ENFORCEABILITY OF CIVIL LIABILITIES
Enel Chile is a publicly held stock corporation organized under the laws of Chile. None of our directors or executive officers are residents
of the United States and all or a substantial portion of our assets and the assets of these persons are located outside the United States. As a result, except as explained below, it may not be possible for investors to effect service of process
within the United States upon such persons, or to enforce against them or us in U.S. courts judgments predicated upon the civil liability provisions of the federal securities laws of the United States or otherwise obtained in U.S. courts.
No treaty exists between the United States and Chile for the reciprocal enforcement of judgments. Chilean courts, however, have enforced final
judgments rendered in the United States by virtue of the legal principles of reciprocity and comity, subject to the review in Chile of the United States judgment in order to ascertain whether certain basic principles of due process and public policy
have been respected without reviewing the merits of the subject matter of the case. If a United States court grants a final judgment in an action based on the civil liability provisions of the federal securities laws of the United States,
enforceability of this judgment in Chile will be subject to the obtaining of the relevant “exequatur” (
i.e.
, recognition and enforcement of the foreign judgment) according to Chilean civil procedure law in force at that time, and
consequently, subject to the satisfaction of certain factors. Currently, the most important of these factors are:
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the existence of reciprocity;
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the absence of any conflict between the foreign judgment and Chilean laws (excluding for this purpose the laws of civil procedure) and public policies;
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•
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the absence of a conflicting judgment by a Chilean court relating to the same parties and arising from the same facts and circumstances;
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•
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the absence of any further means for appeal or review of the judgment in the jurisdiction where judgment was rendered;
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the Chilean courts’ determination that the United States courts had jurisdiction;
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•
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that service of process was appropriately served on the defendant and that the defendant was afforded a real opportunity to appear before the court and defend its case; and
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•
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that enforcement would not violate Chilean public policy.
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In general, the enforceability in
Chile of final judgments of United States courts does not require retrial in Chile but a review of certain relevant legal considerations (
i.e.
principles of due process and public policy). However, there is doubt:
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•
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as to the enforceability in original actions in Chilean courts of liabilities predicated solely on the United States federal securities laws; and
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as to the enforceability in Chilean courts of judgments of United States courts obtained in actions predicated solely upon the civil liability provisions of the federal securities laws of the United States.
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In addition, foreign judgments cannot be enforced in any way against properties located in Chile, which, as a matter of
Chilean law, are subject exclusively to Chilean law and to the jurisdiction of Chilean courts.
Enel Chile has appointed
Puglisi & Associates as its authorized agent upon which service of process may be served in any action which may be instituted against us in any United States federal or state court having subject matter jurisdiction in the State of New
York, County of New York arising out of or based upon the Enel Chile ADSs or the Enel Chile Deposit Agreement.
Enel Chile has also
appointed CT Corporation System at 111 Eighth Avenue, New York, NY 10011 as its authorized agent upon which service of process may be served in the U.S. in any action which may be instituted against Enel Chile arising out of or based upon this
prospectus.
205
ANNEX A
DIRECTORS AND EXECUTIVE OFFICERS OF THE ENEL FILING PERSONS AND ENEL GENERACIÓN
The following table sets forth the information regarding each director and executive officer of Enel S.p.A., Enel South America, S.r.l., Enel
Chile S.A. (collectively, the “Enel Filing Persons”) and Enel Generación Chile S.A. On November 16, 2017, Enel South America S.r.l., a wholly owned subsidiary of Enel through which Enel held its ownership interest in Enel Chile,
merged with and into Enel, with Enel as the surviving company.
To the best knowledge of each of the Enel Filing Persons, Enel
Generación Chile S.A., and the individual directors of Enel Chile S.A. and Enel Generación Chile S.A., none of the Enel Filing Persons or Enel Generación Chile S.A., or any of the persons (including the individual directors of
Enel Chile S.A. and Enel Generación Chile S.A.) listed in or incorporated by reference into this Annex A has been, during the past five (5) years, (i) convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to any judicial or administrative proceeding during the past five years (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.
The principal business addresses of the Enel Filing Persons and Enel Generación Chile S.A. are as follows:
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1.
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Enel S.p.A.
: Viale Regina Margherita 137, 00198 Rome, Italy; Telephone: +39 06 8305 1.
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2.
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Enel South America S.r.l.
: c/o Enel S.p.A., Viale Regina Margherita 137, 00198 Rome, Italy; Telephone: +39 06 8305 1.
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3.
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Enel Chile S.A.
: Santa Rosa 76, Santiago, Chile, Telephone: +56 2 2353 4639.
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4.
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Enel Generación Chile S.A.
: Santa Rosa 76, Santiago, Chile, Telephone: +56 2 2630 9000.
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The present business address of each of the following directors is
c/o Enel S.p.A., Viale Regina Margherita 137, 00198 Rome, Italy.
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Name and Citizenship
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Present and Material Occupations, Positions, Offices and
Employment During
the Past Five Years and Addresses.
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Maria Patrizia Grieco (Italy)
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Chairperson of Enel S.p.A.
(May 2014—Present).
•
Director of Amplifon S.p.A. (hearing solutions) (April 2016—Present).
Via Ripamonti 133, 20141 Milan (MI), Italy.
•
Director of CIR S.p.A.
(media, automotive components, healthcare) (April 2017—Present)
Via Ciovassino 1—20121 Milan (MI), Italy.
•
Director of Endesa, S.A.
(April 2017-Present)
Ribera del Loira 60 Madrid, Spain.
