Integration with Enel Green Power and reorganization of the Renewable Energy business line
On January 11, 2016, the Extraordinary Shareholders’ Meeting of Enel SpA (“Enel”) approved the partial non-proportional demerger of Enel Green Power SpA (“EGP”) into Enel (the “Demerger”) shortly after the operation had been approved by the Extraordinary Shareholders’ Meeting of EGP.
More specifically, the Extraordinary Shareholders’ Meeting of Enel approved, without amendment or addition, the demerger project, which envisages:
- the assignment by EGP to Enel of the demerged assets, essentially represented by: (i) the 100% stake held by EGP in Enel Green Power International, a Dutch holding company that holds investments in companies operating in the renewable energy sector in North, Central and South America, Europe, South Africa and India; and (ii) the assets, liabilities, contracts and other legal relationships associated with those investments; and
- the retention by EGP of all remaining assets and liabilities other than those that are part of the demerged assets (and thus, essentially, all Italian operations and a small number of remaining foreign investments).
Since the transaction involved a non-proportional demerger, it envisaged that:
- shareholders of EGP other than Enel may exchange all the shares they hold in EGP with Enel shares; and
- Enel will exchange the shares corresponding to its stake in the demerged assets with Enel shares, which will be immediately cancelled in accordance with Article 2504ter, paragraph 2, and Article 2506-ter, paragraph 5, of the Italian Civil Code.
The demerger instrument was executed on March 25, 2016, taking effect at the final moment of March 31, 2016.
The shareholders of EGP that did not approve the Demerger were entitled to exercise the right of withdrawal pursuant to Article 2437, paragraph 1, letter a) of the Italian Civil Code (the “Right of Withdrawal”), or the right to have their EGP shares purchased by Enel pursuant to Article 2506-bis, paragraph 4, of the Italian Civil Code (the “Right of Sale”). The Right of Withdrawal and the Right of Sale can be exercised at the unit settlement value for EGP shares, determined in accordance with Article 2437-ter, paragraph 3, of the Italian Civil Code, which is equal to €1.780 per EGP share. At the end of the offer period, those rights had been validly exercised for 16,428,393 ordinary shares of EGP (equal to about 0.33% of EGP share capital) for an aggregate amount of about €29.2 million (of which 14,951,772 shares were acquired by Enel for €26.6 million). The total value of the shares involved is therefore below the threshold of €300 million, set as a condition for the completion of the Demerger.
Upon completion of the Demerger, all the 1,570,621,711 EGP ordinary shares held by EGP shareholders other than Enel were cancelled and exchanged with newly issued Enel ordinary shares, on the basis of the exchange ratio of 0.486 Enel shares for each EGP share in exchange, with no cash adjustments. A total of 1,005,717,849 Enel ordinary shares were allotted to Enel – with simultaneous cancellation of the shares, pursuant to the prohibition provided for under Article 2504-ter, paragraph 2, of the Italian Civil Code, as cited in Article 2506-ter, paragraph 5, of the Italian Civil Code – in exchange for the cancellation, at the time of exchange, of a total of 2,069,378,289 EGP ordinary shares held by Enel associated with the demerged assets. Therefore, following the issuance of 763,322,151 new Enel ordinary shares to be allotted to EGP shareholders other than Enel, the share capital of Enel was increased by a total nominal amount of €763,322,151 and is therefore equal to €10,166,679,946, fully subscribed and paid-up, represented by 10,166,679,946 ordinary shares with a par value of €1.00 each.
EGP shares were traded on the Italian market until the market close of March 31, 2016, and on the Spanish markets until market close of March 30, 2016, while trading in the newly issued Enel shares began on the Italian market on April 1, 2016.
In the subsequent months, in order to reorganize the renewable energy business line in a manner consistent with the entire Group, the following corporate transactions were completed:
- the demerger, with effect from October 25, 2016, of part of Enel Green Power International’s (EGPI) financial business to Enel Finance International: as a result of the spinoff, EGPI mainly retained interests in foreign companies operating in the renewable energy sector;
- the cross-border merger, with effect from October 26, 2016, of EGPI into Enel Green Power.
The implementation of these operations permits the integrated management of the renewable energy business through: (i) the rationalization of the corporate structure, which makes it possible to focus most of the renewables business under a single company entirely owned by Enel, namely EGP; (ii) in accordance with the variety of local laws and regulations, the simplification of governance at both the Enel Group level and the Global Renewable Energy level, with a single decision-making process concentrated with EGP, which can respond to developments in that business; and (iii) consequent strategic, management and operational technical control by a single company within the renewables sector.
On January 14, 2016, within the framework of its program to optimize its liability structure through active management of maturities and the cost of funding, Enel launched a nonbinding voluntary offer to repurchase in cash up to a nominal €500 million of two series of bonds previously issued by Enel itself. At the end of the offer period (January 20, 2016) Enel decided to exercise the option envisaged in the offer documentation to increase the original nominal amount involved in the buy-back and so decided to purchase:
- a nominal €591,088,000 of bonds maturing on June 20, 2017, following the application of the allotment ratio of 92.5715%;
- a nominal €158,919,000 of bonds maturing on June 12, 2018, following the application of the allotment ratio of 100%.
