Greek public power corporation PPC sealed a binding agreement to take over the assets held by Italy's utility group Enel in Romania for the price of approximately EUR 1.26 bln, equivalent to an enterprise value of about EUR 1.9 bln.

The total consideration would be subject to periodic adjustments as well as to an earn-out mechanism for a potential additional payment based on the future value of the retail business.

Completion of the acquisition is expected to occur by the third quarter of 2023 and will be subject to certain conditions (conditions precedent) customary in such transactions, including, but not limited to, the approval of the relevant competition authorities.

PPC plans to finance the acquisition through a combination of debt and equity from its balance sheet, of which EUR 800 mln will come from already secured loans, available in the form of a EUR 485 mln 5-year loan from Greek banks, as well as a bridge loan (bridge facility) of EUR 315 mln from international banks, Economedia.ro reported.

"All Enel's operational activities in Romania are and will continue to run as planned, without affecting partners and end customers who will continue to benefit from all the services and products they are accustomed to," Enel Romania said in a statement.

Fitch Ratings has recently affirmed PPC's Long-Term Issuer Default Rating and senior unsecured rating at BB-/stable, saying that the likely acquisition of Enel Romania "reflects its resilient cash flow performance."

PPC's IDR incorporates a one-notch uplift reflecting overall moderate links with the Greek state (BB+/Stable), including solid evidence of tangible support and moderate systemic relevance in case of default. The rating agency sees those links as weakening in the medium term as PPC builds a record of financial self-sustainability and the state reduces its grip.

iulian@romania-insider.com

(Photo source: Enel Romania)