•
Chairman of the Italian
Corporate Governance Committee (July 2017—Present). c/o Borsa Italiana S.p.A., Piazza degli Affari 6, 20123, Milan (MI), Italy
•
Director of Fondazione
Arché Onlus (February 2017—Present)
Via Lessona, 70 20157 Milan (MI), Italy.
•
Director of Save the Children
(December 2010—June 2017)
Via Volturno, 58 00185 Rome (RM), Italy.
•
Director of Space S.p.A.
(December 2013—June 2014)
Via Vittor Pisani 27 20144 Milan (MI), Italy.
•
Director of Italgas S.p.A.
(June 2013—February 2014)
Largo Regio Parco 9 10153 Torino (TO), Italy.
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A-1
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Name and
Citizenship
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Present and Material Occupations, Positions, Offices and
Employment During
the Past Five Years and Addresses.
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•
Director
of Ferretti S.p.A. (September 2011—June 2012)
Via Bandiera Irma 62 47841 Cattolica (RN), Italy.
•
Director of Ferrari S.p.A.
(car manufacturer) (April 2016—Present).
Via Abetone Inferiore No. 4,
I-41053
Maranello (MI), Italy.
•
Director of Italian
Foundation MAXXI—National Museum of XXI Century Arts (museum) (February 2016—Present).
Via Guido Reni 4, 00196 Rome (RM), Italy.
•
Director of Bocconi
University (November 2014—Present).
Via Roberto Sarfatti 25, 20100 Milan (MI), Italy.
•
Member of Steering Committee
of Assonime (labor union) (September 2014—Present).
Piazza Venezia 11, 00187 Rome (RM), Italy.
•
Chairman of Enel Cuore Onlus
(June 2014—Present).
c/o Enel S.p.A.
•
Director of Anima Holding
(fund manager) (March 2014—Present).
Corso Giuseppe Garibaldi 99, 20121 Milan (MI), Italy.
•
Director of CNH Industrial
(Formerly Fiat Industrial S.p.A.) (capital goods company) (April 2012—April 2016).
25 St. James’s Street, London, United Kingdom.
•
Director (June
2014—October 2014), Chairman (June 2011—June 2014) and CEO (November 2008—March 2013) of Olivetti S.p.A. (mobile and telecom manufacturer).
Via Jervis 77, 10015 Ivrea (TO), Italy.
•
Board Member of Centro Studi
Enel Foundation (June 2014—Present).
Via Arno 64, 00198 Rome (RM), Italy.
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Francesco Starace (Italy)
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•
Chief
Executive Officer of Enel S.p.A. (May 2014—Present).
•
Chief Executive Officer of
Enel Green Power S.p.A. (October 2008—May 2014). Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
President of Eurelectric
(European electricity industry union) (June 2017—Present).
Boulevard de l’Impératrice 66,
B-1000
Brussels, Belgium.
•
Co-Chair
of the World Economic Forum’s Energy Utilities and Energy Technologies Community
(non-profit)
(January
2016—Present).
91-93
route de la Capite CH—1223 Cologny/Geneva, Switzerland.
•
Member of the Board of
Directors of the United Nations Global Compact (intergovernmental organization) (May 2015—Present).
685 3rd Ave, New York, NY, USA.
•
Member of the Advisory Board
of the United Nations Sustainable Energy 4 All Initiative (intergovernmental organization) (June 2014—Present).
1750 Pennsylvania Avenue NW, Suite 300. Washington, DC, USA.
•
Vice Chairman of Endesa S.A.
(June 2014—Present).
Calle de la Ribera del Loira 60, 28042 Madrid, Spain.
•
President of the Board of
Directors of Enel Iberia Srl (June 2017—Present)
c/o Enel S.p.A
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A-2
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Name and
Citizenship
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Present and Material Occupations, Positions, Offices and
Employment During
the Past Five Years and Addresses.
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•
Director
of Enel Iberoamérica, S.R.L. (June 2014—June 2017).
c/o Enel S.p.A.
•
Vice Chairman of Enel
Américas S.A. (April 2015—April 2016).
Santa Rosa 76, Santiago, Chile.
•
Vice Chairman of Enel Chile
S.A. (March 2016—April 2016).
•
Member of the Board of Directors of Fulbright Association (nonprofit) (November 2012—Present)
Via Castelfidardo 8, 00185 Rome(RM), Italy
•
Member of the Advisory Board
of the Universita Politecnico di Milano (January 2014—Present).
Piazza Leonardo da Vinci 32, 20133 Milan (MI), Italy.
•
Vice Chairman of the
Fondazione Italia-Giappone
(non-profit)
(February 2011—Present).
Via Sallustiana 29, 00187 Rome (RM), Italy.
•
Member of the Advisory Board
of the Human Foundation
(non-profit)
(November 2013—Present).
Via G. Reni 9, 00196 Rome (RM), Italy.
•
Member of the Corporate
Advisory Board of the Luiss Business School (March 2015—Present).
Viale Pola 12, Rome (RM), Italy.
•
Member of the Board of the
Italian Institute of Technology Foundation (research institute) (February 2015—Present).
Via Morego 30, 16163 Genoa (GE), Italy.
•
Member of the International
Business Council of the World Economic Forum (nonprofit) (February 2016—Present).
91-93
route de la Capite CH—1223 Cologny/Geneva, Switzerland.
•
Member of the Board of
Directors of Confindustria (Italian employer’s federation) (May 2015—Present).
Viale dell’Astronomia 30, 00144 Rome (RM), Italy.
•
Member of the Advisory Board
of Confindustria (Italian employer’s federation) (May 2016—Present).
Viale dell’Astronomia 30, 00144 Rome (RM), Italy.
