RWE AG Sells 74.9% Stake in Transmission System Operator Amprion

RWE AG has reached agreement on the sale of a 74.9 % stake in its transmission systems operator Amprion GmbH to a consortium of financial investors, RWE announced in a press release yesterday.

Amprion is the largest of the four German transmission systems operators, operating an extra-high voltage grid with a length of 11.000 km. The consortium of mainly German institutional financial investors consists of insurance companies and special pension funds. It is managed by Commerz Real AG, a subsidiary of Commerzbank AG. Members of the consortium are companies belonging to Munich Re and ERGO, represented by MEAG, Swisslife and Talanx as well as the Westfalen-Lippe doctors’ pension fund.

In addition to its remaining 25.1% share, RWE will temporarily hold a stake in the consortium, giving it a further indirect share in Amprion of 10.8 %, the company said. Commerz Real AG will also temporarily hold the equivalent of a 13 % shareholding in Amprion, but is said to sell this stake to further investors in the short term.

According to RWE the sale price is based on an overall enterprise value of approximately EUR 1.3 billion (as at 1 January 2011), representing almost the entire regulated asset base of Amprion as recognised by the German regulator. It reflects about eight times Amprion’s recurrent earnings before interest, taxes, depreciation and amortisation (EBITDA), RWE further pointed out.

The sale of Amprion is a another step in RWE’s divestment programme of up to EUR 8 billion worth of company assets, reducing its net debt. Jürgen Grossmann, CEO of RWE AG, also pointed out that network expansion required very high levels of investment. RWE wanted to spread the burden of Amprion’ investment plans for investments over EUR 3 billion over the next 10 years, he said. “In the investor consortium, we have gained a reliable, financially sound partner with a long-term strategy”, he added, announcing that RWE would continue to provide competent and reliable support to Amprion’s transmission systems business.

Two of the four major German utilities, E.ON AG and Vattenfall AG, already sold their transmission networks in the last two years. The fourth major competitor, EnBW AG, is reportedly considering a sale of a minority stake in its transmission system subsidiary. All transmission system operators are faced with high costs for the modernisation and expansion of the high and extra-high voltage grids, enabling them to accommodate the growing share of renewable energy. According to the German Energy Agency (dena), some 3,600 km of new extra high voltage lines are needed until 2020. Besides the (former) parent companies of the transmission system operators, E.ON AG, RWE AG, EnBW AG and Vattenfall are burdened with the nuclear fuel rod tax introduced with last year’s Energy Concept and the shut down of the seven oldest nuclear power plants after the Fukushima nuclear accident.

Source: RWE AG

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