E.ON sells assets it holds in Spain for 2.5 billion euros to the Australian investment bank Macquarie Group and Kuwait’s sovereign fund to reduce its debt, that surpasses 30 billion euro, reports The Wall Street Journal.
Under the terms of the agreement, Macquarie will cover 60% of the transaction, and Wren House Infrastructure Management, a division of the Kuwait Investment Authority, will contribute with 40% from the total amount, according to The Wall Street Journal sources.
The agreement, which includes the purchase of debt accumulated by E.ON in Spain, was concluded after exclusive negotiations conducted by Macquarie and Wren House. Their final offer was several hundred million higher than competitive offerings.
Among the groups that submitted bids for acquiring the assets of E.ON in Spain were the firm CVC Capital Partners and the association composed of Gas Natural and Madrilena Red de Gas, a Spanish gas distributor owned by Morgan Stanley Infrastructure.
E.ON division of Spain has about 1,200 employees, operates a distribution network of 32,000 km and provides power to 688,000 customers. E.ON sells operations in Spain and Italy to recover some of the 11.5 billion euros worth of investment in assets made from 2007 to this day in South Europe.
Since 2007, however, the demand for energy in the European markets stagnated and E.ON asset value halved.
E.ON wants to raise capital to reduce its debt and to deal with the crisis in the energy industry, due to weak demand and increasing renewable energy in Europe.
Also, the German company shifts to markets in Russia, Turkey and Brazil, counting on the fact that they will grow faster than the European markets.
E.ON Group is active in Romania in supply and distribution of gas and power, serving about three million customers in 20 counties in Transylvania and Moldova.
Earnings before interest, tax, depreciation and amortization of E.ON in Romania increased in the first nine months of this year, given that, globally, the German company reported an EBITDA profit down by 7% and a loss net of 14 million euros.
In April, E.ON Romania predicted a turnover growth for this year, while the power and gas market liberalization continues. Also, E.ON has estimated that the volumes of gas and energy sold this year will be at the 2013 level.
Volumes of gas and energy sold by E.ON Romania last year were 29.4 TWh, 13% below the 2012 level. Consolidated sales of E.ON Romania fell last year compared to 2012, at 4 65 billion lei (1.05 billion euros), mainly due to the decrease volumes of gas and electricity traded.