The settlement date of the offer was January 25, 2016.
Framework agreement with Bank of China and SINOSURE
On January 20, 2016, Enel, Bank of China (a leader in the Chinese banking sector as well as the most internationalized and diversified bank in China), and the China Export & Credit Insurance Corporation (“SINOSURE”) signed a nonbinding framework agreement to promote the development by Enel Group companies, in particular Enel Green Power, of projects on a worldwide basis with the participation of Chinese companies acting as engineering, procurement and construction contractors and/or suppliers. Under the agreement, Bank of China will provide Enel and its subsidiaries with a credit line of up to $1 billion backed by SINOSURE. The framework agreement, which provides the main terms and conditions of the facilities that can be granted, will remain in force for a period of five years, with the possibility of extension if mutually agreed by the parties.
Enel’s new corporate identity
On January 26, 2016, the Group’s new corporate identity was unveiled at the headquarters of the Endesa subsidiary in Madrid. On the same occasion, the new logos of Enel Green Power and Endesa were also revealed within the context of the new identity.
The new identity represents the pursuit of the “Open Power” strategy announced last November in London on the occasion of Enel’s Capital Markets Day. It is founded on openness as the keystone of the strategic and operational approach of the Group. More specifically, “Open Power” seeks to:
- open access to electricity for more people;
- open the world of energy to new technology;
- open energy management to individuals;
- open power to new uses;
- open up to new partnerships.
The new brand strategy transmits the image of Enel as a modern, open, flexible, responsive utility capable of leading the energy transition. The Group has introduced a colorful new visual system – which includes the logos – that reflects the flexible and dynamic principles of “Open Power”. The new visual identity and the new logo are composed of a rich palette of color to reflect the variety of the energy spectrum, the multifaceted nature of a Group present in more than 30 countries and the growing diversification of the services we offer in a global energy system.
The brand renewal also included the unveiling of the new website Enel.com, a site focused on users and access via mobile applications. During 2016, the updating of the Group’s entire online presence was completed.
Start-up program in Israel
On February 10, 2016, Enel announced the launch of a technological support program for start-ups in Israel, a country with such a high concentration of innovative tech companies that it boasts its own version of Silicon Valley, called Silicon Wadi. As part of the program, Enel will create a company to support start-ups, acting as a business incubator headquartered in Tel Aviv. It is scheduled to open its doors in May.
Each year, up to eight start-ups will be selected from among key local companies, which will be able to benefit from a customized support program in collaboration with Enel.
One of the program’s objectives – in addition to developing individual start-ups – is to establish a presence in Israel’s innovation ecosystem, one of the most advanced in the world, leveraging venture capital funds, universities and a collaboration with the Office of the “Chief Scientist” of Israel’s Ministry of the Economy. T
he support company will select the start-ups using public tenders for projects based on Enel’s broad range of technological priorities. Once selected, the start-ups will have access to Enel engineers and technology experts, who will help them develop their business and their technology, using company facilities for testing and leveraging the Group’s commercial and technological experience. Each project will receive support for at least six months.
On July 11, 2016, Enel launched its Innovation Hub in Tel Aviv, Israel. Enel opted to collaborate with SOSA & The Junction, one of the most successful innovation communities in that country.
Memorandum of understanding between architects and Enel Energia
On February 17, 2016, Enel Energia signed a memorandum of understanding with the National Council of Architects, Planners, Landscape Architects and Conservators. The memorandum is intended to promote the energy upgrading of buildings and the architectural quality of the solutions. It also seeks to foster joint policies and actions and propose legislation to raise the quality of the installation of efficient technologies, ensure environmental benefits and dignity and, at the same time, generate savings for the public. The memorandum sets out a collaborative program to encourage and develop approaches to integration and cooperation. Enel Energia will provide Italian architects with permanent ongoing training initiatives – compliant with the rules governing life-long training of the National Council of Architects – in order to keep them up to date on innovation in efficient residential technologies, their characteristics, benefits and key installation and permitting issues. The underlying principle of the agreement is that training and research are priority strategic factors for growth and progress, and so it is necessary to invest in the sector in a manner adequate to the needs of the society and economy of local communities.
Enel Green Power wins renewables tender in Peru
On February 18, 2016, Enel Green Power (“EGP”), acting through its subsidiary Enel Green Power Peru, was awarded the right to sign 20-year energy supply contracts for 126 MW of wind power, 180 MW of solar PV and 20 MW of hydro capacity following the renewable tender launched by the Peruvian government through the energy regulator OSINERGMIN. With 326 MW awarded in the tender, EGP will become by 2018 the main renewable player in Peru and the only company operating plants of three different renewable technologies in the country.
