Significant events in 2019

Issue of new €1 billion green bond in Europe

On January 14, 2019, Enel Finance International NV placed its third green bond on the European market. The issue amounts to a total of €1,000 million and provides for repayment in a single instalment at maturity on July 21, 2025.

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Funac

With Law 20.416 of February 5, 2019, the state of Goiás reduced from January 27, 2015 to April 24, 2012 the period of operation of the Funac fund and the tax benefit system that allowed Celg Distribuição SA - Celg-D (now Enel Distribuição Goiás) to offset ICMS (tax on the circulation of goods and services, similar to VAT) against the tax credit for Celg-D investments to develop and maintain its grid. On February 25, 2019, Celg-D appealed the provisions of Law no. 20.416 of February 5, 2019 on a precautionary basis (“writ of mandamus”) before the Court of the state of Goiás, which denied the appeal on February 26, 2019. Celg-D appealed this ruling and the Court of the state of Goiás allowed the appeal on June 11, 2019. On October 1, 2019, the Court of the state of Goiás issued an order revoking the precautionary measure previously granted in favor of Celg-D. Celg-D filed an appeal against this decision, claiming that the right to guarantee tax credits has both a legal and contractual basis and that, therefore, the actions that the state of Goiás has taken in order to fully suspend the application of these laws are patently unfounded. On April 26, 2019, Law no. 20.468 was promulgated. With the law, the state of Goiás revoked the tax relief referred to above in its entirety. On May 5, 2019, Celg-D filed a petition and a request for a precautionary suspension against the state of Goiás to contest this law. On September 16, 2019, the Court of the state of Goiás denied the petition for precautionary relief, upholding the repeal of the tax benefit of the ICMS. On September 26, 2019, Celg-D filed an appeal against the decision denying the precautionary suspension, claiming that the repeal of the tax credit law is unconstitutional to the extent that these credits were established in accordance with applicable law and constitute acquired rights.

Amendment of regulatory framework for hydroelectric concessions

The changes introduced with Decree Law 135 of December 14, 2018 (the “Simplification Decree”), ratified into law in February 2019, included the amendment of the criteria for the reassignment and extension of concessions and possible in
demnities for outgoing concessionaires. These rules will be completed with implementing provisions to be enacted by the regions and the competent authorities.

Disposal of 100% of Mercure Srl

On March 1, 2019, the sale of 100% of Mercure Srl was finalized with the receipt of a provisional €162 million, subsequently adjusted to €168 million, corresponding to the valuation of the business unit at the reference date of January 1, 2018.

Acquisition of 650 MW of renewables capacity from its North American joint venture EGPNA REP

On March 14, 2019, Enel Green Power North America Inc. finalized the acquisition of 100% of seven renewable generation plants totaling 650 MW from Enel Green Power North America Renewable Energy Partners LLC, an equally owned joint venture. The total paid for the transaction amounted to $256 million, for an enterprise value equal to $900 million.

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Acquisition of Tradewind, a US renewables development company

On March 26, 2019, Enel Green Power acquired Tradewind Energy, a renewables project development company, which includes 13 GW of wind, solar and storage projects located in the United States. The agreement also envisaged the sale of Savion, a subsidiary of Tradewind, to the Green Investment Group.

Increase in stake in Enel Américas

In April 2019, Enel SpA increased its stake in its Chilean subsidiary Enel Américas to 56.8% from 51.8% following the settlement of two share swap transactions entered into in October 2018 with a financial institution to acquire up to 5% of the share capital of Enel Américas.
On June 28, 2019. Enel SpA entered into two share swap contracts with a financial institution to increase its interest in its listed Chilean subsidiary Enel Américas SA by up to 5% of share capital from its current 56.8%.
On September 3, 2019, Enel SpA successfully completed a capital increase at its Chilean subsidiary Enel Américas SA in the total amount of $3 billion. Enel increased its stake in Enel Américas to 57.26% from its previous holding of 56.8%.
At December 31, 2019, Enel held a total interest of 59.97% in Enel Américas.

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Enel refinances hybrid bonds

On May 15, 2019, Enel successfully launched a euro-denominated non-convertible bond on the European market in the form of a subordinated hybrid security with a maturity of about six years, amounting to €300 million.

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Resolution of outstanding regulatory issues in Argentina has positive impact for the Enel Group

On May 17, 2019, Edesur signed two agreements with the Argentine government that enabled the settlement of a number of pending regulatory issues, allowing the Enel Group to operate within a stable and fully defined framework, with a significant positive impact on EBITDA.

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Sale of 540 MW of renewables capacity in Brazil

On May 31, 2019, Enel Green Power Brasil Participações Ltda closed the sale of 100% of three operational renewables plants totaling 540 MW to the Chinese company CGN Energy International Holdings Co. Limited for R$2.9 billion, equivalent to about €660 million.

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Gradual halt of coal-fired generation in Chile

On June 4, 2019, Enel Generación Chile and GasAtacama Chile, members of the Enel Chile Group, signed an agreement with the Ministry of Energy governing the progressive interruption of generation at the Tarapacá, Bocamina I and Bocamina II coal-fired plants.