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Alfredo Antoniozzi (Italy)
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•
Director
of Enel S.p.A. (May 2015—Present)
•
Member of the European
Parliament (Justice Commission, Legal Commission, Constitutional Affairs Commission) (government) (2004—2014).
Rue Wiertz/Wiertzstraat 60,
B-1047
Brussels, Belgium.
•
Counsellor for Heritage and
Special Projects at the Municipality of Rome (local government) (2008—2012).
Piazza del Campidoglio 1, 00186 Rome (RM), Italy.
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Alberto Bianchi (Italy)
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•
Director
of Enel S.p.A. (May 2014—Present).
•
Partner at Bianchi and
Associates Law Firm (August 2001—Present).
Via Palestro 3, 50123 Florence (FI), Italy.
•
Member of Steering Committee
at Cassa di Risparmio Foundation
(non-profit)
(March 2016—Present).
Via Bufalini 6, 50122 Florence (FI), Italy.
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A-3
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Name and
Citizenship
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Present and Material Occupations, Positions, Offices and
Employment During
the Past Five Years and Addresses.
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•
Chairman
of Edizioni di Storia e Letteratura (publisher) (1998—Present).
Via delle Fornaci 38, 00165 Rome (RM), Italy.
•
Chairman of Dada S.p.A.
(digital services company) (2011—2013).
Viale della Giovine Italia 17, 50122 Florence (FI), Italy.
•
Commissioner (as appointed by
the Ministry of Economy and Finance) for the winding up of Fintecna Group companies (government) (July 2007—Present).
Via Goito 4, 00185 Rome (RM), Italy.
•
Director of Fondazione Open
(think tank) (November 2013—Present).
Via Palestro 3, 50123 Florence (FI), Italy.
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Paola Girdinio (Italy)
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•
Professor at the University
of Genoa (2000—Present).
Via Balbi 5, 16126 Genoa (GE), Italy.
•
Headmaster of the Faculty of
Engineering at the University of Genoa (2008—2012).
Via Balbi 5, 16126 Genoa (GE), Italy.
•
Board member of the
University of Genoa (2012—2016).
Via Balbi 5, 16126 Genoa (GE), Italy.
•
Board member of Banca Carige
S.p.A. (bank) (2016—2017).
Via di Cassa di Risparmio 15, 16123 Genoa (GE), Italy.
•
Chairman of the National
Observatory for the Cyber Security, Resilience and Business Continuity of Electric Systems (research institution) (2015—Present).
Via Salaria 113, 00198 Rome (RM), Italy.
•
Board member of Ansaldo
Energia S.p.A. (power engineering company) (2014—2016).
Via Nicola Lorenzi 8, 16152 Genoa (GE), Italy.
•
Board member of
D’Appolonia S.p.A. (engineering firm) (2011—Present).
Via San Nazaro 19, 16145 Genoa (GE), Italy.
•
Board member of Ansaldo STS
S.p.A. (transportation company) (2011—2014). Via Paolo Mantovani 3—5, 16151 Genoa (GE), Italy.
•
Board member of Distretto
Ligure delle Tecnologie Marine (think tank) (2010—2016).
Via delle Pianazze 74, 19136 La Spezia (SP), Italy.
•
President of the Scientific
Committee for the Town of Genoa “Smart City” Project (local government) (2011—Present).
Via della Posta 8, 20123 Milan (MI), Italy.
•
Member of the Genoa Regency
Board of the Banca d’Italia (bank) (2011—2016). Via Dante 3, 16121 Genoa (GE), Italy.
•
Member of the Scientific
Committee of Eurispes (science research network) (2013—Present).
Via Cagliari 14, 00198 Rome (RM), Italy.
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Alberto Pera (Italy)
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•
Director
of Enel S.p.A. (May 2014—Present).
•
Partner at Gianni, Origoni,
Grippo, Cappelli & Partners Law Firm (2001—2014). Via delle Quattro Fontane 20, 00184 Rome (RM), Italy.
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A-4
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Name and
Citizenship
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Present and Material Occupations, Positions, Offices and
Employment During
the Past Five Years and Addresses.
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Anna Chiara Svelto (Italy)
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•
Director
of Enel S.p.A. (May 2014—Present).
•
Chief General Counsel of UBI
Banca (bank) (June 2016—Present).
Piazza Vittorio Veneto 8, 24122 Bergamo (BG), Italy.
•
Chief of Corporate Affairs
and Compliance of the Pirelli Group (tire manufacturer) (October 2000—May 2016).
Viale Piero e Alberto Pirelli 25, 20126 Milan (MI), Italy.
•
Secretary of the Board of
Directors of the Pirelli Group (tire manufacturer) (2003—May 2016).
Viale Piero e Alberto Pirelli 25, 20126 Milan (MI), Italy.
•
Director of ASTM
(international standards organization) (April 2016—Present). Corso Regina Margherita 165, 10144 Turin (TO), Italy.
•
Member of the Remuneration
Committee of ASTM (international standards organization) (April 2016—Present).
Corso Regina Margherita 165, 10144 Turin (TO), Italy.
•
Director of Prelios S.p.A.
(asset management group) (April 2013—February 2014).
Viale Piero e Alberto Pirelli 27, 20126 Milan (MI), Italy.
•
Member of the Control and
Risk and Corporate Governance Committees of Prelios S.p.A. (asset management group) (April 2013—February 2014).
Viale Piero e Alberto Pirelli 27, 20126 Milan (MI), Italy.
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Cesare Calari (Italy)
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•
Director
of Enel S.p.A. (May 2017—Present).
•
Partner and Managing Director
of Encourage Capital (investment management firm) (October 2006—Present).