EGP will be investing about $400 million in the construction of the renewables facilities, which are expected to enter into operation by 2018, in line with the investments outlined in the company’s current strategic plan. The 20-year supply contracts awarded to EGP provide for the sale of specified volumes of energy generated by the plants. Nazca wind project, with a total installed capacity of 126 MW, will be built in the Marcona district, which is located in Peru’s southern coastal area, an area blessed by high level of wind resources. This project, once up and running, will generate about 600 GWh per year, while avoiding the emission of around 370,000 metric tons of CO2 into the atmosphere. The 180 MW Rubi photovoltaic project will be built in the Moquegua district, which is located in Peru’s southern area, an area which enjoys high levels of solar radiation. Once up and running, the solar facility will generate approximately 440 GWh per year, avoiding the emission of around 270,000 metric tons of CO2 into the atmosphere. The Ayanunga hydro project, whose capacity amounts to an approximate 20 MW, will be built in the Monzón district, which is located in Peru’s central area. Once up and running, the hydro plant will generate annually about 140 GWh, while avoiding the emission of around 109,000 metric tons of CO2 into the atmosphere.
Disposal of Hydro Dolomiti Enel
On February 29, 2016, the sale by the subsidiary Enel Produzione of its entire 49% stake in Hydro Dolomiti Enel Srl (“HDE”) to Fedaia Holdings, a Luxembourg-based subsidiary of Macquarie European Infrastructure Fund 4 (“MEIF4”), was completed. The price for the sale was finalized at €335.4 million, in line with the agreement signed on November 13, 2015 between Enel Produzione and Fedaia Holdings. Enel Produzione’s stake in HDE was sold to the Italian company Fedaia Investments Srl, which was designated as the purchaser by Fedaia Holdings and is also controlled by MEIF4.
The completion of the transaction follows clearance from the EU antitrust authority, which was the final outstanding condition precedent provided for in the sale agreement.
Enel Green Power wins preferred bidder status in Morocco
On March 10, 2016, Enel Green Power (“EGP”), in consortium with the Moroccan energy company Nareva Holding (“Nareva”) and the German wind turbine manufacturer Siemens Wind Power, was awarded preferred bidder status in the “2nd phase of the wind integrated project” tender held by the Moroccan utility ONEE (Office National de l'Electricité et de l'Eau Potable). The consortium was therefore preawarded the right to develop, design, finance, build, operate and maintain five wind projects in Morocco with a total capacity of 850 MW. The award will be confirmed following the signing of the purchase agreements for the electricity generated by the plants. Of the five projects, Midelt (150 MW), Tanger (100 MW) and Jbel Lahdid (200 MW) are located in northern Morocco, while Tiskrad (300 MW) and Boujdour (100 MW) are located in the country’s south.
EGP and Nareva will establish and own five companies holding the projects, while Siemens Wind Power will provide the wind turbines, with several components manufactured locally.
The construction of the five plants will require a total investment of approximately €1 billion. EGP will fund the cost of the project corresponding to its 50% shareholding by a mix of equity and debt, the latter through project finance facilities provided by international financial institutions. The wind farms are expected to be completed and enter operation between 2017 and 2020. In line with the tender rules, the power generated by the five wind farms will be sold to ONEE under 20-year power purchase agreements.
Operation OpEn Fiber and subsequent acquisition of Metroweb
On March 23, 2016, the Board of Directors of Enel examined and discussed the strategic plan of Enel OpEn Fiber SpA (“EOF“), the company established by Enel in December 2015 to build and operate ultra-broadband optical fiber infrastructure across Italy.
EOF will operate as a wholesale-only player (i.e. only on the wholesale market) and will build infrastructure for use by other licensed operators.
The EOF plan, in line with the European Digital Agenda and the Italian strategy for ultra-broadband, provides for EOF to build in through several steps to be released in sequence the optical fiber telecommunications network in 224 Italian municipalities, in successful market areas (known as clusters A and B). This network will be built entirely of optical fiber brought right up to the customer's home, in FTTH mode (Fiber to the Home).
In the early years of the plan, very high speed connections are expected to reach some 7.5 million homes, helping Italy to bridge its digital divide.
The plan through these phases provides for investment of about €2.5 billion to be gradually approved, with the support of other investors, and aimed at the development of the network.
Enel’s Board of Directors also discussed a letter of intent between EOF, Vodafone and Wind, which seeks, in a series of steps, to define a strategic and commercial partnership for the development of the ultra-broadband telecommunications network across Italy.
On October 10, 2016, binding agreements were signed relating to the transaction for the integration of Enel’s subsidiary EOF and the group held by Metroweb Italia SpA (“Metroweb”).
The transaction provides for the following stages:
- a capital contribution to EOF by Enel and CDP Equity SpA (“CDPE”), providing EOF with the necessary resources for the acquisition of Metroweb’s total share capital. As a result of this capital contribution, Enel and CDPE will have equal stakes in EOF;
- the acquisition by EOF of all of Metroweb share capital, currently held by F2i SGR SpA (“F2i”) and FSI Investimenti SpA, for about €714 million;
- the merger of Metroweb and its wholly-owned subsidiaries into Metroweb SpA;
- the subsequent merger of Metroweb SpA into EOF. In addition, Enel and CDPE granted an option to F2i to reinvest in the surviving company through the acquisition from Enel and CDPE of a stake of up to 30% of that company’s share capital. The exercise price of the option will be based on the amount paid by EOF for the purchase of Metroweb. As structured with the transaction, EOF will be jointly controlled by Enel and CDPE (even if F2i reinvests in the company) and will therefore be accounted for by Enel using the equity method.
