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How much will Enel collect in the event of the sale of 50% of Open Fiber to Macquarie

3 years ago babelfish

How much will Enel collect in the event of the sale of 50% of Open Fiber to Macquarie

Enel resolved to initiate procedures aimed at the sale of a minimum of 40% and up to 50% of the share capital of Open Fiber to Macquarie. Here are all the details

Enel turnaround on Open Fiber.

Enel resolved to initiate the procedures aimed at the sale of a minimum of 40% and up to 50% of the share capital of Open Fiber to Macquarie Infrastructure & Real Assets, granting a mandate to this effect to the CEO Francesco Starace.

TERMS OF THE TRANSACTION IN THE EVENT OF THE TRANSFER OF 50% OF OPEN FIBER

A note from Enel underlines that based on the final offer, the consideration for the sale of 50% of the share capital of Open Fiber is equal to € 2.650 billion and is inclusive of the transfer to Macquarie of 100% of the Enel portion of the 'shareholders' loan granted. to Open Fiber, including accrued interest, for an estimated value of approximately 270 million euros at 30 June 2021, the date by which the transaction is expected to be finalized.

IN CASE OF SALE OF 40% OF OPEN FIBER

In the event of the sale of 40% of the share capital of Open Fiber, since a proportional reduction of the values ​​indicated above is envisaged in the final offer, the consideration for the sale is 2.120 billion and the Enel portion of the 'shareholders' loan' is equal to 80%, and the relative value at 30 June 2021 is estimated at around 220 million euros. The consideration indicated above does not take into account the effects potentially connected with the earn-out mechanisms.

THE TIMING OF THE OFFER

The final offer provides that if the closing of the transaction is after June 30, 2021, the aforementioned consideration will be increased at an annual rate of 9% calculated starting from July 1, 2021 and up to the closing itself.

THE ROLE OF CDP

The signing of the purchase agreement, the note reads, is subject to certain conditions, including: the authorization to Macquarie Infrastructure & Real Assets, issued by Open Fiber, to share with a small number of potential co -investors the information acquired during the due diligence carried out, in order to syndicate the consideration; failure to exercise the pre-emption right that the Open Fiber statute recognizes in the hands of Cdp Equity (in turn a 50% shareholder of Open Fiber); in the event of the sale of 50% of the share capital of Open Fiber, the sharing between Macquarie and Cdp equity of the modification of some aspects that currently regulate the governance of Open Fiber.

OTHER NECESSARY AUTHORIZATIONS

The completion of the transaction is then in turn subject to a series of conditions, including: the obtaining, by the lending banks of Open Fiber, of the waivers necessary for the transfer to Macquarie of the stake held by Enel in Open Fiber; obtaining the various administrative authorizations in preparation for the transfer of Enel's stake in Open Fiber (with particular regard to the golden power procedure at the Presidency of the Council of Ministers and the authorization issued by the Community Antitrust Authority).

THE EARN-OUT QUESTION

The sale of Open Fiber to Macquarie provides for the recognition of two different 'earn-outs' in favor of Enel, linked to the successful conclusion of the dispute initiated by Open Fiber against Tim and to the creation of value deriving from the possible implementation of the so-called' single broadband network between Open Fiber and Tim. In detail, the note states, an 'earn-out' is linked to the positive conclusion, with a final judgment, of the dispute initiated by Open Fiber against Tim for anti-competitive conduct put in place by the latter. In particular, this 'earn-out' ensures the recognition in favor of Enel of 75% of the net compensation that should consequently be collected by Open Fiber and is expected to be paid to Enel based on the dividends distributed by Open Fiber to its shareholders to any title.

The "earn-out" will be calculated in proportion to the actual stake sold by Enel to Macquarie. The other 'earn out' is instead linked to the creation of value deriving from the possible creation of the 'single network' of broadband. It is based on the criterion of return for the investor and provides that, in the event that a transfer transaction of the investment in Open Fiber held by Macquarie occurs which results in a rate of return on the investment (IRR) greater than 12 , 5%, a share equal to 20% of the value realized by Macquarie exceeding this threshold is paid to Enel, up to a maximum amount of 500 million euros in the event of the sale of 50% of the share capital of Open Fiber and 400 million euro in the event of a sale of 40%.

