Enel Weighs Asset Sales Outside Italy to Cut €70 Billion Debt

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(Bloomberg) — Enel SpA is considering further asset sales outside Italy to reduce its debt pile and finance new investments, according to people familiar with the matter. 

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Italy’s largest utility, which cut its profit target for 2022 in the wake of the energy crisis, will unveil its new strategy later this month. Tha plan may include selling partnerships in stakes in countries such as Romania, Greece, Australia and Colombia, the people said, asking not to be named because the discussion isn’t public. 

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No decision has been taken and the dismissals could still change or be called off, the people said. A spokesman for Enel declined to comment.

Asset sales may help reduce the company’s debt which rose to a record of €69.7 billion ($70.1 billion) at the end of September. Enel targets to cut its debt to €58 billion-€62 billion by the end of this year.

The sales are part of Enel’s strategy of asset rotation aimed at boosting finances for new investments. Enel Chief Executive Officer Francesco Starace will present the company’s 2023-2025 business plan on November 22.

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European utilities have come under mounting pressure as a region-wide gas crunch has sent market prices surging. Some of the continent’s largest energy producers have been grappling for financing, with Enel in talks on a multibillion-euro state-backed credit line.

The Italian company may raise between €15 billion and €25 billion with asset disposals in emerging markets as part of a “deep rationalization,” Goldman Sachs analysts led by Alberto Gandolfi said in a note November 7. 

Enel has already announced asset sales with an expected impact on net debt of around €4 billion by year end. Transactions announced include the sale of the entire stake in its Russian unit, of an electricity distribution unit and a gas plant in Brazil, of the Chilean electricity transmission business and of a stake in smart grid operator Gridspertise.

Enel is also seeking a revolving credit line to cover derivatives risks linked to spiking energy prices. The facility would be an “umbrella” to protect the company against unusually high gas prices in the future, Chief Financial Officer Alberto De Paoli said last week. 

On Nov. 3, Enel reported earnings tjat were little changed for the first nine months of the year, after a decline in hydroelectric power generation was partially offset by an increase in thermal output, including coal-fired plants.