April 10 (SeeNews) - Italy's Enel said on Monday it has paid 401.2 million euro ($424.4 million) for a minority stake in Romanian power distributor formerly known as Electrica Muntenia Sud under a decision of the International Chamber of Commerce in Paris.
The Italian utility has completed the acquisition of a package of 13.57% shareholding interest in the two companies that now make up Electrica Muntenia Sud - E-Distributie Muntenia and Enel Energie Muntenia, Enel said in a press release.
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Enel acquired the shares from SAPE S.A., a state-owned Romanian company that manages public holdings in several companies.
Following the transaction, Enel increased its shareholding in both companies to 78% from 64.4% held previously.
Romania filed for arbitration with the International Chamber of Commerce in 2014, seeking to exercise a put option included in the contract for Electrica Muntenia Sud's privatisation and asking Enel to pay 521.6 million euro for 13.57% interest in the power distributor. According to Romanian media reports, Enel was willing to pay only 300 million euro for the minority stake.
Romania wrapped up the sale of 64.4% of Electrica Muntenia Sud to Enel for 820 million euro in 2008. Following the privatization, Enel divided Electrica Muntenia Sud into E-Distributie Muntenia and Enel Energie Muntenia, to separate power distribution from energy supply business as required by the European Union legislation.
According to the privatisation contract, state-controlled power distributor and supplier Electrica [BSE:EL] has the right to sell part of or the entire stake it still owns in former Electrica Muntenia Sud, of 23.57%, and Enel has the obligation to buy it. A stake of 10% in Electrica was subsequently distributed among the company's employees, leaving Enel with the obligation to buy only the remaining 13.57%.
In July 2016, Enel won a 1 billion euro arbitration case against Romania which claimed that the company had not respected certain provisions of the privatisation contract. The court ruled that Romania also has to pay 1.5 million euro in court fees.
In March 2017, Enel said it plans to invest in Romania 151 million euro this year, mainly in its distribution operations, while in 2018 it plans to put in 178 million euro in network upgrades.
($ = 0.9452 euro)
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