Enel SpA, Italy’s largest utility, is seeking to raise at least 4.4 billion euros ($6 billion) and cut debt by selling all its power assets in Slovakia and Romania.
Enel owns 66 percent of Slovakia’s largest utility, Slovenske Elektrarne AS, and in Romania it holds power distribution and retail assets, according to a statement yesterday. Slovenske is building two new reactors at the Mochovce nuclear plant, a 3.8 billion-euro project beset by delays and budget overruns.
Chief Executive Officer Francesco Starace, who took the helm in May, is accelerating asset sales begun under his predecessor to strengthen the balance sheet as Italy’s sluggish economy curbs demand in Enel’s largest market. The Rome-based company borrowed to lead a $60 billion takeover of Spain’s largest power generator, Endesa SA, in 2008.
“In the last few days, Enel has formally notified the subsidiaries in both Slovakia and Romania, as well as their minority shareholders, of the start of the sale process and has appointed financial advisers,” Enel said in the statement.
Slovenske Elektrarne’s potential buyers include Czech utility CEZ AS, whose CEO Daniel Benes said in April that he’d be open to bidding for Enel’s stake if it came up for sale.
“The biggest failure in CEZ’s history was that we didn’t buy Slovenske Elektrarne,” Benes said in an interview with Bloomberg News. “So if that asset is up for sale, we will gladly enter into negotiations about it.”
The company remains interested in the Slovak market, CEZ spokeswoman Barbora Pulpanova confirmed today without commenting on specific assets.
“Slovenske Elektrarne is an interesting acquisition target for CEZ since their nuclear power plants are similar, so we can imagine many synergies,” said Erste Group Bank AG analyst Petr Bartek. “CEZ is the natural first-choice buyer.”
Rosatom Corp., Russia’s state nuclear company, was cited as another potential bidder in media reports including Slovakia’s Sme and Hospodarske Noviny newspapers. Rosatom spokesman Sergei Novikov declined to comment. Last month, Enel negotiated an 870 million-euro loan facility from Russian lender OAO Sberbank, payable in 7 1/2 years.
Enel began selling assets last year, raising 1.6 billion euros, about one quarter of the company’s 6 billion-euro target. The disposals in Slovakia and Romania will raise more than 4.4 billion euros, the company said in the statement.
Enel is being advised by BNP Paribas SA and Deutsche Bank AG in Slovakia, and Citigroup Inc. and UniCredit SpA in Romania.
The shares advanced 2 percent to 4.22 euros at 12:23 p.m. in Milan trading.
The company is pulling back from Eastern Europe. Planned sales in Slovakia and Romania follow a deal announced in September to sell a stake in a Russian oil and gas production project to OAO Rosneft for $1.8 billion.
Slovenske posted revenue of 2.89 billion euros in 2013 and earnings before interest, tax, depreciation and amortization of 708 million euros, according to the statement.
The first of two new reactors in Slovakia, which was due to start production by the end of this year, won’t come online until sometime in the first nine months of 2015, the country’s power regulator said last month. The budget has grown more than 50 percent since the project was approved in 2007.