2nd UPDATE: Enel Gets EUR7 Billion Finance For Endesa Stake-Sources

Enel SpA (ENEL.MI) has set up about EUR7 billion of financing to enable it to take full control of Endesa SA (ELE.MC) in a deal expected in the next few weeks and just after a year of joint ownership, said people familiar with the matter Monday.

The agreement, in which Enel will buy Acciona SA's (ANA.MC) 25% stake in Endesa, is estimated to take place in the "next few weeks," said one of the people familiar with the matter. The person asked not to be named.

The financing deal, lined up to buy Acciona's stake, would help Enel to take control of one of Spain's largest power utilities. Enel already spent almost EUR30 billion to buy a 67% stake in Endesa in 2007, but it has jointly run the company with Acciona.

As part of the 2007 agreement between the two, Acciona holds a put option that allows it to force Enel to buy out its stake from 2010 at more than EUR41 a share, or about 39% higher than the current value, placing a value of around EUR11 billion on the stake.

The pool of Italian and Spanish banks that are part of the financing are Mediobanca SpA (MB.MI), UniCredit SpA (UCG.MI), Intesa Sanpaolo SpA (ISP.MI), Banco Santander SA (STD), Banco Bilbao Vizcaya Argentaria SA (BBV) and La Caixa, the people said.

The agreement is expected to happen "in the next two months" and would allow Italy's biggest utility to run the Spanish company on its own, said another person, who asked not to be identified.

Analysts say that spats between the two in their joint management of Endesa indicate parting would be better.

The reason why Enel is interested in buying out Acciona is so it can run the company more efficiently, said one of the people.

One of the people said he originally had thought the breakthrough could happen during the Christmas holiday period but cautioned certain conditions still had to be met.

A key part of the deal would be the valuation of Endesa's renewable energy assets in a transaction that would include selling them to Acciona so as to reduce the cash burden for Enel.

The person also said Enel isn't concerned about the extra debt burden from the deal.

Enel has reported its net debt on Sept. 30 - its last public figure - was EUR51.4 billion and that the amount for the end of 2008 would be less than EUR50 billion. Enel's market value Monday closed at EUR27.1 billion.

In November, Enel Chief Executive Fulvio Conti repeated on a conference call that any deal increasing the utility's debt pile would be accepted only if it allows the company to keep its "A" credit rating.

On Thursday, Standard & Poor's Rating Services said it placed its "A-" long-term corporate credit rating on Enel on "CreditWatch" with negative implications. It cited Enel's "weak" capital structure, delays in its asset disposal program and "significant" refinancing risk as some of its concerns.

Monday, Enel shares closed 1.6% higher at EUR4.38, outperforming the 1.8% drop in Italy's benchmark S&PMib Index.

Company Web site: http://www.enel.it

-By Liam Moloney and Sabrina Cohen, Dow Jones Newswires; [phone]; [e-mail]

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