E.ON shapes up as Endesa books court

3 April 2006 – E.ON has moved closer to securing the finance necessary to complete its purchase of Endesa, days after the Spanish company agreed to pay a €1bn ($1.2bn) guarantee that will suspend a hostile bid from Gas Natural.

The German power company, who’s bid is favoured by Endesa’s board, issued a statement declaring that it had “successfully completed the sub-underwriting phase for the €32bn syndicated term and guarantee facility obtained in February in support of its acquisition of up to 100 per cent of the outstanding share capital of Endesa”.

E.ON said the syndication was “heavily oversubscribed” with a 24-bank syndicate including book runners offering commitments of €46bn. The company has tabled an offer of €29.1bn for Endesa.

The amount of finance made available to E.ON will come as a further boost after Endesa declared it would take the action of complying with a Spanish court demand of providing a €1bn deposit in return for a court case into Gas Natural’s hostile approach.

Despite labelling the guarantee as “manifestly out of proportion to the case”, Endesa was compelled to comply safe in the knowledge that a court case would result in a suspension of Gas Natural’s offer for several months.

The court case will investigate Endesa’s allegation that Gas Natural violated EU laws when it announced that it would sell its assets in Iberdrola in order to generate funds for its €22.6bn bid and comply with various regulations. Endesa has alleged that Gas Natural agreed to sell around €8bn of assets before it had announced its bid to create a Spanish energy giant.

If unsuccessful, Endesa will lose its deposit. The company has not ruled out the possibility of contesting the size of the court deposit.