ELEQ: International Endesa: Endesa's letter sent to Enersis

  ELEQ: International Endesa: Endesa's letter sent to Enersis

UK Regulatory Announcement

NEW YORK

                              SIGNIFICANT EVENT

The letter sent by ENDESA, S.A. to ENERSIS S.A., regarding the capital
increase carried out by ENERSIS S.A., is attached.

                                                    Madrid, November, 8th 2012

                                                            Borja Prado Eulate
                                                                     President

Mr. Pablo Yrarrázaval
ENERSIS S.A.
President
Santa Rosa #76
Santiago - Chile

                                                       Madrid, 8 November 2012

Dear President,

We are writing on behalf of Endesa, S.A., the controlling shareholder of
Enersis S.A. (“Enersis”) through Endesa Latinoamerica, S.A. (hereinafter
“Endesa”), in relation to the Extraordinary Shareholder Meeting scheduled for
20 December 2012 to announce a proposed capital increase (“the Capital
Increase”) through the issuance of shares to be paid for in cash and with
stakes in certain companies.

Once all the shareholders have been provided with the reports of Mr. Walker,
the expert from the Independent Evaluators "IM Trust" and "Clara y Asociados",
as well as the reports from the Committee of Directors and the individual
reports from each one of the Enersis´s Directors, we aim, with this letter to
provide additional information relating to Endesa’s position with respect to
specific aspects of this Capital Increase, in order to ensure that the
Shareholder Meeting has all the information it requires to make a decision.

1. Guarantees regarding the transfer of ownership of Cono Sur

As set forth in the reports of the Independent Evaluators and the Expert Mr.
Walker, Endesa would subscribe to its shares in the Capital Increase using
non-cash assets comprising all of the shares in "Cono Sur", a company which
encompasses the shares of several Latin American companies.

In the event that the Capital Increase is approved, the transfer of the shares
to Enersis would be formalised via the share subscription contract. This
contract contains the obligation to transfer the Cono Sur shares, and is the
vehicle through which Endesa promises to include the following:

(i) declarations and guarantees relating to the three companies in which
Enersis currently has no stake, and which would be transferred to it, namely,
Yacilec, Inversora Dock Sud and Empresa Electrica de Piura, with the
obligation to provide compensation up to the value of the contribution of the
company in question in the event that Enersis suffers damages as a result of
these declarations and guarantees being inaccurate;

(ii) A commitment by this company to hold Enersis harmless from any liability
resulting from damages that could be incurred, within a period of five years,
as a result of tax contingencies derived from the structure of the share
transfer utilised by Endesa in the transaction.

2. Sole growth vehicle

If the Capital Increase is carried out successfully, Endesa makes explicit in
this letter that so long as it remains the controlling shareholder of Enersis,
this Chilean company will be the Group's only vehicle for future investments
in South America in the electricity generation, distribution and sales sector,
excluding the businesses currently being developed by "Enel Green Power
S.p.A.", or those that this company may develop in the future in the renewable
energy sector, in accordance with its corporate purpose.

3. Dividend policy

Endesa is convinced that if this proposed Capital Increase is successful, it
will generate excellent results for Enersis and all its shareholders, and in
the interests of all of the aforementioned, Endesa intends to propose to the
competent corporate bodies of Enersis that they continue to follow the same
dividend policy that has been in place in previous years, if they believe it
opportune.

We also want to take advantage of this opportunity to reiterate Endesa’s
assurance, as set forth in our letter of 30 July 2012, that this Capital
Increase is not in any way intended to capture funds in order to subsequently
distribute them in the form of dividends or to use them for other forms of
capital repayment, and that it would be carried out for the sole purpose of
providing Enersis sufficient resources to finance an accelerated expansion
process in Latin America, and that, consequently, Endesa will not seek the
payment of an extraordinary dividend from Enersis for at least two years.

4. Use of funds

In regard to the proposal that the company has detailed in several
presentations regarding the use of funds raised by the capital increase,
Endesa wishes to make clear that said proposal is for indicative purposes
only, and that determining the use of said funds will be the sole
responsibility of Enersis’s management team and subject to its board’s
approval.

In this regard, Endesa wishes to once again express its confidence in
Enersis's Board of Directors and management team and in its demonstrated
capacity to define and successfully execute specific operation, which would
include the Plan for Use of Funds, which in this case would have to be
approved by its Board of Directors.

5. Long term commitment

Lastly, it should be noted that if Endesa involuntarily increases its stake in
Enersis to over its current 60.62% (but without ever surpassing the legal and
statutory limit of 65% of the shares with voting rights) because no other
interested parties subscribe to the Capital Increase, Endesa does not intend
to reduce this stake, given its strategic character. It thereby confirms its
long term commitment to Enersis and its aim to work with the rest of the
shareholders on the development of the company.

For all of the above reasons, we believe that it would be opportune if this
letter was brought to the attention of the Board of Directors and the Comite
de Directores, respectively. Furthermore, we believe that it should be duly
publicised so that all interested parties have the relevant information
regarding its existence and consequences.

Sincerely,

                                                                   Borja Prado
                                                                     President

Contact:

International Endesa
 
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