Enersis, Chile pension funds to discuss controversial cap hike

Fri Nov 23, 2012 8:40am EST

* Shareholder meeting with pension funds planned for Dec. 14
    * Pension funds have opposed Enersis capital hike
    * Enersis to seek shareholder OK for cap hike on Dec. 20

    SANTIAGO, Nov 23 (Reuters) - Regional energy group Enersis
will hold a meeting with its Chilean private pension fund
shareholders to go over a series of sticking points surrounding
a controversial capital increase.
    Enersis plans to ask shareholders to approve on
Dec. 20 a share issue to raise between $5.915 billion and $6.555
billion, intended to fund acquisitions and to hike stakes in
firms it already partially owns. 
    The private pension funds, Enersis' largest group of
minority shareholders with a combined 13.63 percent stake, will
have their tete-a-tete with the Chile-based energy company on
Dec. 14, according to a statement Enersis posted on the website
of Chile's securities regulator late Thursday. The session was
requested by the funds but will be open to all shareholders. 
    The capital increase was originally set at $8.02 billion,
but opposition from minority shareholders, especially the
pension funds, prompted the regulator to step in and impose
conditions on the deal. Enersis subsequently scaled back the
plan.
   
    The pension funds argued assets that Enersis' parent
company, Spanish energy company Endesa, planned to use
to subscribe to its portion of the share issue were overpriced.
 Endesa plans to swap Latin American assets that
it owns for shares issued in the capital hike.
    Among other things, the group of pension funds, including
AFP Capital, AFP Planvital and AFP Habitat,
want to know how Enersis' board members came to the revised
price for the Endesa assets.
    "We request to know the following ... the reasons the board
had to propose a floor or minimum value for the assets the
controller (Endesa) plans to use to pay for the capital
increase," the pension funds said in a letter sent to Enersis. 
    While the new price Enersis put forward for the assets
represents an 18 to 26 percent discount from the initial
disputed valuation of $4.86 billion, it is still higher than the
price tag the pension funds sought. 
 
    The pension funds previously expressed skepticism about
Enersis' plans to use the proceeds to fund merger and
acquisition opportunities, advance greenfield projects and buy
minority interests. The funds also suggested the operation may
be aimed at helping Endesa's parent company, Italy's Enel
, Europe's most indebted utility.
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