ENDESA Awards Viesgo to ENEL for Euro 2,147 Million

Business Wire, Sept 13, 2001

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 13, 2001

ENDESA (NYSE:ELE)

    --  ENEL has offered the highest price in the two rounds, closed
        on August 13th and September 10th respectively, and has
        completely accepted the contractual conditions.

    --  The offer made by ENEL values Viesgo's equity at Euro 1,870
        million. Additionally, ENEL will assume Euro 277 million of
        net debt and provisions.

    --  The portfolio of assets divested amount to 2,365 MW generation
        capacity, which does not include nuclear assets, and a
        distribution market of 500,703 customers.

    --  The price offered for Viesgo is 3% higher than the one paid in
        the last acquisition of a similar integrated electricity
        company in Spain.

    --  After this divestiture, ENDESA has achieved all the capital
        gains expected in the disposal program of its Strategic Plan.

    --  This transaction will reduce by 16.2 percentage points
        Endesa's consolidated leverage over shareholder's equity as of
        June 30th, 2001.

    --  The sale of Viesgo will result in an improvement of
        ENDESA's generation mix, and will better balance its asset
        portfolio.

    --  After this divestiture, ENDESA has a higher margin to build
        new installed capacity in Spain of technologically advanced
        plants, beyond the 1,837 MW currently under construction.

After the deadline established, ENDESA (NYSE:ELE) has evaluated the three offers received from the three companies out of the five that submitted binding offers, and that were offered with a final opportunity to improve their bids.

As a result, Endesa has decided to award Viesgo to Enel, company that has presented the best binding offer in the two rounds. The best offer values 100% of Viesgo's equity at Euro 1,870 million, plus Euro 277 million of net debt and provisions. Enel's offer implied the complete acceptance of the contractual conditions required by the disposal process.

The conditions that have been accepted are mainly related to the authorisation process required by the Spanish and EU authorities, to the requirement of labour guarantees and to the maintenance of the coal supply contracts of the power plants divested.

The net capital gains amount to approximately Euro 850 million according to the historical book value of these assets.

-- Assets integrated in Viesgo

The portfolio of assets awarded to Enel, is composed of distribution assets integrated by 100% of Electra de Viesgo I, which includes Endesa's 54.8% stake in BEGASA, and has a total of 500,703 customers whose demand in year 2000 amounted to 4,870 GWh. Electra de Viesgo I's market extends to the Cantabria region and areas of Asturias, Palencia, Burgos and Lugo.

Regarding the generation business, the portfolio of assets amounts to 2,365 MW including: coal 944 MW (40%), oil-gas 753 MW (32%), conventional hydroelectric 307 MW (13%) and pumping storage 361 MW (15%). In year 2000, total output for these plants was 7,483 GWh.

The coal power plants are the following: Cercs, 160 MW; Escucha, 160 MW; Puertollano, 221 MW; Escatron, 80 MW; and Puente Nuevo, 324 MW. The 753 MW oil-gas installed capacity corresponds to the Algeciras power plant.

The hydroelectric plants are Picos (32 MW), Navia (162 MW), Alto Esla, (85 MW) and Aguayo with an installed capacity of 389 MW, out of which 361 MW are pumping storage and 28 MW conventional hydroelectric plants.

The initial portfolio of assets was modified as Endesa decided to withdraw 243,7 MW nuclear capacity represented by 50% share in Nuclenor (233 MW through its 50% interest in Santa Maria de Garona plant and 10.7 MW of a 1% stake in Trillo plant).

The companies bidding for Viesgo were aware of the final composition of the generation assets before submitting their binding offers. Endesa has decided to keep the ownership of its nuclear assets in Spain. This decision explains the difference between the 2,610 MW initial announced capacity and the finally 2,365 MW sold.

-- Comparable transactions

The final price paid for Viesgo is 3% higher, in terms of EBITDA multiples, than the price paid in the last acquisition of a similar integrated electricity company in Spain and is in the top range of similar transactions in the European electricity market.

Moreover, the final price for Viesgo, excluding nuclear assets, is 15% higher than the average market consensus for the transaction.

-- The sale of Viesgo within the Endesa's Strategic Plan.

This sale, considered successfully completed, is part of Endesa's Strategic Plan, which includes Euro 5 billion of asset disposals for the period 2001-2002. These proceeds will be devoted to finance the Expansion Plan and to reduce the leverage.

This disposal follows other divestitures carried out this year, including, among others, the sale of the Endesa's direct and indirect stakes in the Argentinean electricity distributor Edenor.

With this transaction, Endesa has already achieved the whole amount of capital gains expected in the divestiture program announced.