Fitch: No Impact on Endesa-Chile's Ratings From Sale of GNL Quintero

CHICAGO--()--According to Fitch Ratings, there is no material impact on Empresa Nacional de Electricidad S.A's (Endesa-Chile: FC/LC IDR: 'BBB+'/Outlook Positive, National Rating: 'AA(cl)'/Outlook Positive) ratings from the sale of its participation (20%) in the liquefied natural gas (LNG) terminal GNL Quintero.

Fitch believes the company's sale of non-core business GNL Quintero at an agreed purchase price of approximately USD200 million (subject to post-closing adjustments) would not have an impact on Endesa-Chile's credit profile as the company would continue focusing on its primary business segments, power generation and electricity distribution. After the closing of the transaction, Endesa-Chile will not have a participation in GNL Quintero, but will remain having a 33.3% participation in GNL Chile, GNL Quintero's sole customer.

The company's LNG contractual position would not be affected by the sale of GNL Quintero's participation. Through GNL Chile, and under the Terminal Use Agreement with GNL Quintero, Endesa-Chile will continue having access to the regasification facilities with GNL Quintero until 2035. This contract coupled with the LNG Sale and Purchase Agreement with British Gas allows Endesa-Chile to secure its long-term LNG supply at competitive prices.

Fitch views the acquisition as mildly positive for Endesa-Chile as it would bolster liquidity and slightly reduce leverage. GNL Quintero's dividend payments to Endesa-Chile did not represent a significant portion of the company's cash flow generation, and as of year-end 2015 it was equivalent to approximately USD6 million. The transaction is expected to close during the second half of 2016.

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Contacts

Fitch Ratings
Cinthya Ortega
Director
+1-312-606-2373
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
or
Rina Jarufe
Senior Director
+56 2 2499 3310
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Cinthya Ortega
Director
+1-312-606-2373
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
or
Rina Jarufe
Senior Director
+56 2 2499 3310
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com