1350 Ave. of the Americas, Suite 2900, New York, NY, USA.
•
Member of Investment
Committee of Wolfensohn Capital Partners (private equity firm) (October 2006—Present).
1350 Ave. of the Americas, Suite 2900, New York, NY, USA.
•
Director of Terna S.p.A.
(energy company) (2014—2017).
Viale Egidio Galbani, 70—00156 Rome.
•
Director of Global Ports
Holding (cruise port operator) (2013—2016).
Rihtim Caddesi, No. 51 Karakoy 34425 Istanbul, Turkey.
•
Director of Meritum Bank
(bank) (2011—2013).
Ul. Chlopska 53, Gdansk Greater Poland
80-350,
Poland.
•
Director of Assicurazioni
Generali (insurance company) (2010—2013).
Piazza Duca Degli Abruzzi, 2, 34132 Trieste (TS), Italy.
•
Adjunct professor of
International Finance at Johns Hopkins University, SAIS (2005-2013).
1740 Massachusetts Ave NW, Washington, DC, USA.
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Angelo Taraborrelli (Italy)
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•
Director
of Enel S.p.A. (May 2011—Present).
•
Facts Global Energy
(“FGE”), (2010—Present).
FGE House—133, Aldersgate Street—London EC1A4JA—United Kingdom.
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A-5
The present business address of each of the following
executive officers is c/o Enel S.p.A. Viale Regina Margherita 137, 00198 Rome, Italy.
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Name and
Citizenship
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Present and Material Occupations, Positions, Offices and
Employment During the Past Five
Years and Addresses.
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Francesca Di Carlo (Italy)
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•
Head of
Human Resources and Organization of Enel S.p.A. (June 2014—Present).
•
Head of Audit of Enel S.p.A.
(January 2008—May 2014)
•
Board member of Enel Américas S.A. (April 2015—April 2016).
Santa Rosa 76, Santiago, Chile.
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Alberto De Paoli (Italy)
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•
Chief
Financial Officer of Enel S.p.A. (November 2014—Present).
•
Chairman of the Board of Enel
Green Power S.p.A. (December 2014—Present). Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Head of Group Strategy of
Enel S.p.A. (2012—2014).
•
Chief Financial Officer of Enel Green Power S.p.A. (2008—2012).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Board member of Enel Italia
S.R.L. (April 2015—Present).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Board member of Enel S.A.
(April 2013—April 2016).
Santa Rosa 76, Santiago, Chile.
•
Board member of Enel Chile
(March 2016—April 2016).
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Ryan O’Keeffe (South Africa)
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•
Head of
Communications for Enel S.p.A. (October 2014—Present)
•
Associate in Finsbury (public
relations company) (2006—2008).
45 Moorfields, London EC2Y 9AE, United Kingdom.
•
Associate Partner in Finsbury
(public relations company) (2008—2011).
45 Moorfields, London EC2Y 9AE, United Kingdom.
•
Partner in Finsbury (public
relations company) (2011—2014).
45 Moorfields, London EC2Y 9AE, United Kingdom.
•
Board Member of Enel Cuore
Onlus (February 2015—Present).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
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Ernesto Ciorra (Italy)
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•
Head of
the Innovation and Sustainability Office of the Enel S.p.A. (September 2014—Present).
•
Founder and CEO of Ars et
Inventio (consulting firm) (December 2003—September 2014).
Via Sicilia 43, 00187 Rome (RM), Italy.
•
Partner of Business
Integration Partners S.p.A. (consulting firm) (January 2009—September 2014).
Piazza San Babila 5, Milan (MI), Italy.
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Giulio Fazio (Italy)
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•
General
Counsel of Enel S.p.A. (2016—Present).
•
Head of Legal and Corporate
Affairs of Enel S.p.A. (January 2016—Present).
•
Head of Legal and Corporate
Affairs of Country Italy of Enel S.p.A. (2014—June 2017).
•
Head of Legal and Corporate
Affairs of Enel Green Power S.p.A. (2008—2014). Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Board member of Enel Chile
S.A. (April 2016—Present).
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A-6
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Name and
Citizenship
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Present and Material Occupations, Positions, Offices and
Employment During the Past Five
Years and Addresses.
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Simone Mori (Italy)
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•
Head of
European Affairs of Enel S.p.A. (July 2014—Present).
•
Chairman of Elettricita
Futura (business association) (May 2016—Present).
Via Benozzo Gozzoli 24, 00142 Rome (RM), Italy.
•
Head of Regulatory,
Environment and Innovation of Enel S.p.A. (2011—2014).
•
Head of Carbon Strategy of
Enel S.p.A. (2009-2014).
•
Senior Transatlantic Fellow of the German Marshall Fund (think tank) (2010—Present).
1744 R Street, NW, Washington, DC, USA.
•
Professor of Economics and
Management of Energy Business of La Sapienza University (University) (2011—Present).
Piazzale Aldo Moro 5, 00185 Rome (RM), Italy.
•
Professor of Economics and
Management of Energy Business of LUISS Guido Carli (University) (2012—Present).
Viale Romania 32, 00197 Rome (RM), Italy.
•
Vice President of
Assoelettrica (business association) (2007—2014).
Via Benozzo Gozzoli 24, 00142 Rome (RM), Italy.
•
Chairman of business
association Assolombarda’s Energy Committee Group (business association) (2008—2010).
Via Pantano 9, 20122 Milan (MI), Italy.
•
President of the Industrial
Union of Rome’s Energy Committee (union) (2011—2015).
Piazza del Campidoglio 1, 00186 Rome (RM), Italy.