The implementation of the transaction will enable EOF:
- to accelerate the development of the network construction project;
- to broaden the scope of the cabling operation, developing a commercial offering that includes the most important Italian cities and, therefore, is of interest to all alternative operators that appreciate a project being implemented on a national scale (note that the Metroweb group has cabled Milan and is laying cable in Bologna and Turin);
- to exploit the industrial skills and know-how developed by the Metroweb group;
- to improve the financial profile of the project and, accordingly, its financing opportunities.
On December 20, 2016 OpEn Fiber (“OF”), the new name of EOF, completed the acquisition of all of Metroweb for about €714 million.
Acquisition of 40% of a number of wind farms in Calabria
On May 3, 2016, Enel Green Power, which already owned 60% of Maicor Wind, acquired the remaining 40% of the company from PLT Energia, thus becoming the sole shareholder of a company that owns two wind farms in Calabria with a total installed capacity of 64 MW. The two plants, which have been in operation since 2011, are located in the municipalities of Maida, Cortale (56 MW) and San Floro (8 MW) in the province of Catanzaro.
Enel enters Zambia with the award of 34 MW of photovoltaic capacity in a public tender
On June 14, 2016, Enel, acting through Enel Green Power, was awarded the right to develop, finance, build and operate a 34 MW PV solar project in Zambia following the Scaling Solar program first round tender launched by the stateowned investment holding company Industrial Development Corporation Limited (IDC). Mosi-oa-Tunya, which is located in Lusaka South Multi-Facility Economic Zone in southern Zambia, marks the entry of Enel in the country’s renewables market.
Enel will be investing about $40 million in the construction of the new PV plant. The project will be supported by a 25year power purchase agreement (PPA) for the sale of all the electricity generated by the plant to the state-owned utility ZESCO. The project, which will be owned by a special purpose vehicle in which IDC will maintain a 20% minority stake in line with the tender rules, is expected to enter into operation in the 2nd Quarter of 2017 and will generate around 70 GWh per year.
Enel and DCNS inaugurate marine energy research and innovation center in Chile
On June 17, 2016, Enel, acting through its subsidiary Enel Green Power Chile, and the French industrial group DCNS, inaugurated the Marine Energy Research and Innovation Center (MERIC) in the presence of Chile’s Energy Minister. MERIC is a groundbreaking global center of marine energy R&D excellence in Chile supported by the Chilean Government’s economic development organization CORFO (Corporación de Fomento de la Producción).
The inauguration marked the start of MERIC’s first line of work, which will focus on the analysis of bio-fouling and environmental impact of marine energy. The research activity will be carried out at the marine research laboratory of Pontificia Universidad Católica de Chile ECIM (Estación Costera de Investigaciones Marinas) located in Las Cruces, in Valparaíso region.
Enel presents Enel Open Meter, the new electronic meter
On June 27, 2016, Enel presented the Enel Open Meter at the Triennale di Milano. The second generation (2.0) smart meter is one of the key elements of Enel’s “Open Power“ strategy, a process of renewal towards a concept of power that is open, accessible, technologically advanced and sustainable.
Starting next autumn, the new meter will be installed in 32 million homes and businesses, and will replace the first generation electronic meter, which in turn took the place of the old electromechanical device starting in 2001.
The second generation meter is the result of a process that reflects recent developments in the market and technology in the field of metering and remote management. Enel Open Meter complies with the specifications for new meters set out in Resolution 87/2016 of the Authority for Electricity, Gas and the Water System, which also established a set of performance indicators.
The innovative features of the new smart meter include faster changes of supply, the elimination of fixed time bands and the availability of data on electricity use for greater savings. The measurement of customer data every 15 minutes, for example, provides a much more timely picture of daily power use and the consumption behavior of customers, who are increasingly aware of how they use electricity and alert to opportunities for achieving greater energy efficiency.
Enel and China’s BYD join forces on e-buses and energy storage
On June 28, 2016, Enel signed a global framework cooperation agreement with the Chinese corporation BYD, a leading electric vehicle and lithium battery manufacturer, for the worldwide development of joint projects in electric mobility and energy storage.
The agreement, signed in the Chinese city of Shenzhen, will pave the way for possible cooperation projects targeting electric buses and other transport services, as well as residential, commercial and industrial applications based on BYD’s lithium batteries.
Regarding electric mobility, Enel and BYD have agreed to leverage on the technological solutions developed by both companies in vehicle charging and electric mobility, as well as to explore integrated solutions and synergies for a possible joint offer to any interested municipalities in the areas where Enel or BYD are present. Furthermore, Enel and BYD will jointly explore financing opportunities in order to sell turnkey solutions composed of BYD electric buses and Enel’s charging infrastructure stations and electricity supply.
