April 4, 2008 / 8:04 AM / 10 years ago

EDP maintains plan for renewables IPO

LISBON (Reuters) - Energias de Portugal (EDP) (EDP.LS) is optimistic that an initial public offering (IPO) of its renewable energy unit will go ahead as planned in June, Chief Financial Officer Nuno Alves said.

Speaking at the Reuters Latin America summit in Lisbon, Alves said despite volatility, markets are “better than they were two weeks ago.”

“I am more optimistic. We have been optimistic since the beginning of the operation,” Alves said. “Our plan continues to be to go to the market in June, at the beginning of June.”

He said if there is a “terrible situation that leads to the cancellation of the IPO, EDP has alternatives.” But he ruled out a capital increase for EDP to raise financing.

“A capital increase is completely out of the question -- EDP is not going to carry out any capital increase,” he said.

If the IPO cannot be launched due to market conditions, EDP’s options would include finding one or two partners that could buy five to 10 percent each of the renewable energy unit, Alves said.

“Our number one objective is to carry out the IPO in June because we continue to think that it makes sense and there is demand,” he said, adding that the final decision to go ahead or not will be taken in May.

EDP, the world’s fourth-largest wind power company, said in January it would float 20 to 25 percent of its renewable energy unit, which includes U.S. subsidiary Horizon Wind Energy and European unit NEO.

Turning to business opportunities in South America, Alves said EDP and Algerian state energy company Sonatrach are “trying to go together to Brazil.”

The idea would be to replicate a partnership between EDP and Sonatrach in Iberia on combined cycle-projects, which are supplied with gas by Sonatrach.

“We are already thinking about this, the Brazilian authorities have shown interest,” Alves said. “It is something for the second half of 2009, if not earlier.”

In Brazil EDP operates through its subsidiary Energias de Brasil (ENBR3.SA).

DEBT PAID OFF

    Alves said part of the capital raised through the IPO would pay off the unit’s debts, which are mainly owed to EDP, and the rest would finance business growth.

    In 2007, the renewables unit boosted its installed capacity by 132 percent to 3,640 mega watts (MW). It wants to invest 6.2 billion euros between 2007 and 2010 -- 60 percent of it from EDP -- to raise the renewable unit’s capacity to 7,600 MW.

    Analysts valued EDP’s renewables unit at between 7.5 billion euros and 11 billion in the second half of 2007.

    But since then markets have fallen sharply. Shares in global wind-power leader Iberdrola Renovables IBR.MC have fallen 19 percent since its IPO in December.

    Alves said, however, that EDP has comfortable credit lines and can easily finance its growth.

    “EDP can manage to finance its growth, but we want to maintain a single-A rating,” he said.

    At 0737 GMT shares in EDP traded 0.63 percent higher at 4.00 euros in low volume.

    Reporting by Sergio Goncalves and Denise Luna; writing by Axel Bugge; Editing by Quentin Webb

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