•
Member of the Board of CESI
S.p.A. (2009—2014)
Via R. Rubatiino 54. 20134 Milan, Italy.
•
Member of the Board of Enel
Foundation (2012—2014)
Via Vincenzo Bellini, 24 00198 Rome, Italy.
•
Member of the Italian
employers’ association Confindustria’s Energy and Europe Committees (association) (Energy since 2008 and Europe since 2014).
Viale dell’Astronomia, 30, 00144 Roma (RM), Italy.
•
Member of the Advisory and
Support Group of Business Europe (business association) (2015—Present).
Av. de Cortenbergh 168, 1000 Brussels, Belgium.
•
Member of the General
Assembly and the Executive Committee of Observatoire Méditerranéen de l’Energie (industry association) (2015—Present).
32bis boulevard Haussmann 75009 Paris, France.
•
Corporate member on
Bruegel’s Board (think tank) (March 2017—Present).
Rue de la Charité
33-1210
Brussels, Belgium.
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Silvia Fiori (Italy)
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•
Head of
Audit of Enel S.p.A. (July 2014—Present).
•
Head of Audit of Enel Green
Power S.p.A. (2008—June 2014).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
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A-7
|
|
|
|
|
Name and Citizenship
|
|
Present and Material Occupations, Positions, Offices and
Employment During the Past Five
Years and Addresses.
|
|
Carlo Bozzoli (Italy)
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|
•
Head of
Global Information and Communications Technology of Enel S.p.A. (July 2014—Present).
•
Head of Network Commercial
Services for the Infrastructure & Networks Division in Italy of Enel S.p.A. (2009—2014).
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Salvatore Bernabei (Italy)
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|
•
Head of
Global Procurement of Enel S.p.A. (May 2017—Present).
•
Head of Renewable Energies
Latin America of Enel Green Power S.p.A. (May 2016—May 2017).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Director of Enel Chile S.A.
(April 2016—Present).
•
Country Manager for Chile and the Andean Countries of Enel Green Power S.p.A. (January 2013—April 2016).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Board Member of Geotermica
del Norte (December 2013—Present).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile.
•
Board Member of EGP Latam
(June 2013—September 2017).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile.
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José Damián Bogas Gálvez (Spain)
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•
Head of
Country Iberia of Enel S.p.A. (October 2014—Present).
•
Chief Executive Officer of
Endesa, S.A. (October 2014—Present).
Calle de la Ribera del Loira 60, 28042 Madrid, Spain.
•
Chairman of Elcogas, S.A.
(power plant company) (May 1997—Present). Carretera de Calzada de Calatrava, km 27, 13500 Puertollano, Ciudad Real, Spain.
•
Director of Endesa
Generación Portugal, S.A. (December 2005—January 2015). Qta da Fonte, Edif. D. Manuel Piso 0, Ala B,
2780-730
Paço de Arcos, Portugal.
•
Director of Enel Iberia S.L.
(named Enel Iberoamérica, S.R.L. until May 2017) (December 2014—Present).
Calle de la Ribera del Loira 60, 28042 Madrid, Spain.
•
Director of Enel Green Power
España SL (December 2014—Present).
Calle de la Ribera del Loira 60, 28042 Madrid, Spain.
•
Director of
Compañía Operadora del Mercado Español de la Electricidad, S.A. (electricity market manager) (November 1998—Present).
Calle Alfonso XI 6, 28014 Madrid, Spain.
|
|
Carlo Tamburi (Italy)
|
|
•
Head of
Country Italy of Enel S.p.A. (July 2014—Present).
•
Head of International
Division of Enel S.p.A (January 2008—June 2014).
•
Chairman with powers of Enel
Italia S.R.L. (November 2014—Present).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Chairman with powers of Enel
Energia S.p.A. (August 2014—November 2014). Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Chairman with powers of Enel
Servizio Elettrico S.p.A. (August 2014—November 2014).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
|
|
Luca D’Agnese (Italy)
|
|
•
Head of
South America of Enel S.p.A. (January 2015—Present).
•
Chief Executive Officer of
Enel Americas S.A. (March 2016—Present).
Santa Rosa 76, Santiago, Chile.
|
A-8
|
|
|
|
|
Name and
Citizenship
|
|
Present and Material Occupations, Positions, Offices and
Employment During the Past Five
Years and Addresses.
|
|
|
|
•
Director
of Enel Brasil (April 2015—Present).
Praça Leoni Ramos 1, Sao Domingos, Niterói, Rio de Janeiro, Brazil.
•
Chairman of the Board of
Directors of Enel Latinamérica, S.R.L. (February 2015—December 2016).
c/o Enel S.p.A.
•
Board member of Enel Iberia
S.L. (named Enel Iberoamérica, S.R.L. until May 2017) (February 2015—June 2017).
c/o Enel S.p.A.
•
Chairman of the Board of
Directors and Chief Executive Officer of Slovenské Elektrárne (electric company) (2014—2015).
Mlynské nivy 47, 821 09 Bratislava, Slovakia.
•
Country Manager Slovakia of
Enel S.p.A. (2014—2015).
•
Director of the Eastern European Division of Enel S.p.A. (2014—2015).
•
Chairman of the Board of
Directors and Chief Executive Officer of Enel Romania (2011—2014).
Oras Otopeni, Calea Bucuresti nr. 11A, Et.3, cam.
302-303,
Jud. Ilfov., Romania.
•
Chairman of the Board of
Directors of Enel Distributie Muntenia (2011—2014). Oras Otopeni, Calea Bucuresti nr. 11A, Et.3, cam.
302-303,
Jud. Ilfov., Romania.
•
Chairman of the Board of
Directors of Enel Distributie Banat (2011—2014).