In the energy storage field, Enel and BYD have agreed to evaluate business opportunities in markets of interest, using BYD technology and solutions for applications for residential, commercial and industrial purposes.
Disposal of Enel Longanesi Developments
On July 13, 2016, Enel completed the sale of all its Italian assets (comprising 21 onshore and offshore permit applications and exploration permits) in the upstream gas sector held through its wholly-owned subsidiary Enel Longanesi Developments to AleAnna Europa Srl, a subsidiary of the US company AleAnna Resources, which operates in the exploration and production of hydrocarbons. The maximum consideration for the sale is €30 million, of which a portion (about €7 million) was paid immediately, while the remainder can be paid, depending on gas prices, in a number of instalments once the Longanesi gas field in Emilia Romagna enters production, which is expected to occur in 2018.
EGP wins tender for renewables in Indonesia
On July 14, 2016, Enel Green Power (“EGP”), in consortium with the Indonesian geothermal developer PT Optima Nusantara Energi (“PT ONE”), was awarded the right to explore geothermal resources and develop the 55 MW Way Ratai project in the Way Ratai area, in Indonesia’s Lampung province. The project, awarded in the tender launched by the Indonesian Ministry of Energy and Mineral Resources in December last year, will be the first to be developed by Enel in the country, marking the company’s entry into Indonesia’s renewables market. Enel will be investing up to $30 million in the exploration phase of the project, as provided for in the investment program set out in the Group’s current Strategic Plan. Construction of the geothermal power plant,
which depends on the results of the exploration phase, is expected to be completed and enter operation in 2022. EGP and PT ONE will jointly establish a special purpose vehicle (SPV) for the project, with EGP having the majority stake in the SPV. In line with the tender rules, the power produced by the geothermal plant, which is expected to generate around 430 GWh per year, will be sold to the national utility PLN under a 30-year power purchase agreement.
from 19 July
Broadband agreement in a number of Italian cities
In the 2nd Half of 2016, Enel OpEn Fiber (“EOF“) reached a number of agreements with the first Italian cities interested in laying optical fiber. More specifically:
- on July 19, 2016, the City of Catania and EOF signed an agreement on a plan providing for work to begin in September 2016, with a coverage of 50% of building units by June 2017 and 80% by the end of September 2018, for a total of 115,000 wired units, 200 km of underground cabling and 360 km of overhead cabling;
- on August 16, 2016, the City of Venice and EOF signed an initial agreement that will allow the laying of fiber optic cabling across the entire city. EOF’s plan for Venice provides for works to begin in September 2016, with coverage of 50% of building units by September 2017 and 80% by mid-2018, for a total of about 120,000 wired units, about 600 km of underground cabling and about 500 km of overhead cabling;
- on October 12, 2016, the City of Padua and EOF signed a similar agreement on a plan providing for coverage of 50% of building units by June 2017 and 80% by May 2018, for a total of about 116,000 wired units, about 560 km of underground cabling and about 210 km of overhead cabling;
- on October 24, 2016, the City of Cagliari and EOF signed an agreement on a plan providing for coverage of 50% of building units by July 2017 and 80% by March 2018, for a total of about 66,000 wired units, about 440 km of underground cabling and about 60 km of overhead cabling;
- on November 15, 2016, the City of Bari and EOF signed a similar agreement on a plan providing for coverage of 50% of building units by September 2017 and 80% by September 2018, for a total of about 120,000 wired units and about 600 km of cabling, of which 400 km of underground cabling.
The fiber optic cabling will be brought to customers’ homes using a Fiber to the Home (FTTH) approach, which will be capable of supporting download and upload speeds of 1 Gbps. The cable laying operations will count on the support of the cities involved to ensure the rapid completion of the works.
Enel Green Power International sells Enel Green Power España to Endesa Generación
On July 27, 2016, Enel Green Power International (“EGPI”), a wholly-owned subsidiary of Enel, and Endesa Generación, a wholly-owned subsidiary of Endesa, executed an agreement for EGPI to sell 60% of Enel Green Power España (“EGPE”) to Endesa Generación, which already holds the remaining 40% of EGPE and will therefore control 100% of the share capital of the company following the transaction. The price paid by Endesa Generación for the stake was €1,207 million.
In determining the price for the operation, the boards of directors of EGPI and Endesa adopted valuation techniques commonly used at the international level and drew on the expertise of prominent financial advisors, who issued a fairness opinion on the transaction. In compliance with the applicable Spanish regulations, the board of directors of Endesa approved the transaction subject to a favorable opinion of the Comité de Auditoría y Cumplimiento, with only independent directors participating in the vote.
Disposal of 50% of Slovenské elektrárne to EPH
On July 28, 2016, Enel Produzione closed the disposal to EP Slovakia, a subsidiary of Energetický a pru˚myslový holding (“EPH“), of 50% of Slovak Power Holding (“SPH“), which in turn holds 66% of Slovenské elektrárne.