Placement of first “General Purpose SDG Linked Bond” in the world

On September 6, 2019, Enel Finance International NV placed a single-tranche “sustainable” bond for US institutional investors on the US and international markets. The bond totaled $1.5 billion, equal to about €1.4 billion.

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Brindisi plant - Ash dispute

With regard to the criminal investigation initiated by the Public Prosecutor’s Office of the Court of Lecce in 2017 concerning the use of fly ash, in the cement industry, on August 1, 2018, the Lecce Public Prosecutor lifted its seizure of the plant, with the termination of the judicial custody/administration of the facility and the restitution of about €523 million to Enel Produzione. However, the preliminary investigation is continuing both against the accused individuals and the company pursuant to Legislative Decree 231/2001. On October 10, 2018, the Definitive Technical Report was filed. On December 6, 2018, the investigating magistrate of the Court of Lecce, at the request of the Public Prosecutor, scheduled a hearing for January 22, 2019, to receive testimony from the experts on the report. The investigating magistrate then postponed the hearing until April 15, 2019. Following this hearing, the experts reiterated the accuracy of the assessment and the non-hazardous nature of the ash produced by the thermoelectric plant and the possibility of using that ash in the production of cement.
With a notice communicated on June 7, 2019, the Lecce Public Prosecutor announced the completion of the preliminary investigation (pursuant to Article 415-bis of the Code of Criminal Procedure) in relation to the criminal proceedings in question. On July 1, 2019, the brief pursuant to Article 415-bis of the Code of Civil Procedure was filed jointly by all the defendants, requesting that the case against the defendants and the company be dismissed, given the clear conclusions of the expert testimony, which fully confirmed the appropriateness of the ash management process adopted at the Brindisi plant.
On January 9, 2020, the original notices of the preliminary hearing set for January 29, 2020 were received. Due to a number of irregularities in the notices, the hearing was postponed until April 8, 2020.

Halt of generation at coal-fired plants in Iberia

On September 27, 2019, Endesa SA decided to promote the interruption of generation by the coal-fired plants owned by Endesa in Iberia and to assess future options for the related sites, in compliance with the procedures set out in applicable regulations.

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Sale of Reftinskaya GRES coal-fired plant in Russia

On October 1, 2019, Enel SpA announced that Enel Russia had transferred ownership of the Reftinskaya GRES coal-fired plant to JSC Kuzbassenergo, owned by Siberian Generating Company.

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Placement of first “General Purpose SDG Linked Bond” on the European market

On October 10, 2019, Enel Finance International NV launched a multi-tranche “sustainable” bond for institutional investors on the European market totaling €2.5 billion. The bond is linked to the achievement of the United Nations Sustainable Development Goals (SDGs) and is the Enel Group’s first “General Purpose SDG Linked Bond” issued on the European market.

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Agreement for acquisition of 55% of PayTipper

On November 14, 2019, Enel X reached an accord to acquire 55% of PayTipper, a payment institution with agreements with an extensive network of sales outlets.

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Increase in stake in Enel Chile by up to 3%

On December 5, 2019, Enel SpA entered into two share swap agreements with a financial institution to increase its interest in its listed Chilean subsidiary Enel Chile SA by up to 3% from the current holding of 61.9%.

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Early redemption of hybrid bond

On December 5, 2019, Enel SpA exercised its early call option for the listed hybrid bond issued on January 15, 2014 on the Irish Stock Exchange with a nominal value of €1,000 million, in accordance with the terms and conditions envisaged in the prospectus of January 10, 2014.

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Endesa industrial relations

After a series of meetings of the Comisión Negociadora del V Convenio Colectivo de Endesa (Comisión Negociadora) which began in October 2017 and continued throughout 2018, in view of the impossibility of reaching an agreement, Endesa notified the workers and their union representatives that, with effect from January 1, 2019, the 4th Endesa Collective Bargaining Agreement must be considered terminated in the same way as the “framework guarantee contract” and the “agreement on the voluntary suspension or resolution of employment contracts in the period 2013-2018”, applying from that date the provisions of general labor law, as well as the legal criteria established in the matter.
In December 2019, the most representative union at Endesa decided to abandon the suit pending before the Supreme Court to voluntarily participate in an arbitration proceeding before the Servicio Interconfederal de Mediación y Arbitraje (SIMA) aimed at resolving the main issues connected with the 5th Endesa Collective Bargaining Agreement.
Accordingly, the proceeding before the Supreme Court is continuing with the three minority unions that had initially initiated the suit together with the larger union.
In parallel, numerous individual suits have been filed by retired staff and ex-employees who had participated in the retirement incentive agreements (AVS) to judicially ascertain that the termination of the 4th Endesa Collective Bargaining Agreement would not impact them. Currently, the majority of these proceedings have been suspended or are being suspended, pending a ruling on the collective issue before the Supreme Court, on whose outcome these proceedings depend