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HERE IS THE INTEGRAL NOTE OF ENEL

The Board of Directors of Enel SpA ("Enel" or the "Company"), meeting today under the chairmanship of Michele Crisostomo, resolved to initiate the procedures aimed at the sale of a minimum of 40% and up to 50% of the capital of Open Fiber SpA ("Open Fiber") to Macquarie Infrastructure & Real Assets ("Mira"), giving the CEO a specific mandate in this regard.

Based on the final offer received from Mira, the consideration for the sale of 50% of the share capital of Open Fiber is equal to € 2,650 million and includes the transfer to Mira of 100% of the Enel portion of the "shareholders' loan" granted to Open Fiber, including accrued interest, for an estimated value of approximately 270 million euros at 30 June 2021, the date by which the transaction is expected to be finalized. In the event of the sale of 40% of the share capital of Open Fiber, a proportional reduction of the above values ​​being envisaged in the final offer of Mira, the consideration for the sale amounts to 2,120 million euros, the Enel portion of the "shareholders' loan ”Granted to Open Fiber subject to transfer to Mira is equal to 80%, and the relative value at 30 June 2021 is estimated at approximately 220 million euros. The consideration indicated above does not take into account the effects potentially connected to the earn-out mechanisms described below, as they cannot be quantified at present.

The final offer received by Mira provides that if the closing of the transaction is after June 30, 2021, the aforementioned consideration will be increased at an annual rate of 9% calculated from July 1, 2021 and up to the closing itself.

The offer also provides for the recognition of two different earn-outs in favor of Enel, linked to future and uncertain events.

An “earn-out” is linked to the positive conclusion, with final judgment, of the dispute initiated by Open Fiber against TIM SpA (“TIM”) for anti-competitive conduct put in place by the latter. In particular, this "earn-out" ensures the recognition in favor of Enel of 75% of the net compensation that should consequently be collected by Open Fiber and is expected to be paid to Enel based on the dividends distributed by Open Fiber to its shareholders to any title. The "earn-out" will be calculated in proportion to the actual share sold by Enel to Mira.

The other "earn out" is instead linked to the creation of value deriving from the possible creation of the so-called "single network" broadband between Open Fiber and TIM. It is based on the criterion of return for the investor and provides that, in the event that a transfer transaction of the investment in Open Fiber held by Mira occurs which results in a rate of return on the investment (IRR) greater than 12, 5%, Enel is paid a share equal to 20% of the value realized by Mira exceeding this threshold, up to a maximum amount of 500 million euros in the event of the sale of 50% of the share capital of Open Fiber and 400 million euros euro in case of sale of 40%.

The stipulation of the purchase agreement between the parties is subject to certain conditions, including:

· The authorization to MIRA, issued by Open Fiber, to share the information acquired during the due diligence performed with a small number of potential co-investors, in order to syndicate the consideration;

· Failure to exercise the right of pre-emption that the Open Fiber statute recognizes in CDP Equity SpA (“CDPE”, in turn a 50% shareholder of Open Fiber);

· In the event of the sale of 50% of the share capital of Open Fiber, the sharing between Mira and CDPE of the modification of some aspects that currently regulate the governance of Open Fiber.

The completion of the transaction is then in turn subject to a series of conditions, including:

· The obtaining, from the lending banks of Open Fiber, of the waivers necessary for the transfer to Mira of the investment held by Enel in Open Fiber;

obtaining the various administrative authorizations in preparation for the transfer of Enel's stake in Open Fiber to Mira (with particular regard to the golden power procedure at the Presidency of the Council of Ministers and the authorization issued by the Community Antitrust Authority

[1] Equal to the entire stake held by Enel in Open Fiber.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/quanto-incassera-enel-in-caso-di-vendita-del-50-di-open-fiber-a-macquarie/ on Thu, 17 Dec 2020 17:29:27 +0000.