The disposal was carried out in execution of the contract signed on December 18, 2015, between Enel Produzione and EP Slovakia. It represents the first phase of the sale of the Group’s entire stake held by Enel Produzione in Slovenské elektrárne, as provided for in that contract. More specifically, the disposal was carried out following the transfer to SPH of the entire 66% interest previously held directly by Enel Produzione in Slovenské elektrárne and the receipt of clearance for the transaction from the antitrust authorities of the European Union.
The price was set at €375 million, of which €150 million paid in conjunction with the sale and €225 million to be paid following the closing of the second phase of the operation. The consideration could vary subject to the application of an adjustment mechanism.
Nissan, Enel and Nuvve launch world’s first fully commercial V2G hub in Denmark
On August 29, 2016, the world’s first fully commercial vehicleto-grid (V2G) hub was inaugurated in Denmark thanks to the collaboration between global automotive manufacturer Nissan, multinational energy company and smart grid technologies pioneer Enel, and California-based company Nuvve, a leading V2G services provider. Enel has installed 10 V2G units at the headquarters of the Danish utility Frederiksberg Forsyning, which also purchased 10 Nissan e-NV200 zero-emissions vans. The V2G hub will help stabilize Denmark’s national power grid, offering electricity storage capacity to the grid operator Energinet.dk. Using V2G technology, electric vehicles can play an integral part in power management system, helping to improve grid stability and further promoting the integration of renewables in the generation mix, a key objective of Enel’s global energy strategy.
Enel confirmed in Dow Jones Sustainability World Index
On September 9, 2016, for the 13th year in a row, the Enel Group was again admitted to the Dow Jones Sustainability World Index (DJSI World). The Group’s Spanish subsidiary Endesa was also included. Enel and Endesa are two of the nine utility companies admitted to the index at the global level. Out of 316 companies admitted to the index, Enel is one of six based in Italy.
Public tender for float of Endesa Américas and corporate reorganization in Latin America
On September 13, 2016, after the approval of the board of directors of Enersis Américas, which met the day before, a voluntary public tender offer was launched for the shares On September 13, 2016, after the approval of the board of directors of Enersis Américas, which met the day before, a voluntary public tender offer was launched for the shares of the subsidiary Endesa Américas. More specifically, the public tender offer regarded all of the shares and American Depositary Shares of Endesa Américas not held by Enersis Américas, which represent about 40.02% of the share capital of Endesa Américas. The price offered per share amounted to 300 Chilean pesos, for a total maximum outlay of about 984.7 billion Chilean pesos. The offer period ran from September 14 to October 28, 2016.
The voluntary public tender offer, which was first announced in November 2015 as part of the corporate restructuring of the Enel Group in Latin America, was intended to facilitate and support the successful merger of Endesa Américas and the other subsidiary Chilectra Américas into Enersis Américas, a transaction whose approval and effectiveness is a condition of the tender offer. More specifically, the tender was intended to give minority shareholders a way to liquidate their interests at a price in line with the market price in the event the above merger was completed.
On September 28, 2016, the extraordinary shareholders’ meetings of the Chilean subsidiaries Enersis Américas, Endesa Américas and Chilectra Américas approved the merger of Endesa Américas and Chilectra Américas into Enersis Américas, the consequent increase in the latter’s share capital and the change in its name to “Enel Américas”. More specifically, on the basis of the merger plan approved by the extraordinary shareholders’ meetings of the companies involved in the operation:
- the shareholders of Endesa Américas will receive 2.8 Enersis Américas shares for each Endesa Américas share they hold;
- the shareholders of Chilectra Américas will receive 4 Enersis Américas shares for each Chilectra Américas share they hold.
On October 31, 2016, the subsidiaries Enersis Américas, Endesa Américas and Chilectra Américas announced that, as the deadline to exercise withdrawal rights reserved to the companies’ shareholders who did not approve the merger by incorporation of Endesa Américas and Chilectra Américas into Enersis Américas had expired, the conditions for this merger had been fulfilled. More specifically:
- the entitled shareholders of Enersis Américas had exercised their right to withdraw within the maximum limit of 10% of the share capital of that company post-merger. Furthermore, following the withdrawals, no shareholder actually owns a larger stake than that provided for by law, defined as 65% of Enersis Américas’ share capital;
- the entitled shareholders of Endesa Américas had exercised their right to withdraw within the maximum limit of 10% of the company’s share capital;
- the entitled shareholders of Chilectra Américas had exercised their right to withdraw within the maximum limit of 0.91% of the company’s share capital.
In conformity with the resolutions of the extraordinary shareholders’ meetings of Enersis Américas, Endesa Américas and Chilectra Américas held on September 28, 2016, the merger took effect as from December 1, 2016, and as from that date Enersis Américas changed its name to “Enel Américas SA”. Taking account of the withdrawals exercised by the shareholders of Enersis Américas, Endesa Américas and Chilectra Américas that did not approve the merger, as well as the shares tendered in the public tender offer launched by Enersis Américas for the float of Endesa Américas, as a result of the merger as from December 1, Enel indirectly controls – through subsidiaries – 51.8% of Enel Américas.
