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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November, 2005
Commission File Number: 333-07654
ENDESA, S.A.
(Translation of Registrant's Name into English)
Ribera del Loira, 60
28042 Madrid, Spain
(Address of principal executive office)
Indicate by check mark whether the registrant
files or will file annual reports under
cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
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Indicate by check mark if the registrant is
submitting the Form 6-K in paper as
permitted by Regulation S-T Rule
101(b)(1):
Yes No X
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Indicate by check mark if the registrant is
submitting the Form 6-K in paper as
permitted by Regulation S-T Rule
101(b)(7):
Yes No X
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Indicate by check mark whether by
furnishing the information contained in this Form, the
Registrant is also thereby furnishing the information to the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): N/A
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ENDESA Will Appeal to the Minister for Industry against the National Energy
Commission's (CNE) Decision Regarding Gas Natural's Bid; ENDESA Will Lodge a
Formal Complaint with the Competent European Authorities in the Coming Days
NEW YORK--(BUSINESS WIRE)--Nov. 9, 2005--ENDESA (NYSE: ELE) will
lodge an appeal tomorrow with the Industry Minister directly citing
the CNE, contesting the two decisions adopted yesterday, Tuesday 8
November, by five of the nine CNE members concerning i) the transfer
of gas distribution installations from Gas Natural SDG to two
subsidiaries and ii) Gas Natural's hostile bid for ENDESA.
ENDESA considers that the CNE's decisions are distinctly
inconsistent with previous decisions made by that regulatory body in
similar cases. ENDESA also believes that the decisions suggest that
regulated activities can be used to finance operations that go against
the public interest, and that the decisions impose conditions that do
not go no further than the strict legal minimum requirements.
ENDESA also believes that the procedure followed by the CNE was
patently unorthodox in denying ENDESA access to the bulk of the
existing documentation, preventing ENDESA from practicing a petition
of proof and awarding ENDESA the minimum legal timeframe to launch an
appeal against its decisions.
In this latter respect, we note that only a few hours before the
appeal timeframe conceded to ENDESA expired, the CNE approved a
resolution proposal of roughly two hundred pages, which suggests that
the final resolution had already been decided upon.
Separation of Gas Natural's regulated activities
The first of the two decisions taken by the CNE authorises Gas
Natural to create two subsidiaries destined to takeover the regulated
activities of natural gas transport and distribution that have until
now been controlled by the mother company.
The CNE's decision is very surprising indeed, especially as the
regulatory body now admits the creation of companies founded more than
a year ago and a transfer of activities that Gas Natural has already
carried out, despite the fact that authorisation should have been
obtained before such a transfer was made.
Moreover, the authorisation, that was adopted without any
explanation of its technical and /or economic rationale, allows and
approves the transfer of more than three billion euros of regulated
income to other types of activities - essentially the financing of Gas
Natural's takeover bid.
This transfer - authorised by the CNE - is a direct negation of
the public interest, particularly in respect of the gas markets in
Madrid and Catalonia, and it completely ignores the authorities of
these autonomous regions.
Authorisation conditioned by the take-over bid
The second decision adopted by five of the nine CNE board members
yesterday authorises the take-over of ENDESA by Gas Natural, subject
to conditions.
Examination of the resolution reveals that the CNE adopted the
resolution on the basis of data put forward by Gas Natural, the bulk
of which it describes as "prudent". In this heedless way, the CNE has
given the green light to an operation that will affect 52% of the
regulated income of the gas and electricity sectors based on data
provided - in the main - by only one of the parties involved.
In addition, the document signed by the CNE asserts that the
majority of the arguments are completely "generic", such that the
resolution, or any other resolution, could have been adopted without
any necessity whatsoever of examining or assessing the risks or
negative effects highlighted by ENDESA.
Below we enumerate ENDESA's main arguments against the CNE ruling:
-- The ruling clearly differs from precedents set by the
regulatory body itself. This lack of consistency is all the
more surprising if considering that:
-- The precedents are relatively recent (2001 and 2003).
-- Case history relates to the same sector and markets as the
Gas Natural - Endesa bid.
-- The earlier instances relate to the same companies.
-- These previous cases generated the same issues and
uncertainties as the Gas Natural bid for ENDESA in terms
of the so-called 14th Function: financial viability of the
transaction, potential for conflict between regulated and
unregulated businesses, etc.
