VERBUND intensifies successful engagement in Italy

5/27/2004Wien

VERBUND is increasing its share in the Italian joint venture Energia SpA to 37.5 percent through a capital increase of 150 million euros - VERBUND CEO Haider: “We are writing a new chapter in the Italian success history of VERBUND”.

Electricity production of Energia SpA in Italy to be increased to 23 TWh by 2007 - VERBUND expects 30 million Euro flow of dividends from its commitment in Italy as of 2007, trend: sharply rising.

VERBUND, Austria’s largest electricity service provider, continues its successful policy in the Italian energy market. For the further development of the joint venture, the VERBUND Supervisory Board approved a 150 million Euro increase in capital in Energia. Thus VERBUND increases its shares in Energia SpA by 17 percent to a calculated percentage of 37.5 percent. The majority holder is the industrial holding CIR Group, which is controlled by the DeBenedetti Group.

There are a number of reasons why VERBUND further develops its business activities in one of Europe’s most interesting electricity markets within the successful partnership with the CIR Group:

At an electricity consumption of 320 terawatt hours in the year 2003 (TWh), the Italian electricity market is the fourth largest in the European Union. Italy depends heavily on imports. In 2003, Italy imported 51 TWh, which corresponds to almost the total production of all Austrian electricity suppliers. The Italian electricity wholesale prices are approximately 50 percent above the EU average and no less than about two thirds above the Austrian price level. The Italian businesses have shown a high degree of willingness to change their electricity providers. More than 50 percent of the big industrial customers changed their electricity provider, which is nearly twice the rate of Austria.

“Our commitment in Italy, which we started building from zero around five years ago by founding the joint venture Energia in cooperation with the CIR Group, has developed excellently in the past couple of years. We are absolutely positive that we can add another important chapter to our Italian success story by increasing our shares in Energia”, Mr. Hans Haider, VERBUND CEO, shows confidence in view of the current facts.

How sharp the increase actually is can be seen from the fact that Energia has become one of the major suppliers in the free Italian electricity and gas market, ranking fourth in the supply of industrial electricity customers.

One fundamental factor of success in the Italian electricity market is the availability of national generating capacities. Energia took an important step by acquiring the former production company ENEL Interpower - now: Tirrenopower.

Energia also plans to build new generating units, however. A gas-fuelled power plant with a capacity of 760 megawatt (MW) is already under construction in Termoli. For the construction of another gas-fuelled power plant with a similar capacity in Modugno near Bari the building permit will be obtained soon.

Additionally, the procedure to obtain permit for the construction of a thermal power plant comparable in size in Aprilia is ongoing. The projected production of all three plants is around 16 TWh of electricity. (By comparison: the Dürnrohr power plant has an installed electrical power of not quite 760 MW and generates approx. 4 TWh of electricity p.a.).

By 2007, Energia will have around 23 TWh of company-generated electricity in Italy, which corresponds to about three quarters of the VERBUND output in Austria. (2003: VERBUND total output approx. 28 TWh).

From its increased engagement in Italy VERBUND expects substantial, two-digit million-euro dividend flows with a strong upward tendency as of 2007.

In the course of its increase in equity investment, VERBUND had its Italian partner guarantee a number of additional statutory rights to VERBUND, including dividend guarantees and stronger representation in the bodies.