Enel to sell its share in Slovenské Elektrárne

5 January 2016

Enel Produzione (EP), a subsidiary of Italian utility Enel, has signed a memorandum of understanding (MOU) with the Slovak economy ministry regarding its 66% stake in the share capital of Slovak utility Slovenské Elektrárne (SE).

The MOU forms part of the proposed sale of the stake to a newly established company HoldCo, and the eventual sale to EP Slovakia, a subsidiary of Czech-Slovak energy investment group Energetický a prumyslový holding (EPH), of 100% of the share capital of HoldCo in two phases for a preliminary price of €750m ($815m). Enel said earlier the potential sale was part of a plan to offload non-strategic assets under a broader €6bn debt reduction programme. Czech media have put the value of the deal at €1.3bn.

Enel said the final price will be subject to adjustments related to the condition of the Slovak producer after completion of the roject to complete two reactors at Slovakia's Mochovce nuclear power plant. Under the terms of the contract, signed on 18 December, the two-stage sale will be executed by way of a transfer of Enel Produzione's entire stake in SE to a newly established company (HoldCo), and the eventual sale to EP Slovakia of 100% of the share capital of the HoldCo.

In the first phase of the deal, Enel Produzione will sell 50% of the HoldCo's share capital to EP Slovakia for €375m, of which €150m will be paid at the closing of the first phase, and €225m at the closing of the second phase. A put or a call option can be exercised by Enel Produzione or by EP Slovakia in the second phase exercisable 12 months after receiving the trial operation permit of Mochovce 3&4. On exercise of either option, Enel Produzione would transfer the remaining 50% of the HoldCo's share capital to EP Slovakia for €375m.

Enel said that any adjustment to the final price "will be calculated by independent experts and applied upon completion of the second phase on the basis of a set of parameters, including the evolution of the net financial position of SE, developments in energy prices in the Slovak market, operating efficiency levels at SE as measured against benchmarks specified in the agreement, and the enterprise value of units 3 and 4 of Mochovce". Final closing of the transaction will be subject to approval by the European Union's antitrust authorities.

EPH is a leading Central European energy group operating mainly in the Czech Republic, Slovakia, Germany and Poland. The government holds the remaining 34% of shares in SE, which is Slovakia's main power generator with a market share of 82%. SE owns Slovakia's four operating nuclear units - two 471MWe units at Bohunice V2 and two 436MWe units at Mochovce - all Russian-designed VVER pressurised water reactors (PWRs). Construction began on Mochovce 3&4 in 1986 and resumed in 2008 after a 16-year suspension. These are both 440MWe Russian VVER V-213 PWRs.

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