Italy's Enel to Acquire U.S.-Based CHI Energy; Acquisition Represents Enel's Entry into North American Market

Business Wire, Nov 1, 2000

Business Editors/Utilities Writers

ROME--(BUSINESS WIRE)--Nov. 1, 2000

Enel S.p.A. (MIB:ENEL, DAX:ENL, NYSE:EN) ("Enel"), through its wholly owned subsidiary Erga S.p.A ("Erga"), today announced a definitive merger agreement to acquire CHI Energy, Inc. ("CHI") of Stamford, Connecticut, a leading owner, operator and developer of renewable power projects in North America, for $170 million in cash. Major investors in CHI include Morgan Stanley & Co., Inc. and UBS AG, London Branch. Under the terms of the agreement, approximately $142 million in CHI debt will remain outstanding.

This acquisition, Enel's first in the United States, complements the company's strategy for worldwide growth in its core electric business and creates additional expansion opportunities throughout North America and Latin America.

Enel is the world's largest publicly listed electric utility with 29 million customers and a current generating capacity of 56,000 megawatts (MW). In 1999, Enel established Erga as a wholly owned subsidiary to grow its existing set of competencies and assets in the renewable energy segment of its business. With this acquisition, Erga becomes the world's largest company dedicated exclusively to renewable energy. Erga already owns 30 geothermal plants, 273 hydroelectric plants, four wind farms and three photovoltaic plants and a generating capacity of about 1,700 MW. Erga has also committed $800 million to expand its capacity in Italy. With this acquisition, Erga will have 389 power plants and a combined generating capacity of approximately 2,000 MW.

Chicco Testa, chairman of Enel, said, "Enel's acquisition of CHI is a significant achievement for our company. As a global multi-service provider, it is critical that we expand our geographic footprint in renewable energy and broaden our assets and skills mix. This transaction leverages Enel's strong core capabilities in plant operation and maintenance and will provide a platform to capture the robust growth opportunities that exist in the North American and Latin American markets. Working together with CHI, and building on their established relationships with suppliers, customers and communities, we will set new standards for renewable energy."

Paolo Pietrogrande, chief executive officer of Erga, said, "This acquisition will enable Enel to establish a beachhead for future growth in renewable energy markets throughout the United States, Canada and Latin America. Deregulation, environmental awareness and volatile oil prices are all contributing to the accelerating interest in renewable energy sources. In the United States alone, we have seen a dramatic increase in green power over the past few years. Twenty-two states now offer their customers the opportunity to purchase energy from renewable sources, and twelve states have set specific standards regarding the quantity of power sales that must come from renewables. In Canada, the government has been particularly outspoken in its support of clean energy."

"We believe CHI is the ideal partner to enable us to capitalize on these opportunities. By harnessing the talent and experience that CHI's people bring to our organization, we will be better positioned to compete in the evolving energy marketplace. Together, we will be able to achieve results that we could not have achieved on a stand-alone basis. Our technological and operational expertise, coupled with CHI's project development strength, will fortify our abilities for global expansion. We will also be able to leverage CHI's experience in trading CO2 credits. This is a growing business in North America and, in light of the Kyoto Conference protocol, we expect it to be an expanding market in Europe as well," Mr. Pietrogrande concluded.

Edward M. Stern, president and chief executive officer of CHI said, "We are delighted to become a part of the Enel family. This transaction brings together two leading organizations, with complementary strengths, in the growing renewable energy market. Erga, backed by Enel's global reach and financial strength offers a tremendous depth of resources and technical capabilities. CHI has extensive transactional experience and knowledge of the North American renewables market, as well as the ability to act quickly on new project opportunities. Together, we will be able to offer broader capabilities to our existing customers and project partners and also offer increased opportunities to our employees. I am confident that the combination of Erga and CHI will play a significant and dynamic part in support of Enel's growth and in meeting the growing demand for cleaner energy."

Mr. Stern will remain president and chief executive officer of CHI. Charles F. Goff, Jr., former chairman and chief executive officer of Destec Energy, Inc., will remain as chairman of CHI's board of directors. Michael J. Petrick of Morgan Stanley will also remain on CHI's board. CHI's senior management team will remain in their current positions. CHI will maintain its name and headquarters in Stamford, Connecticut, and continue to manage its portfolio of renewable energy facilities in operation, under construction, and in development.