Tax equity agreement for Cimarron Bend wind project in the United States
On September 16, 2016, Enel Green Power North America Inc. (“EGPNA”), the US renewable energy company of the Enel Group, acting through its subsidiary Cimarron Bend Wind Holdings, signed a tax equity agreement worth approximately $500 million with three investors – Bank of America Merrill Lynch, J.P. Morgan and MetLife – for the construction of the 400 MW Cimarron Bend wind project located in Kansas.
Under the agreement, the investors will contribute the above amount to the wind farm’s owner Cimarron Bend Wind Holdings in exchange for 100% of “Class B” membership interests in the project. This interest will allow the three investors to obtain, at certain conditions provided for under US tax laws, a percentage of the tax benefits that will be attributed to the Cimarron Bend project. In turn, EGPNA, through Cimarron Bend Wind Holdings, will retain 100% ownership of the “Class A” interests and therefore management control of the project. The funding commitment came into effect at signing. Funds will be released in two phases, the first instalment being released mid-way through the construction of the 400 MW project and the second instalment upon completion of the project. The tax equity partnership will be supported by a parent company guarantee from Enel SpA.
The Cimarron Bend wind farm, whose construction started in April 2016, is expected to begin operations in 2017. The project will require an investment of approximately $610 million, in line with the Enel Group’s current strategic plan.
Enel confirmed in STOXX Global ESG Leaders Index
On September 20, 2016, for the third year in a row, Enel was again admitted to the STOXX Global ESG Leaders Index, which measures companies’ environmental, social and governance (ESG) performance. Enel achieved a score of 90.72/100 in the Social ranking, 88.93/100 in the Governance ranking and 53.32/100 in the Environmental ranking.
Enel enters Top 100 of the new Thomson Reuters Diversity and Inclusion Index
On September 26, 2016, Enel was named in the Top 100 of the new Thomson Reuters Diversity and Inclusion Index, which ranks over 5,000 companies for their diversity and inclusion performance via environmental, social and governance (ESG) data gathered from sources such as annual reports, company websites, stock exchange filings, CSR reports and the news. Enel’s score of 74.75 put it in 25th place in the index, which was created by the business information multinational Thomson Reuters, and it performed impressively against industry and country peers. The Group is the highest ranked of the five Italian companies included in the Top 100, and was also one of only two electric utilities and independent power producers (IPPs) as defined by Thomson Reuters to make the index’s Top 50.
Agreement for the sale of Marcinelle Energie
On September 28, 2016, Enel signed an agreement to sell Marcinelle Energie, a 100% subsidiary of Enel Investment Holding, to French electricity supplier Direct Energie. Following the closing of the transaction, expected in the coming months, Enel will exit the Belgian market. Marcinelle Energie owns and operates a combined cycle gas turbine (CCGT) power generation plant of around 400 MW in Belgium. The sale took place on December 30, 2016 at a total price of about €36.5 million, which was paid in full. The sale price will be subject to customary completion adjustments, including an earn-out mechanism.
Enel wins renewables tender in Mexico
On September 29, 2016, Enel, acting through its subsidiary Enel Green Power México, was awarded the right to sign an energy and green certificate supply contract with the Salitrillos wind project in the second renewable energy tender launched by the Mexican Ministry of Energy.
Enel will invest about $120 million in the construction of the wind farm, as part of the investments envisaged in its current Strategic Plan. The plant, located in the state of Tamaulipas, in North-eastern Mexico, will have a total installed capacity of 93 MW and is expected to enter into operation by 2019. The project will be supported by a contract providing for the sale to Mexico’s Federal Electricity Commission (Comisión Federal de Electricidad or CFE) of both specified volumes of energy over a 15-year period and the related green certificates over a 20-year period.
2017 interim dividend
On November 10, 2016, the Board of Directors decided to adopt an interim dividend policy aimed at optimizing shareholder return that will be applied starting with net income for 2016. The reasons which prompted the Board of Directors to adopt this policy are:
- the need to align Enel’s dividend policy with that adopted by the major utilities with which it is compared by investors. In fact, a large number of companies included in the Euro STOXX Utilities index that actually pay a dividend have adopted a policy for the payment of interim dividends;
- the shareholder structure of Enel. Much of Enel’s share capital is held by institutional investors that practice a “long-only“ investment approach, a significant number of whom are essentially guided by their assessment of dividend distributions (including frequency). The practice of distributing one or more interim dividends is quite common in the United States, and a significant portion of Enel’s share capital is held by US institutional investors;
- investors’ positive assessment of Enel’s ability to generate stable cash flows.
The interim dividend policy approved by the Board of Directors provides for dividends be paid to shareholders in two instalments each year. In line with the prevailing practice of companies included in the Euro STOXX Utilities index that have adopted an interim dividend policy, from now on Enel plans to pay an interim dividend in January and the balance of the dividend in July. Bearing in mind the foregoing and the fact that the Parent Company posted net income of €2,259 million in the first nine months of 2016, the Board of Directors, taking due account of the outlook for the 4th Quarter of the year, has approved the distribution of an interim dividend of €0.09 per share. The interim dividend, gross of any withholding tax, will be paid as from January 25, 2017, with an ex-dividend date for coupon no. 25 of January 23, 2017 and a record date of January 24, 2017.
