor Valore e Capitale Srl, an investment banking firm specializing in the renewable energy sector, signed an agreement for the construction at Finale Emilia (Modena) of a 12.5 MW power plant that will be fuelled by agricultural biomass. The project will be implemented through Enel Green Power’s acquisition of 70% of Domus Energia (now Enel Green Power Finale Emilia), formerly a COPROB Group company.

The accord represents a further step in Enel Green Power’s strategy for expansion in Italy’s biomass sector, as well as enabling the COPROB Group to complete the complex process of reorganizing and converting sugar refineries closed in 2006, following the EU’s reform of the sugar market. Enel Green Power’s expertise in the renewable energy sector, coupled with COPROB’s proven ability to supply the agricultural raw material, provide further assurances of the plant’s efficiency and productivity, all to the benefit of the development of the Modena area and in full compliance with the national targets for renewable resources.

29 August - Enel Green Power awarded contracts for the supply of renewable energy in Brazil

On August 29, 2013, following the 2013 Brazilian Reserve Auction, Enel Green Power was awarded the right to enter into three 20-year electricity supply contracts with the Brazilian Camara de Comercialização da Energia Elétrica (CCEE) to deliver power produced by three wind projects with a total capacity of 88 MW. The plants are located in the state of Bahia, where the company already has more than 146 MW of capacity under construction. These new contracts represent an extension of the projects the company was already awarded in 2010 and 2012 public auctions in the same region. Once completed, the three new wind projects, requiring a total investment of about $163 million, will be able to generate more than 400 GWh per year.

On September 4, 2013, Enel Green Power was awarded energy supply contracts with three hydro projects with a total capacity of 102 MW in Brazil’s first “New Energy Auction” in 2013 for “A-5” power. The three plants, denominated Salto Apiacás, Cabeza de Boi and Fazenda, are located close together in the state of Mato Grosso in mid-western Brazil. Once operational, the hydro projects, whose completion will require a total investment of about $248 million, will be able to generate around 490 GWh per year. Enel Green Power was awarded 30-year energy supply contracts providing for the sale of a specified amount of power generated by the three hydro plants to a pool of distribution companies operating in the Brazilian regulated market. Enel Green Power will adopt a highly innovative and sustainable approach to the construction of the new plants, supplying the worksites with renewable energy from the very start of the works. The company will build a thin-film photovoltaic system of about 1.2 MW, which will supply part of the power required for the construction works. Once the three plants are completed, the photovoltaic plant continue to operate, adding its own renewable power to the green energy produced by the new hydro plants.

3 September - Issues of hybrid financial instruments

On September 3, 2013, Enel SpA launched a multi-tranche international issue of non-convertible bonds for institutional investors in the form of subordinated hybrid instruments with an average maturity of about 60 years, denominated in euros and pounds sterling (GPB) in the total amount of about €1.7 billion.

The issue is structured in the following two tranches:

  • €1,250 million maturing on January 10, 2074, issued at a price of 98.956 with an annual fixed coupon of 6.50% until the first early redemption date scheduled for January 10, 2019. As from that date and until maturity, the rate will be equal to the 5-year euro swap rate plus a spread of 524.2 basis points and interest rate step-up of 25 basis points from January 10, 2024 and a further 75 basis points from January 10, 2039;
  • £400 million maturing on September 10, 2075, issued at a price of 98.698 with an annual fixed coupon of 7.75% (hedged with a euro swap at a rate of around 7%) until the first early redemption date scheduled for September 10, 2020. As from that date and until maturity, the rate will be equal to the 5-year GBP swap rate plus a spread of 566.2 basis points and interest rate step-up of 25 basis points from September 10, 2025 and an additional 75 basis points from September 10, 2040.

The offering is being led by a syndicate of banks comprising, for the euro tranche, Banca Imi, Banco Bilbao Vizcaya Argentaria SA, BNP Paribas, Crédit Agricole-CIB Deutsche Bank, ING, JP Morgan, Mediobanca, Natixis, Société Générale Corporate & Investment Banking, UniCredit Bank; and, for the sterling tranche, Barclays, BNP Paribas, Deutsche Bank, HSBC, JP Morgan, The Royal Bank of Scotland, Santander Global Banking & Markets, and UBS Investment Bank.