Oras Otopeni, Calea Bucuresti nr. 11A, Et.3, cam.
302-303,
Jud. Ilfov., Romania.
•
Chairman of the Board of
Directors of Enel Distributie Dobrogea (2011—2014). Oras Otopeni, Calea Bucuresti nr. 11A, Et.3, cam.
302-303,
Jud. Ilfov., Romania.
•
Chairman of the Board of
Directors of Enel Energie Muntenia (2011—2014).
Oras Otopeni, Calea Bucuresti nr. 11A, Et.3, cam.
302-303,
Jud. Ilfov., Romania.
•
Chairman of the Board of
Directors of Enel Energie (2011—2014).
Oras Otopeni, Calea Bucuresti nr. 11A, Et.3, cam.
302-303,
Jud. Ilfov., Romania.
•
Country Manager Romania of
Enel S.p.A. (2011—2014).
|
|
Antonio Cammisecra (Italy)
|
|
•
Head of
Global Renewable Energies of Enel S.p.A. May 2017—Present).
c/o Enel S.p.A.
•
Head of North and Central
America,
Sub-Saharan
Africa and Asia of Enel S.p.A. (May 2017—Present).
•
Chief Executive Officer of
Enel Green Power S.p.A. (May 2017—Present).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Head of Global Business
Development of Enel Green Power S.p.A. (2013—May 2017).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
|
A-9
|
|
|
|
|
Name and
Citizenship
|
|
Present and Material Occupations, Positions, Offices and
Employment During the Past Five
Years and Addresses.
|
|
Robert Deambrogio (Italy)
|
|
•
Head of
Europe and North Africa of Enel S.p.A (April 2016—Present).
•
Head of Eastern Europe of
Enel S.p.A. (2015—April 2016).
•
Head of Italy and Europe Area of Enel S.p.A. (2010—2015).
•
Chairman of the Board of De
Rock S.R.L. (energy) (September 2014—April 2015).
Oras Otopeni, Calea Bucuresti nr. 11A, Et.3, cam.
302-303,
Jud. Ilfov., Romania.
•
Chairman of the Board of Gv
Energie Rigenerabili
Ital-Ro
S.R.L. (electric producer) (September 2014—April 2015).
Oras Otopeni, Calea Bucuresti nr. 11A, Et.3, cam.
302-303,
Jud. Ilfov.,
Romania.
•
Chairman of the Board Elcomex
Solar Energy S.R.L. (energy) (September 2014—April 2015).
Oras Otopeni, Calea Bucuresti nr. 11A, Et.3, cam.
302-303,
Jud. Ilfov., Romania.
•
Chairman of the Board of Enel
Green Power Romania S.A. (December 2008—April 2015).
Oras Otopeni, Calea Bucuresti nr. 11A, Et.3, cam.
302-303,
Jud. Ilfov., Romania.
|
|
Enrico Viale (Italy)
|
|
•
Head of
Global Thermal Generation of Enel S.p.A. (April 2016—Present).
•
Head of Global Generation of
Enel S.p.A. (July 2014—April 2016).
•
Country Manager of Enel
Russia (2013—2014).
10 Khokhryakova Street, Yekaterinburg, Sverdlovsk Oblast, Russian Federation, 620014.
•
Chief Executive Officer of
Enel Russia (2013—2014).
10 Khokhryakova Street, Yekaterinburg, Sverdlovsk Oblast, Russian Federation, 620014.
•
Chief Executive Officer of
Enel OGK—5 (new brand Enel Russia from 2013) (2010—2013).
10 Khokhryakova Street, Yekaterinburg, Sverdlovsk Oblast, Russian Federation, 620014.
•
Chief Operating Officer of
Enel Russia (2008—2013).
10 Khokhryakova Street, Yekaterinburg, Sverdlovsk Oblast, Russian Federation, 620014.
•
Board member of PJSC Enel
Russia (2010—2013).
10 Khokhryakova Street, Yekaterinburg, Sverdlovsk Oblast, Russian Federation, 620014.
•
Board member of Endesa, S.A.
(October 2014—Present).
Calle de la Ribera del Loira 60, 28042 Madrid, Spain.
•
Chairman of the Board of
Empresa Nacional de Electricidad S.A. (November 2014—April 2016).
Calle de la Ribera del Loira 60, 28042 Madrid, Spain.
•
Chairman of the Board of
Endesa Américas S.A. (March 2016—April 2016). Santa Rosa 76, Santiago, Chile.
•
Board member of Enel
Américas S.A. (April 2016—Present).
Santa Rosa 76, Santiago, Chile.
|
A-10
|
|
|
|
|
Name and
Citizenship
|
|
Present and Material Occupations, Positions, Offices and
Employment During the Past Five
Years and Addresses.
|
|
|
|
•
Board
member of Arctic Russia B.V. (energy company) (October 2008—November 2013).
Strawinskylaan 1725, 1077 XX Amsterdam, The Netherlands.
•
Board member of RES Holding
B.V. (IT service company) (May 2012—March 2015).
Prins Bernhardplein 200, 1097 JB Amsterdam, The Netherlands.
•
Chairman of the Board of Enel
Produzione SpA (August 2014—December 2014).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Board member of
CESI—Centro Elettrotecnico Sperimentale Italiano Giacinto Motta S.p.A. (consulting firm) (November 2014—Present).
Via Rubattino 54, 20134 Milan (MI), Italy.
•
Board member of Slovak Power
Holding B.V. (May 2017—Present).
Herengracht 471, 1071, BS Amsterdam, The Netherlands.
|
|
Livio Gallo (Italy)
|
|
•
Board
member of EPRI—Eletric Power Research Institute (April 2015—Present).
