Last week, Enel announced it would put up for sale 64.4% in Enel Distributie Muntenia and Enel Energie Muntenia, 51% of Enel Distributie Banat, Enel Distributie Dobrogea and Enel Energie, as well as 100% in Enel Romania, the companies through which the Italian-held company operates on the segment of energy distribution and supply in Romania.
Market sources now say regaining control over former Electrica Muntenia Sud, Electrica’s crown jewel, the company that supplies Bucharest with energy, is out of the question. Consultants in the field rather expect foreign investors or even investment funds, in the context where the state has just ceded the 51% stake in Electrica through a floatation.
According to Electrica Muntenia Sud privatization contract, in the case of a stock transfer, the ceding unit, in this case Enel, will submit an offer to the other significant shareholders of the company that have preemption rights, in this case Electrica and Proprietatea Fund.
Within 30 days since they get the notification, the significant stakeholders can, if they wish, partially or entirely buy the number of stock offered by the ceding company.
Through the privatization contract for Muntenia Sud, Electrica and Proprietatea Fund have another right, called Tag Along. In case Enel finds a buyer for Muntenia Sud operations, then, Electrica and Proprietatea Fund can participate in the sale if they want to.
In the case of the other two privatization contracts, through which Enel bought the former Electrica Banat and Electrica Dobrogea, Enel’s only obligation was to maintain its stake in the companies at 25% for at least 4 years.
“I believe Enel leaves because of money, it needs cash to pay its debts and secondly it did not trust it would generate revenue from Romanian operations that should meet some expectations of the Italian management,” said Sorin Elisei, an independent consultant in the field of energy.
One of the questions arising is whether with this sale the Romanian state, through Electrica, could consolidate its foothold in the field of energy distribution and supply.
“This is an interesting idea, but I do not see the logic as it’s just sold at Electrica. I believe Enel will be bought by a player with enough experience in managing these assets and big enough to wait until the market picks up,” said Elisei.
Market sources also say there are few chances Electrica should take over the former Electrica Muntenia Sud.
“Enel can sell very quickly, depending on the asking price. A fair price can be put at EUR1-1.5 billion. We must take into account Enel has had 10 years of experience in these operations and brought some changes, investments, modernized infrastructure, so that Enel’s business is quite easy to manage,” said Elisei.
Market sources say a meeting between Enel’s top management and Romanian authorities is scheduled this week.
However, Enel’s exit is due to be a quite difficult one, the more so as the Italian company is awaiting the verdict in a trial initiated by the Romanian state at Paris Arbitration Court through which Electrica demands EUR800 million in damages.
(English version by Catalina Apostoiu)