UPDATE 1-Bidders emerge for E.ON's Spanish assets - sources

Tue Aug 5, 2014 12:41pm EDT

* Potential bidders include CVC, Macquarie, KKR, EDP - sources

* Bids to value whole portfolio at about 2 bln eur - sources

* Indicative bids to be submitted by Aug. 11 - sources (Adds details on assets, background)

By Arno Schuetze, Christoph Steitz and Andrés González

FRANKFURT/MADRID, Aug 5 (Reuters) - Bidders are readying indicative offers for the Spanish assets of Germany's top utility E.ON, three sources familiar with the matter told Reuters, adding bids would value the whole portfolio at about 2 billion euros ($2.7 billion).

Parties expected to submit non-binding bids for all or some of the assets include private equity firm CVC ; a consortium consisting of Canada's Borealis Infrastructure and Portuguese utility EDP ; as well as a group comprising private equity firm Riverstone and Swiss energy company Alpiq , the people said.

KKR, Macquarie and Spain's Grupo Villar Mir are also expected to express an interest, they said, adding it was not immediately clear whether they were part of a consortium or bidding alone.

First bids are expected to be submitted by an Aug. 11 deadline, the sources said.

E.ON, CVC, KKR, Riverstone, Macquarie, Borealis Infrastructure, Alpiq and Grupo Villar Mir all declined to comment. EDP, which is 21 percent-owned by China Three Gorges, was not immediately available for comment.

Burdened by 31.1 billion euros in net debt, a collapse in wholesale power prices and the demise of its traditional generation business, E.ON is exploring the sale of its country operations in Italy and Spain, sources have told Reuters.

E.ON employs roughly 1,200 staff in Spain, and owns 3.2 gigawatt (GW) worth of thermal plants as well as 1.1 GW of renewable capacity in the country.

It sells power to about 688,000 customers and operates a 32,000 km power distribution network with a so-called regulated asset base (RAB) of about 0.8 billion euros ($1.1 billion).

The power grid is expected to be one of the most attractive assets of E.ON's portfolio, as investors are looking for stable and guaranteed returns amid low interest rates, something which regulated energy assets provide.

Earlier on Tuesday, sources told Reuters that EVG Thueringen, a gas grid owned by E.ON and gas firm VNG, had attracted at least four bidders in what could be a 400 million euro transaction.

Other bidders for the Spanish assets could include Italian utility Enel, which last week said it was interested in parts of the portfolio, without being more specific.

Enel owns about 92 percent of Spanish utility Endesa .

($1 = 0.7477 Euros) (Additional reporting by Andrei Khalip in Lisbon, Teresa Larraz in Madrid and Caroline Copley in Zurich; Editing by Mark Potter)

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