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Exclusive: Italy's grid company to get 1.5 billion euro loan ahead of China Grid deal - sources
July 23, 2014 / 5:45 PM / 3 years ago

Exclusive: Italy's grid company to get 1.5 billion euro loan ahead of China Grid deal - sources

MILAN (Reuters) - Italian energy grid holding company CDP Reti will receive a loan of around 1.5 billion euros ($2 billion) to help smooth a sale of a stake to China’s State Grid Corp, two sources familiar with the matter said.

State-owned lender Cassa Depositi e Prestiti (CDP) is close to an agreement to sell a 35 percent stake in CDP Reti to the State Grid Corporation of China.

The planned sale is part of Italy’s efforts to sell off state assets to help to reduce the country’s debt and to raise funds to invest in infrastructure projects.

CDP Reti, wholly owned by CDP, controls gas grid Snam (SRG.MI) and will soon receive a controlling stake in power grid Terna (TRN.MI) currently owned by CDP.

CDP chief executive Giovanni Gorno Tempini this week told journalists the value of CDP Reti could be 6.8 billion euros ($9.15 billion), based on the market capitalizations of both Snam and Terna. This implies a 35 percent stake would be worth 2.4 billion euros.

“CDP Reti will receive a 1.5 billion euro syndicated loan from a group of banks and Cassa Depositi e Prestiti itself,” one source with knowledge of the deal said on Wednesday.

Four sources said the pool of banks making the loan includes Banca IMI (ISP.MI), BNP Paribas (BNPP.PA), HSBC (HSBA.L), Mediobanca (MDBI.MI), Societe Generale (SOGN.PA) and UniCredit (CRDI.MI).

CDP and the lenders were not available for comment.

A second source said the financing aimed to reduce the price tag on the deal ahead of the sale to give the buyer an incentive. The loan would also allow CDP Reti to pay a special dividend to its owner CDP, without burdening the vehicle that has currently no debt. It is unclear at this stage whether CDP will pass on part of the cash payment to the Italian government, which is trying to cut the world’s fourth-largest public debt pile.

The Treasury, which owns 80 percent of CDP, declined to comment on the deal. CDP had decided last year to sell a stake of up to 49 percent in CDP Reti to raise cash. Gorno Tempini recently said he expected a decision on the disposal to be made by the end of August.

Investment bank Lazard is advising CDP on the sale of a stake in CDP Reti, while State Grid Corp. of China has hired Morgan Stanley as financial adviser in the transaction.($1 = 0.7425 Euros)

($1 = 0.7428 Euros)

Editing by Valentina Za and Jane Merriman

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