EF Solare Italia acquires other plants in Italy
On November 14, 2016, EF Solare Italia, an equally held joint venture between Enel Green Power (“EGP”) and the F2i infrastructure fund, created to develop and consolidate the photovoltaic market in Italy, signed an agreement for the acquisition of 60 MW of photovoltaic plants held in Italy by Etrion, a player in the solar power industry that is listed on the Toronto and Stockholm stock exchanges.
The transaction closed on December 15, 2016, and involved 17 plants located in Lazio (40.6 MW) and Puglia (19.3 MW), which in 2015 generated a total of over 100 million kWh of electricity. The transaction follows a deal for another 10 plants, making EF Solare Italia the leading operator in the Italian PV sector.
EF Solare Italia’s portfolio has expanded to 92 plants with an installed capacity of about 341 MW. Previously, it consisted of 65 plants in 12 different regions (about 102 MW contributed by EGP and about 163 MW contributed by F2i, including 58 MW currently being transferred).
AISCAT and API agree to work to boost electric mobility
On November 21, 2016, Enel and AISCAT, Italy’s association of toll motorway and tunnel concessionaires, signed a memorandum of understanding to launch a joint working group on electric mobility on the Italian toll motorway
network. The agreement provides for the establishment of a strategic, technological and logistical testing program for a network of electric fast-charging stations in service areas. The trial will last about three years and will include both a study and analysis phase and a pilot implementation phase in the field. The service areas where the charging infrastructure is to be installed will be selected by the individual motorway concession holders in collaboration with Enel and AISCAT, initially beginning with a list of stations approved by the European Union as part of the EVA+ (Electric Vehicle Arteries) project. The first installations will begin in 2017.
On December 15, 2016, Enel Energia and the API Group signed a memorandum of understanding for the installation of fast recharging points in IP service stations for electric cars. The agreement provides for two implementation stages: the first will see the installation of fast recharging points (E-corners) at six IP service stations, three in Rome and three in Milan, alongside petrol and diesel pumps. The project, which has already started a pilot initiative, is expected to become operational in spring 2017. The second stage will see the conversion of two IP petrol stations in the same cities to Enel E-Stations, which are 100% electrical recharging stations. The E-Stations will be managed by Enel and will be installed at service stations currently being decommissioned.
Transformation of partnership with General Electric
On November 21, 2016. Enel’s US-based renewables subsidiary Enel Green Power North America Inc. (“EGPNA”) has signed a letter agreement with the GE unit (NYSE: GE) GE Energy Financial Services under which the two companies intend to sign a deal that will see EGPNA sell a 1% stake in EGPNA Renewable Energy Partners LLC (“EGPNA REP”) to GE Energy Financial Services, at a price to be fixed at a later stage. The agreement was subsequently executed on December 15. Following the transaction, EGPNA reduced its stake in EGPNA REP to 50% from 51% and GE Energy Financial Services increased its stake to 50% from 49%. The two companies also revised their LLC (Limited Liability Company) agreement, converting EGPNA REP into an equally owned joint venture. Thanks to the new joint venture, the United States will become the first country in which Enel has implemented its new industrial growth strategy, driven by a “Build, Sell and Operate” approach with lower capital intensity and designed to accelerate the development of Enel’s broad global project pipeline.
Enel Energia wins tender for safeguard services in nine regions
On November 25, 2016, Enel Energia won the tender for the supply of safeguard services in nine Italian regions (Liguria, Piedmont, Valle d’Aosta, Trentino Alto Adige, Lombardy, Lazio, Puglia, Molise and Basilicata) for 2017-2018, corresponding to four lots in the national tender organized by the Acquirente Unico (Single Buyer).
On December 23, 2016, the Brazilian national development bank (“BNDES”) confirmed that the subsidiary Enel Brasil SA (“Enel Brasil”) was the winner of the tender for the acquisition of approximately 94.8% of the share capital of Celg Distribuição SA (“CELG”), an energy distribution company that operates in the Brazilian state of Goiás.
The financial offer presented by Enel Brasil was worth R$2.187 billion (about $637 million). Established in 1956 and with its headquarters in Goiânia, CELG (which is currently a subsidiary of state-controlled electricity company Eletrobras) operates in a territory that covers more than 337 thousand square kilometers under a concession that is valid until 2045. The sale of CELG is part of the privatization of state assets launched by the Brazilian government. CELG’s market includes 237 municipalities with a combined population of about 6.2 million people. CELG’s customer base of 2.9 million is served via a network of more than 200,800 kilometers.
The signing and closing of the purchase agreement are both expected to take place in the 1st Quarter of 2017, following approval from antitrust authority CADE and electricity regulator ANEEL. After closing of the purchase of approximately 94.8% of the company’s share capital, a residual stake of around 5.1% of CELG will be offered to the company’s current employees and retired employees, through a process that will allow Enel Brasil to purchase the shares not bought by current employees and retired employees, the details of which will be announced at a later date.