Enersis Falls on Concern Shake-Up Will Cut Share Value

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Enersis SA, Chile’s largest power utility, dropped to a six-month low amid speculation that a corporate restructuring proposed by its controlling company will result in a loss of value for minority shareholders.

Enersis retreated 1.6 percent to 193.69 pesos at 1:50 p.m. in Santiago, its third day of losses, while the IPSA benchmark gauge advanced 0.3 percent.

The Enersis board said Monday that a plan put forth by parent Enel SpA would separate the company into two, with one holding Chile assets and the other assets in Brazil, Argentina, Peru and Colombia. Investors are concerned because they don’t know the details, according to Sergio Zapata, an equity analyst at Corpbanca.

“Volatility will continue until we have all of the information,” Zapata said by phone from Santiago. “Chile’s power market is more mature, and demand is growing slower than the rest of the region.”

Enel will list both companies in Santiago and New York and has said that the new structure will simplify ownership. Enersis’ board will have a final vote in October while shareholders should vote in December, with the goal of completing the restructuring in the second half of 2016, according to a presentation on its website.

Two-thirds of shareholders must approve the deal. Enel owns 60 percent of Enersis, which in turn owns 60 percent of Empresa Nacional de Electricidad SA, Chile’s largest power generator.

Chilean pension funds, some of which have said they oppose the proposal, own about 12 percent of Enersis and 15 percent of Endesa, according to data from the pension funds regulator.

(Corrects third paragraph of story published July 29 to clarify that board still hasn’t given final approval to deal.)
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