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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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ENDESA, S.A.
(Name of Subject Company)
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ENDESA, S.A.
(Name of Person(s) Filing Statement)
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Ordinary shares, nominal value (euro)1.20 each
American Depositary Shares, each representing the
right to receive one ordinary share
(Title of Class of Securities)
00029274F1
(CUSIP Number of Class of Securities)
Alvaro Perez de Lema
Authorized Representative of Endesa, S.A.
410 Park Avenue, Suite 410
New York, NY 10022
(212) 750-7200
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
With a Copy to:
Sergio J. Galvis, Richard A. Pollack, Angel L. Saad
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
1 (212) 558-4000
Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
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IMPORTANT LEGAL INFORMATION
The following document was made available to shareholdersof Endesa, S.A.
(the "Company" or "Endesa") on October 21st, 2005. Endesa shareholders are urged
to read Endesa's Solicitation/Recommendation Statement on Schedule 14D-9 when it
is filed by the Company with the U.S. Securities and Exchange Commission (the
"SEC"), as it will contain important information. The
Solicitation/Recommendation Statement and other public filings made from time to
time by the Company with the SEC are available without charge from the SEC's
website at www.sec.gov and at the Company's principal executive offices in
Madrid, Spain.
Statements in this document other than factual or historical information are
"forward-looking statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements regarding Endesa's
anticipated financial and operating results and statistics are not guarantees of
future performance and are subject to material risks, uncertainties, changes and
other factors which may be beyond Endesa's control or may be difficult to
predict.
Forward-looking statements could include, but are not limited to, statements
regarding: (1) estimated future earnings; (2) anticipated increases in wind and
CCGTs generation and market share; (3) expected increases in demand for gas and
gas sourcing; (4) management strategy and goals; (5) estimated cost reductions
and increased efficiency; (6) anticipated developments affecting tariffs,
pricing structures and other regulatory matters; (7) anticipated growth in
Italy, France and elsewhere in Europe; (8) estimated capital expenditures and
other investments; (9) expected asset disposals; (10) estimated increases in
capacity and output and changes in capacity mix; (11) repowering of capacity;
and (12) macroeconomic conditions. For all of these-forward looking statements,
Endesa claims the protection of the safe harbor for forward-looking statements
contained in the U.S. Private Securities Litigation Reform Act of 1995. Endesa
disclaims any obligation to revise or update any forward-looking statements in
this document.
The following important factors, in addition to those discussed elsewhere in
this document, could cause actual financial and operating results and statistics
to differ materially from those expressed in our forward-looking statements:
o Economic and Industry Conditions: materially adverse changes in economic or
industry conditions generally or in our markets; the effect of existing
regulations and regulatory changes; tariff reductions; the impact of any
fluctuations in interest rates; the impact of fluctuations in exchange
rates; natural disasters; the impact of more stringent environmental
regulations and the inherent environmental risks relating to our business
operations; and the potential liabilities relating to our nuclear
facilities.
o Transaction or Commercial Factors: any delays in or failure to obtain
necessary regulatory, antitrust and other approvals for our proposed
acquisitions or asset disposals, or any conditions imposed in connection
with such approvals; our ability to integrate acquired businesses
successfully; the challenges inherent in diverting management's focus and
resources from other strategic opportunities and from operational matters
during the process of integrating acquired businesses; the outcome of any
negotiations with partners and governments; any delays in or failure to
obtain necessary regulatory approvals (including environmental) to
construct new facilities or repower or enhance our existing facilities;
shortages or changes in the price of equipment, materials or labor;
opposition of political and ethnic groups; adverse changes in the political
and regulatory environment in the countries where we and our related
companies operate; adverse weather conditions, which may delay the
completion of power plants or substations, or natural disasters, accidents
or other unforeseen events; and the inability to obtain financing at rates
that are satisfactory to us.
o Political/Governmental Factors: political conditions in Latin America and
changes in Spanish, European and foreign laws, regulations and taxes.
o Operating Factors: technical difficulties; changes in operating conditions
and costs; the ability to implement cost reduction plans; the ability to
maintain a stable supply of coal, fuel and gas and the impact of
fluctuations on fuel and gas prices; acquisitions or restructurings; and
the ability to implement an international and diversification strategy
successfully.
o Competitive Factors: the actions of competitors; changes in competition and
pricing environments; the entry of new competitors in our markets.
[LOGO]
ENDESA'S RELEVANT FACT
New York, October 21, 2005.- Given the confusion created by Gas Natural SDG
S.A.'s recent statement regarding the supposed existence of required
authorizations to effect the legal separation of its gas distribution and
transportation activities, Endesa S.A. deems it necessary to make the following
observations for the general knowledge of the market:
1. At the time it announced the tender offer for the acquisition of Endesa
S.A.'s shares, Gas Natural SDG S.A. had not undertaken the separation of
its gas distribution and transportation activities, because it lacked
-according to Endesa's legal advisors- the required administrative
approvals, as a result of which the National Energy Commission cannot grant
Gas Natural SDG S.A. any approval to acquire share capital.
