Annual Report 2010 - Enel.com

guarantees or privileges with respect to those already
established in the individual contracts by the company
or subsidiaries of the Enel Group, unless an equivalent
guarantee is extended equally or pro rata to the loans
in question;
> clauses that require the guarantor (whether Enel SpA
or banks acceptable to the EIB) to maintain its rating
above a specified grade; in the case of guarantees provided
by Enel SpA, the Group’s equity may not fall below
a specified level;
> material changes clauses, under which the occurrence
of a specified event (mergers, spin-offs, disposal or
transfer of business units, changes in company control
structure, etc.) gives rise to the consequent adjustment
of the contract, without which the loan shall become
repayable immediately without payment of any commission;
> requirements to report periodically to the EIB;
> requirement for insurance coverage and maintenance
of property, possession and use of the works, plant and
machinery financed by the loan over the entire term of
the agreement;
> contract termination clauses, under which the occurrence
of a specified event (serious inaccuracies in documentation
presented in support of the contract, failure
to repay at maturity, suspension of payments, insolvency,
special administration, disposal of assets to creditors,
dissolution, liquidation, total or partial disposal of
assets, declaration of bankruptcy or composition with
creditors or receivership, substantial decrease in equity,
etc.) triggers immediate repayment.
In 2009 Cassa Depositi e Prestiti SpA granted a loan to
Enel Distribuzione SpA. The main covenants governing
the loan and the guarantee issued by Enel SpA can be
summarized as follows:
> a termination and acceleration clause, under which the
occurrence of a specified event (such as failure to pay
principal or interest installments, breach of contract
obligations or occurrence of a substantive prejudicial
event) entitles Cassa Depositi e Prestiti to terminate the
loan;
> a clause forbidding Enel or its significant subsidiaries
(defined in the contract and the guarantee as subsidiaries
pursuant to Article 2359 of the Civil Code or consolidated
companies whose turnover or total gross assets
are at least 10% of consolidated turnover or consolidated
gross assets) from establishing additional liens,
guarantees or other encumbrances except for those expressly
permitted unless Cassa Depositi e Prestiti gives
it prior consent;
> clauses requiring Enel to report to Cassa Depositi e
Prestiti both periodically and upon the occurrence of
specified events (such as a change in Enel’s credit rating,
or breach in an amount above a specified threshold
in respect of any financial debt contracted by Enel,
Enel Distribuzione or any of their significant subsidiaries,
etc.). Violation of such obligation entitles Cassa
Depositi e Prestiti to exercise an acceleration clause.
> a gearing clause, under which, at the end of each
measurement period (half yearly), Enel’s consolidated
net financial debt shall not exceed 6 times annual consolidated
EBITDA. The contract establishes that as from
January 1, 2013, Enel’s consolidated net financial debt
shall not exceed 4.5 times annual consolidated EBITDA.
During 2010, Enel SpA and Enel Finance International NV
(formerly Enel Finance International SA) (the borrowers)
and a pool of banks (the lenders) agreed a €10 billion revolving
credit facility.
The main covenants for the Credit Agreement 2007, the
Credit Agreement 2009 and the €10 billion revolving line
of credit are substantially similar and can be summarized
as follows:
> negative pledge clauses under which the borrower
(and its significant subsidiaries) may not establish or
maintain (with the exception of permitted guarantees)
mortgages, liens or other encumbrances on all or part
of its assets to secure any present or future financial
liability;
> pari passu clauses, under which the payment undertakings
constitute a direct, unconditional and unsecured
obligation of the borrower and bear no preferential
rights among them and have at least the same seniority
as other present and future loans;
> change of control clause, which is triggered in the event
(i) control of Enel is acquired by one or more parties other
than the Italian state or (ii) Enel or any of its subsidiaries
transfer a substantial portion of the Group’s assets
to parties outside the Group such that the financial reliability
of the Group is significantly compromised. The
occurrence of one of the two circumstances may give
rise to (a) the renegotiation of the terms and conditions
of the financing or (b) compulsory early repayment of
the financing by the borrower;
> specification of default events, whose occurrence (e.g.
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