Public disclosure required by Consob Resolution No. 11971 of May 14, 1999, as amended. Following the purchase of an initial 25% interest two weeks ago, the acquisition of 100% of ISE is a preliminary step to its absorption by Edison
Milan, June 15, 2004 - The Boards of Directors of Edison, which met today under the chairmanship of Umberto Quadrino, and Finel, an Edison subsidiary (60%) in which EDF has a 40% interest, approved the transfer to Edison of Finel’s 75% interest in ISE at a price of €486 million. The consideration paid takes into account a distribution of reserves totaling €260 million (Finel’s share is €195 million) that ISE’s Stockholders’ Meeting is expected to approve before the transfer of the 75% interest. Because the transaction is occurring between related parties, the price was determined on the basis of a valuation provided by an independent appraiser and taking into account the price Edison paid to buy a 25% minority interest in ISE from Ilva Spa.
This transaction, which will lead to the absorption of ISE by Edison in accordance with a merger proposal that the respective Boards of Directors approved today, is expected to close before the end of this year and, in any case, before the execution of the deed of merger.
The merger proposal makes no provision for the determination of a share exchange ratio because at the time of merger ISE’s entire capital stock will be owned directly by Edison. Moreover, no amendment to the corporate purpose will be required, since the activities carried out by ISE are already included in Edison’s corporate purpose. Consequently, Edison’s stockholders will have no grounds to request redemption of their shares.
Considering the time needed to physically deposit and register the various instruments and the deadlines for the filing of creditor objections, it is unlikely that the merger will become effective vis-à-vis outsiders before December 1, 2004. The effective date of ISE’s absorption by Edison, for reporting and tax purposes, will be January 1, 2004.
The merger will produce a deficit upon cancellation of shares totaling €276 million, which will be recognized as an addition to the value of fixed assets.
Since Article 2501-bis of the Italian Civil Code will not apply and the merger involves the absorption of a company that on the date of the merger will be a wholly owned subsidiary of the absorbing company, the merger proposal may be approved by Edison’s Board of Directors (scheduled to meet on July 28, 2004), as allowed under the Bylaws. However, stockholders representing at least five percent of the capital stock, provided they send a written request to the Company within eight days of the filing of the merger proposal with the Company Register, have the right to demand that the merger be approved by a Stockholder’s Meeting.
As for ISE, the merger proposal will be submitted to its Stockholders’ Meeting (also scheduled for July 28, 2004), since its Bylaws do not empower the Board of Directors to approve such mergers.
The merger of ISE into Edison is consistent with the program of streamlining the system of subsidiaries that the Group launched in 2003 after simplifying Edison’s chain of control in 2002.
Since ISE’s sale will produce a change in Finel’s connotation, Edison granted EDF a put option (conditional on the transaction being completed) for the Finel shares it holds.
ISE produces and distributes electric power and steam at four thermoelectric plants and one hydroelectric plant. These five facilities, which are located in central and southern Italy, have a total installed capacity of about 1,300 MW.
ISE’s 2003 financial statements show net revenues of €800 million and net income of €133 million.
In view of Edison’s recent rating boost, the Board of Directors approved a plan to issue an additional €1 billion in bonds within the framework of the 2-billion-euro EMTN program approved on November 11, 2003, which thus far has been tapped for a total of €700 million. The plan will be implemented in several tranches over the next 12 months.
The overall purpose of these bond issues is to lengthen the maturity of the Group’s indebtedness and seize the cost-saving opportunities that the capital markets offer to a quality borrower such as Edison.
The resources generated by the bond issue will be used to repay outstanding bank debt and further improve the Group’s financial structure.