3420 Hillview Avenue, Paolo Alto, California, USA.
•
Head of Global Infrastructure
and Networks Business Line of Enel S.p.A. (July 2014—Present).
•
Head of Infrastructure and
Networks Division of Enel S.p.A. (2008—June 2014).
•
Board Member of Directors of
Enel Open Fiber, S.A. (December 2015—December 2016).
Via Giosué Carducci 1/3, Milan (MI), Italy.
•
Board Member of Enel
Américas, S.A. (April 2016—Present).
Santa Rosa 76, Santiago, Chile.
•
Chairman of the Board of
Directors of Chilectra Américas, S.A. (March 2016—April 2016).
Santa Rosa 76, Santiago, Chile.
•
Chairman of the Board of
Directors of Chilectra, S.A. (2014—2016).
Santa Rosa 76, Santiago, Chile.
•
Chairman of the Board of
Directors of Enel Sole (2005—2015).
Viale di Tor di Quinto 45/47, 00191 Rome (RM), Italy.
•
Board Member of Endesa, S.A.
(2014—April 2017).
Calle de la Ribera del Loira 60, 28042 Madrid, Spain.
•
Board Member of CESI S.p.A.
(consulting firm) (2014—Present).
Via Rubattino 54, 20134 Milan (MI), Italy.
•
Chairman of Enel Rete Gas
(2006—2013).
Via Carlo Serassi 17, Bergamo (BG), Italy.
•
Deputy Chairman of the
European Distribution System Operators for Smart Grids Association (distribution system operators’ association) (2010—2013).
Rue de la Science 14B, 1040 Brussels, Belgium.
•
Chairman and Founding Member
of the European Distribution System Operators for Smart Grids Association (distribution system operators’ association) (2010—2013).
Rue de la Science 14B, 1040 Brussels,
Belgium.
|
A-11
|
|
|
|
|
Name and
Citizenship
|
|
Present and Material Occupations, Positions, Offices and
Employment During the Past Five
Years and Addresses.
|
|
|
|
•
Chairman
of the Board of Directors of Enel Distribuzione S.p.A. (new brand
e-distribution
from 01/07/16) (2005—2009 and 2015—January 2017).
Via Ombrone 2, 00198 Rome (RM), Italy.
•
Chief Executive Officer of
Enel Distribuzione S.p.A. (new brand
e-distribution
from 01/07/16) (2009—2014).
Via Ombrone 2, 00198 Rome (RM), Italy.
•
Member of the Board of
Directors of Enel Distribuzione S.p.A. (new brand
e-distribution
from 01/07/16) (2009—2014).
Via Ombrone 2, 00198 Rome (RM), Italy.
•
Chief Executive Officer of
Deval (automation) (2005—2011).
Rue Clavalité 8, 11100 Aoste (AO), France.
|
|
Claudio Machetti (Italy)
|
|
•
Head of
Global Trading of Enel S.p.A. (May 2017—Present).
•
Head of Global Trading and
UpStream Gas Business Line of Enel S.p.A. (March 2016—May 2017).
•
Board Member of Eurogas
(European gas association) (January 2015—Present).
Av. de Cortenbergh 172,
B-1000
Brussels, Belgium.
•
Chairman of Fondenel (pension
fund) (April 2017—Present).
Via Po 31, 00198 Rome (RM), Italy.
•
Head of Global Trading of
Enel S.p.A. (August 2014—February 2016).
•
Head of the Risk Management
Department of the Enel Group (July 2009—July 2014).
•
Chairman and CEO for Global
Trading activities of Enel Trade S.p.A. (August 2014—Present).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Member of the Board of
Directors of Fondazione Centro Studi Enel (April 2015—Present).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Chairman of Enel Insurance
Ltd. (August 2012—December 2014).
Herengracht, 471, 1017, BS, Amsterdam, Netherlands
•
Chairman of Enel New Hydro
S.r.l. (2007—2015).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Member of the Board of
Directors of Enel Produzione S.p.A.(March 2007—April 2012).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Member of the Board of
Directors of Enel Distribuzione S.p.A. (March 2007- April 2012).
Via Ombrone 2, 00198 Rome (RM), Italy.
•
Member of the Board of Enel
Energia S.p.A. (March 2007—April 2009).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Member of the Board of Enel
Investment Holding B.V. (2005—2012).
Herengracht, 471, 1017 BS Amsterdam, Netherlands.
•
Chairman of Board of
Directors of Enel.Re Ltd. (an Irish company that merged with Enel Insurance N.V.) (2000—2012).
Herengracht, 471, 1017 BS Amsterdam, Netherlands.
|
A-12
|
|
|
|
|
Name and
Citizenship
|
|
Present and Material Occupations, Positions, Offices and
Employment During the Past Five
Years and Addresses.
|
|
Francesco Venturini (USA and Italy)
|
|
•
Head of
Global
E-Solutions
of Enel S.p.A. (April 2017—Present).
•
Chief Executive Officer and
General Manager of Enel Green Power S.p.A. (May 2014—April 2017).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Head of North America of Enel
Green Power North America, Inc. (May 2011—May 2014).
Tech Drive 1, Suite 220, Andover, MA, USA.
|
II. Enel South America S.r.l.
The present business address of the following sole director is c/o
Enel S.p.A., Viale Regina Margherita 137, 00198 Rome, Italy.
|
|
|
|
|
Name and
Citizenship
|
|
Present and Material Occupations, Positions, Offices and
Employment During the Past Five
Years and Addresses.
|
|
Giancarlo Pescini (Italy)
|
|
•
Sole
Director of Enel South America S.r.l. (June 2017—Present).
