Portugal Agrees to Sell REN Stake for 592 Million Euros

Portugal Agrees to Sell REN Stake for 592 Million Euros
Electricity lines, operated by REN-Redes Energeticas Nacionais SA, stand in countryside near Montijo, Portugal. Photographer: Mario Proenca/Bloomberg

Portugal’s government agreed to sell a 40 percent stake in REN-Redes Energeticas Nacionais SA for 592 million euros ($779 million) to State Grid International of China and Oman Oil Co. to meet the terms of a bailout accord.

The price values REN, Portugal’s power and gas grid operator, at about 150 million euros above its market value, Secretary of State for Treasury and Finance Maria Luis Albuquerque said today. REN shares rose 0.7 percent to close at 2.091 euros in Lisbon, giving it a value of 1.12 billion euros.

State Grid will buy a 25 percent stake and Oman Oil will buy 15 percent, Albuquerque told reporters in Lisbon. The Chinese company will pay 387.2 million euros and Oman Oil will pay 205.1 million euros, she said.

In April, Portugal became the third euro-area country after Greece and Ireland to request a bailout from the European Union and the International Monetary Fund. As part of that aid package, the government agreed to sell its stakes in energy companies including REN and utility EDP-Energias de Portugal SA.

China Financing

State Grid’s proposal includes 1 billion euros in funds from China Development Bank Corp. to help REN meet refinancing needs until 2014 and fulfill its investment plan, Albuquerque said. The Portuguese company plans to invest 3.2 billion euros through 2016 in new lines and substations, as well as natural-gas storage facilities and pipelines.

State Grid is also proposing a partnership with REN in Angola and Mozambique, and Oman Oil proposed an expansion of REN’s gas infrastructure, Albuquerque said.

Chinese companies have been involved in other deals in Portugal. China Three Gorges Corp. agreed in December to pay 2.69 billion euros for 21 percent of EDP, and refiner China Petrochemical Corp. said in November it would buy 30 percent of the Brazilian unit of Galp Energia SGPS SA, Portugal’s biggest oil company.

Portugal on Dec. 7 said it planned to sell a stake of as much as 40 percent in Lisbon-based REN. The bidders were required to present binding proposals to buy 5 percent to 25 percent. The state holds 51 percent of the company.

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