Therefore it is surprising that the same regulatory authority
should take contradictory decisions within such as short timeframe in
respect od similar operations taking place in the same sector and
affecting the same companies.
-- This contradiction generates serious uncertainty surrounding
the rules of the game governing this and other potential
corporate mergers since it gives the impression that the body
of decisions taken by the regulatory organism do not
constitute a reliable and useful precedent. It also suggests
that that decision-making process is subject to other variable
factors or criteria, undermining the credibility of the
regulatory framework, of legal protection and of the sector
players' legitimate confidence.
-- It is surprising that the conditions on the takeover bid are
restricted to the minimal legal requirements: information
disclosure obligations, investment in transmission assets,
etc.
-- The conditions imposed clearly allow the regulated businesses
to finance the debt taken on to fund the acquisition. They
essentially mean that the customers will pay the price of the
deal, resulting in an inevitable upward pressure on tariffs.
-- Some of the conditions confirm that the deal poses serious
uncertainty for ENDESA shareholders, as they significantly
limit the newco's ability, if the deal goes ahead, to pay
dividends in the future, calling into question the commitment
made publicly by Gas Natural to the market just a few short
weeks ago to pay out Euro 5 billion in dividends through 2009.
-- In terms of the newco's financial situation, should the deal
go ahead, the CNE's ruling quotes word for word that "Gas
Natural has requested Standard & Poor's to determine what
credit rating it would apply to the newco in the wake of the
transaction. To this end, Standard & Poor's unofficially
indicated to Gas Natural that the newco's rating would be
between a single A and A-. Both group's current financial
strength and solvency would therefore remain intact although
at the low end of the range should the final outcome be an A-
rating". It is astonishing that the CNE should base its
judgment on something as essential as the newco's financial
strength on undocumented statements made by the company
promoting the takeover in question, which is in turn based on
unofficial information attributed to a ratings agency.
-- Regarding the transaction the CNE ruling actually states that
"it is possible that the transaction timeline will not
coincide with the previously outlined regulatory reforms. On
the other hand, the fact that the Commission is not in a
position to guarantee the completion of the new regulation in
the short term, this cannot and should not be a reason to rule
against the deal". This statement by the CNE means that the
takeover bid will determine the course of the future
regulatory framework.
-- Finally, we find the 10th condition particularly serious,
since it leaves the exercise of the so-called 14th Function in
the hands of the CNE in the event that Gas Natural modifies
the terms of its bid. The regulatory framework is very clear
on this issue setting forth exactly when an approval of this
nature can be requested. In no instance can a decision of this
nature by taken by the CNE itself.
-- The CNE ruling does not provide for efficient mechanisms to
ensure compliance with the conditions imposed, which are
woefully insufficient in light of the potential damage and
risks posed to the regulated businesses and, accordingly, to
the interests of both shareholders and customers.
-- In any event, the conditions imposed by the CNE, despite their
limitations and lack of thoroughness, introduce an element of
uncertainty to the deal which is incompatible with
guaranteeing protection of shareholder rights and complying
with applicable securities markets legislation.
ENDESA to appeal the CNE rulings
Tomorrow, 10 November 2005, ENDESA's legal services will appeal
the above rulings before the Minister for Industry, Commerce and
Tourism.
ENDESA trusts that, given the importance of the decisions in
question, the government will rule on the appeal in an expeditious
manner, without applying the period of administrative silence provided
for.
In addition, ENDESA will lodge a formal complaint with the
competent European authorities in the coming days.
* This document may contain certain forward-looking statements
regarding anticipated financial and operating results and statistics
that are subject to risks and uncertainties as well as to material
risks, changes and other factors which may be difficult to predict,
including, without limitation, those factors described in the
Documento de Registro de Acciones of Endesa filed within the Comision
Nacional del Mercado de Valores and in the Form 20-F of Endesa filed
within the Securities and Exchange Commission, both for the fiscal
year ended December 31, 2004. For all of these forward-looking
statements, we claim the protection of the safe harbour for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
CONTACT: ENDESA
Alvaro Perez de Lema, 212-750-7200
www.endesa.es
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ENDESA, S.A.
Dated: November 10th , 2005 By: /s/ Alvaro Perez de Lema
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Name: Alvaro Perez de Lema
Title: Manager of North America Investor
Relations