On September 17, 2013, the Company launched a multitranche international issue in the United States of non-convertible bonds for institutional investors in the form of subordinated hybrid instruments with an average maturity of about 60 years, denominated in US dollars (USD) in the amount of $1,250 million, equal to about €936 million on the issue date. The transaction involves the issue of a $1,250 million bond maturing on September 24, 2073, at a price of 99.183 with a semi-annual fixed coupon of 8.75% (hedged with a euro swap at a rate of around 7.50%) until the first early redemption date scheduled for September 24, 2023. As from that date and until maturity, the rate will be equal to the 5-year USD swap rate plus a spread of 588.0 basis points and interest rate step-up of 25 basis points from September 24, 2028 and an additional 75 basis points from September 24, 2043.

The offering is being led by a syndicate of banks comprising Barclays Capital Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co, JP Morgan Securities LLC, Merrill Lynch Pierce Fenner & Smith Inc., Mitsubishi UFJ Securities (USA) Inc., Mizuho Securities USA Inc., and Morgan Stanley & Co. LLC.

Both issues were carried out in execution of the resolution of the Board of Directors of Enel of May 7, 2013. They form part of the measures to strengthen the financial structure of the Enel Group set out in the business plan presented to the financial community on March 13, 2013.

The bonds, which have been listed on the Irish Stock Exchange, have been assigned provisional ratings of “BB+” by Standard & Poor’s, “Ba1” by Moody’s and “BBB-” by Fitch.

19 September - Agreement for the supply of gas from Azerbaijan

On September 19, 2013, Enel Trade signed a 25-year agreement with the Shah Deniz Consortium to purchase part of the gas that will be produced by Stage 2 of the Shah Deniz field in Azerbaijan. The gas will be transported to Italy through the Trans-Adriatic Pipeline (TAP). Gas supplies from Azerbaijan will be used by Enel to supply its Italian market. The agreement will enter force following the final investment decision on the Shah Deniz - Stage 2 project, which is scheduled to take place by the end of 2013. The delivery of gas is due to start no earlier than 2019. Stage 2 development of the Shah Deniz field, which lies some 70 km offshore in the Azerbaijan sector of the Caspian Sea, will enable the production of 16 billion cubic meters of gas, adding to the 9 billion cubic meters already produced by the field’s Stage 1. Thanks to Stage 2 of Shah Deniz, Azeri gas will be delivered to Europe for the first time ever. The new gas will be transported through more than 3,500 km of pipelines running across Azerbaijan, Georgia, Turkey, Greece, Bulgaria, Albania and under the Adriatic Sea to Italy.

14 October - Memorandum of understanding with Huaneng for cooperation in power generation

On October 14, 2013, Enel signed a memorandum of understanding with the China Huaneng Group (CHNG), which operates in the energy sector, aimed at strengthening cooperation on clean coal technologies, flue gas purification, enhancing the efficiency and performance of coal plants, renewable energy and distributed generation. The memorandum is a product of the cooperation program between Enel, the Chinese Ministry of Science and Technology and the Italian Ministry for the Environment launched in 2008 to boost the use of environmentally sustainable technologies in power generation. More specifically, the memorandum is the follow-up to the signing in 2012 of another agreement between Enel and CHNG’s Clean Energy Research Institute that launched cooperation between the two groups on research in clean coal, renewables and distributed generation.

Under the new agreement, Enel’s contribution will mainly apply to the areas of flue gas purification, carbon capture and storage, pilot project analysis of distributed power generation in urban areas with innovative environmentally sustainable technologies, renewable energy generation and the implementation of a regulatory framework to foster pilot cap and trade programs in China.

31 October - Award of right to contract renewable energy in South Africa

On October 31, 2013, Enel Green Power (EGP) was awarded the right to enter into energy supply contracts with the South African utility Eskom in the amount of 314 MW of solar projects and 199 MW of wind projects (for a total of 513 MW) in the third round of the renewable energy tender sponsored by the South African government.