2. According to the information notified by Gas Natural SDG to the CNMV, by
Relevant Fact number 61.180, dated October 3, 2005 (available at
www.cnmv.es), its Board of Directors approved the separation of its
distribution assets project through a transfer to Gas Natural SDG, S.A.,
"transfer [that] will be immediately completed through (...) share capital
increases in Gas Natural Distribucion SDG". Said announcement expressly
indicated that "from a legal, operational and accounting perspective, the
separation of activities will become effective as of October 1, 2005".
Nonetheless, Gas Natural did not point out that such transaction required
prior administrative approval.
3. Gas Natural has repeated these statements in a Relevant Fact filed with the
CNMV on October 19, 2005 (number 61.519, available at www.cnmv.es). In that
announcement the gas company stated that "the separation of activities
became effective as of October 1, 2005, in accordance with the respective
Public Deed [of share capital increase], which, in addition, has been
registered with the commercial Registry on October 17, 2005".
4. On October 4, Endesa requested that the National Energy Commission (CNE)
require Gas Natural to request to the Commission the required prior
authorizations for the creation of two companies (Gas Natural SDG
Transporte and Gas Natural SDG Distribucion) and for the subsequent
transfer of gas transportation and distribution assets. Likewise, Endesa
requested that the Commission suspend the authorization process for Gas
Natural's tender offer for Endesa.
5. On October 11, Gas Natural SDG requested the CNE's authorization for the
creation of the affiliates and for the transfer of transportation and
distribution assets, if it deemed necessary. On October 13 and October 18,
the CNE decided, with the dissenting vote of two commissioners, that such
authorizations should be processed simultaneously with Gas Natural's tender
offer for Endesa, without the latter being suspended.
6. Gas Natural SDG persists today with the CNMV, by Relevant Fact number
61.584 (available at www.cnmv.es) in pretending to be in compliance with
respect to the separation of activities that it has undertaken, indicating
that the transaction has been reported to the CNE and that transfer of
distribution facilities is not subject to Madrid Autonomous Community's
approval, since "there are no rules regulating this issue".
7. Nonetheless, Gas Natural SDG has omitted to mention that the separation of
activities requires "CNE's prior approval" and not an ex post notification,
pursuant to article 63.7 of the LSH and the additional provision 11,3.1,14
of such Law. Therefore, Gas Natural SDG's actions have been taken is in an
irregular manner and Endesa reserves such rights as it may have under
applicable law.
8. In addition, Gas Natural SDG disregards the fact that the transfer of
natural gas distribution facilities also requires prior administrative
approval by the applicable regulatory entity, as established in articles 86
and 87 of the RD 1434/2002, of December 27. This rule is applicable both to
Federal-regulated natural gas distribution facilities and to those subject
to the Autonomous Communities that have not set their own regulation on
this issue. Therefore, the autonomous authorities regulate all distribution
facilities that affect a Community, while the rest of the facilities are
subject to Federal regulation.
9. Also untrue is Gas Natural SDG's statement in today's Relevant Fact that
articles 86 and 87 of the RD 1434/2002 are not legally enforceable, and
even less that they contradict the Hydrocarbons Sector Law (LSH). To start
with, every Royal Decree is presumed to be legal and enforceable and also
bears the State Council's approval, which has not raised any objection to
the authorization requirement for the transfer of distribution facilities.
Secondly, these rules complete, in a perfectly consistent way, article 73.2
LSH which only refers to the notification of assets transfer to the
administrative authority that has issued the original authorization. It
would be absurd to assume, and would invite all sorts of fraud, that a
company which requires an authorization to install and operate a natural
gas distribution facility (article 73.2, paragraph 1 LSH), could transfer
it to a third party by way of a simple notification, without giving the
competent authority the chance to assess the managerial, economic and
technical capabilities of the new owner. If the original owner of a
facility has to be authorized by the Administration, so do its subsequent
owners.
10. The transfer to Gas Natural Distribucion of the distribution facilities,
without having the corresponding administrative approvals, suggests that
Gas Natural SDG S.A. may have incurred "very serious" administrative
violations, set in article 109.1.a) LSH, in performing regulated
distribution activities (through the holding of ownership of distribution
facilities) without having the required approval. As very serious
violations, it may carry a fine "from 100,000,001 to 500,000,000 pesetas"
and may give rise to termination or suspension of the administrative
authorization and the "subsequent temporary prohibition to operate the
business for a maximum term of a year" (article 113.1.a and 113.4 of RD
1434/2002). It should be noted that the administrative authorizations are
required to be obtained in advance, and therefore Gas Natural's actions
have been taken is in an irregular manner and Endesa reserves such rights
as it may have under applicable law.