Enel is pressing ahead with plans to sell assets in Slovakia and Romania despite a recent delay, in an effort to reassure investors that it will keep paying down its debt and refocus on faster-growing markets.
"We do have offers. We know more or less what the issues are and we know that this process can be closed sometime between now and next June," Francesco Starace, chief executive of Italy's largest utility said in an interview with the Financial Times.
"They will be sold in 2015 so we will be much better off with debt than we had originally planned."
Enel, which is 30 per cent owned by the Italian government, has been struggling to reduce its heavy leverage - a legacy of its 2008 purchase of Spanish rival Endesa - while also investing in new, expanding markets outside Europe.
Mr Starace, who was appointed as chief executive in May by Matteo Renzi, Italy's 40 year-old reformist prime minister, has already implemented sweeping organisational changes designed to simplify the company's structure, including a raft of cost-cutting measures.
However, he has come under pressure to deliver the planned Eastern European disposals, which could bring in about €4bn for the group.
Enel aimed to end 2014 with a debt level of €39.5bn, against earlier projections of €37bn, which has unnerved some investors.
Shares in the Italian utility were trading at €3.57 on Friday, down substantially from a peak of €4.46 last June.
Some analysts have been supportive of Mr Starace's strategy. "Enel is emerging from some very difficult years, under the new leadership it could be ready to reboot itself," says Claudia Introvigne, an equity analyst at Kepler Chevreux, which has a "hold" rating on Enel shares. "With the new structure everything Enel does will become clearer, the sentiment is positive".
But others have been more sceptical. Citi in November trimmed its target price on the company's indebtedness and maintains a "sell" rating on Enel shares.
Enel's leverage would have been even higher if the company had not successfully placed 22 per cent of its shares in Spanish utility Endesa in November, raising more than €3bn.
"This was a big success," says Mr Starace. "It was by far one of the largest public offerings in Europe and for Spain it was a very strong sign of confidence by the investment community at a time when Spain is trying to complete the reform process," he says.
Despite the slowdown in growth across parts of Latin America, Enel, Mr Starace is looking to grow further in the region.
"If you have a population that is big and so young, for a business like us that provides electricity it's a fantastic assurance that for the next 10-20 years demand will keep growing," he said.
He is much more cautious about growth in Enel's home market, which has been hobbled by a stagnant economy. "There will be some recovery in demand [in 2015] but we are not betting heavily on that."
The Italian finance ministry is looking to reduce its stake in Enel to 25 per cent, but the privatisation plan has been on hold due to the poor market conditions.
"They can do what they want with their shares. They can sell or keep them," he said. " It doesn't really make a difference. I know people don't believe this, but the Italian government is not at all intruding in the running of the company," Mr Starace said.
He is expected to unveil
more details on his reorganisation in March. "It will take 2015 for
markets to understand that what we say is actually happening," said Mr
Starace, "We will keep the debt at the right level depending on the
confidence that investors have in our capability to generate cash."
(Financial Times)