In accordance with the rules of the tender, EGP participated with vehicle companies, retaining a controlling 60% stake, in partnership with major local players. The four photovoltaic projects (Aurora, Tom Burke, Paleisheweul and Pulida) will be in the Northern Cape, Western Cape, Free State and Limpopo regions, in areas boasting the highest concentration of solar radiation in the country. The two wind projects (Gibson Bay and Cookhouse) will be located in the Eastern Cape region in areas with abundant wind resources.

Once completed, in 2016 the six projects, which will require a total investment of about €630 million, will generate more than 1,300 GWh per year, making an environmentally sustainable contribution to meeting the country’s rising energy demand.

13 November - Agreement for the sale of SeverEnergia to Rosneft

On September 24, 2013 Enel Investment Holding reached an agreement with Itera, a wholly-owned subsidiary of the Russian oil and gas company Rosneft, for the sale of its 40% stake in Artic Russia BV, which in turn owns 49% of the share capital of SeverEnergia, giving Enel a weighted stake of 19.6% in the latter. The price for the interest amounted to $1.8 billion, which was paid in cash upon closing. The transaction was completed following receipt of antitrust clearance and compliance with other normal conditions, including waivers received from the other parties involved in the transaction on November 13, 2013.

26 November - Cooperation agreement with Rosneft for joint development of projects in upstream segment of the hydrocarbon industry

On November 26, 2013 Enel and Rosneft signed a memorandum of understanding to team up in the international upstream hydrocarbon sector.

Under the agreement Enel and Rosneft will partner to identify commercial opportunities and to jointly develop projects in the exploration, production and transportation of hydrocarbons outside of Russia. More specifically, the two companies will jointly pursue international expansion opportunities and will organize a series of meetings, seminars and workshops for exchanging information on exploration and production activities and on their respective strategies in the upstream sector.

The joint Enel/Rosneft working group will also analyze opportunities for partnering in Latin America, southern Europe, the Mediterranean basin and North Africa.

29 November - Enel Green Power awarded long-term contracts to supply energy to Chile’s regulated market

On November 29, 2013, Enel Green Power awarded the right to enter into long-term energy supply contracts with a pool of distribution companies operating in Chile’s regulated electricity market, providing up to 4,159 GWh for the entire duration of the contracts. The energy supply, at a price of $128/MWh, will start in December 2013 and terminate in 2024. The power supply will initially be generated by an existing plant and, later, by three new plants (two photovoltaic plants and one wind farm), that will have a total installed capacity of 161 MW and will be located in Chile’s Central Interconnected System.

The new plants will be built and enter service by the end of the first half of 2015.

6 December - Disposal of 14.8% of Enel Rete Gas to F2i and Ardian

On December 6, 2013, Enel SpA and Enel Distribuzione signed with F2i SGR SpA (F2i), Ardian and F2i Reti Italia Srl an agreement for the sale of the remaining stake (equal to 14.8%) held by Enel Distribuzione in Enel Rete Gas.

The price agreed amounted to €122.4 million, giving the overall company a valuation in line with its regulatory asset base. The disposal is subject to the pre-emption rights of all the other shareholders of Enel Rete Gas, including F2i Reti Italia Srl (a company controlled by F2i and Ardian that owns 85.1% of Enel Rete Gas SpA), which has undertaken to exercise them in favor of a newly formed company also controlled by F2i and Ardian.

The agreement also established that at the time of the transfer of the holding, F2i Reti Italia would repay Enel (in advance of the contractual due date in 2017) of the vendor loan received from the latter in 2009 at the time of the disposal of 80% of Enel Rete Gas.

On December 20, 2013, the transaction was closed. Pending the expiration of the pre-emption rights of all the other shareholders of Enel Rete Gas (representing a total of about 0.05% of the share capital) and having verified that the conditions precedent to the sale have been met, on that date Enel Distribuzione also completed the transfer to F2i Reti Italia 2 of the proportional interest due to F2i Reti Italia for a price of around €122.3 million. Once the rights of pre-emption expire, Enel Distribuzione will sell the remaining shares of Enel Rete Gas to the other shareholders who have exercised these rights or, if the rights go unexercised, sell them to F2i Reti Italia 2, therefore raising the total expected amount of €122.4 million.

Also on December 20, 2013, F2i Reti Italia repaid Enel a vendor loan amounting to about €177 million (including initial principal and interest accrued but not yet paid).