•
Head of Group’s
Participations—Corporate Affairs Department of Enel S.p.A. (December 2014—Present).
|
Enel South America S.r.l. does not have any executive
officers.
III. Enel Chile S.A.
The information contained in Item 6.A. of the Annual Report on Form
20-F
for the year ended December 31, 2016 of Enel Chile is incorporated herein by reference.
Messrs. Herman Chadwick, Fernán Gazmuri, Pablo Cabrera and Juan Gerardo Jofré are citizens of Chile and Messrs. Giulio
Fazio, Vicenzo Rainieri and Salvatore Bernabei are citizens of Italy.
The information contained in Item 6.A. of the Annual Report
on Form
20-F
for the year ended December 31, 2016 of Enel Chile S.A. is incorporated herein by reference.
|
|
|
|
|
Name and Citizenship
|
|
Present and Material Occupations, Positions, Offices and Employment During the Past Five
Years and Addresses.
|
|
Bruno Stella (Italy)
|
|
•
Manager
of Planning and Control of Enel Chile S.A. (2016—Present).
•
Head of Planning and
reporting of Enel Trade S.p.A. (2015—2016).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Head of Planning and Control
of Retail Customer Operations in Italy of Enel Servizio Elettrico S.p.A. (2012—2015).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
|
A-13
|
|
|
|
|
Name and Citizenship
|
|
Present and Material Occupations, Positions, Offices and Employment During the Past Five
Years and Addresses.
|
|
Monica De Martino
(Italy)
|
|
• Head of Regulatory Affairs of Enel Chile S.A.
(2017—Present).
• Head of Regulatory Affairs Latin America Enel Green Power S.p.A,
(2011—2016).
Viale Regina Margherita 125, 00198 Rome (RM), Italy
|
|
|
|
|
Antonella Pellegrini
(Italy)
|
|
• Head of Sustainability and Community Relation of
Enel Chile S.A. (Sept 2016—present).
• Board Member of Fundacion San Ignacio del Huinay (June
2017—present)
Santa Rosa N° 76, Santiago, Chile
• Head of Sustainability Enel Green Power Chile and Andean Countries
(May 2015—September 2016).
Presidente Riesco 5335, Las Condes, Santiago, Chile
• Sustainability Area Manager Latin America, Enel Green Power Peru
(March 2014—May 2015).
Santa Cruz 875, Miraflores, Lima, Peru
• BD Planner Enel Green Power Chile and Andean Countries (December
2011—March 2014).
Presidente Riesco 5335, Las Condes, Santiago, Chile
|
|
|
|
|
Francisco Silva (Chile)
|
|
• Manager of Services of Enel Chile S.A.
(2014—Present).
• Regional Manager of General Services of Enersis S.A.
(2011—2013)
• Board member of “Aguas Manantial S.A.” (2004—2014), El
Roble 540, Quilicura, Chile.
• Board member of “Contempora Corredores de Bolsa de Productos
S.A.” (2008—Present).
Av. El Bosque Norte 0177, piso 7, Las Condes.
|
|
|
|
|
Juan José Bonilla Andrino (Spain)
|
|
• Global Procurement Manager of Enel Chile S.A.
(January 2018—Present). Santa Rosa 76, Piso 9, Santiago, Chile.
• CEO of Enel Green Power Chile S.A. (May 2014—December
2017).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile.
• Head of O&M Chile and Andean Countries (renewable energy) (June
2016—November 2017).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile.
• Board Member of Enel Green Power Chile S.A. (December
2016—December 2017).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile.
• Board Member of Geotermica del Norte S.A. (March 2017—November
2017).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile.
• Board member of Parque Talinay Oriente S.A. (December
2016—November 2017).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile.
• Board member of Parque Eólico Valle de Los Vientos S.A. (December
2016—November 2017).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile.
• Board member of Enel Green Power del Sur SpA. (December
2016—November 2017).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile.
|
A-14
|
|
|
|
|
Name and Citizenship
|
|
Present and Material Occupations, Positions, Offices and Employment During the Past Five
Years and Addresses.
|
|
|
|
• Board member of Almeyda Solar SpA (December
2016—November 2017).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile
• Board member of Parque Eólico Taltal S.A. (December
2016—November 2017).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile
• Board member of Empresa Electrĺca Panguipulli S.A. (December
2016—November 2017).
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile
• Board member of Meric SpA. (April 2017—November 2017).
Avenida
Apoquindo 2827, Piso 12, Las Condes, Santiago, Chile
• O&M Director, Enel Green Power North America (January
2014–December 2016).
100 Brickstone Square, Suite 300, Andover MA 01810, United States.
• Maintenance/Technical Support Responsible in the O&M Wind
Competence Centre, Enel Green Power S.p.A. (January 2010–January 2014).
Viale Regina Margherita 137, 00198 Rome, Italy
|
The present business address of Messrs. Stella, Silva and Andrino as well as Ms. De Martino and Ms. Pellegrini
is c/o Enel Chile S.A. Santa Rosa 76, Santiago, Chile.
Messrs. Pedro Urzúa, José Miranda, Antonio Berreda and Domingo
Valdés are citizens of Chile and Messrs. Nicola Cotugno, Raffaele Cutrignelli, Raffaele Grandi and Alain Rosolino are citizens of Italy.
IV.
Enel Generación Chile S.A.
The information contained in Item 6.A. of the Annual Report on Form
20-F
for the year ended December 31, 2016 of Enel Generación Chile S.A. is incorporated herein by reference.
|
|
|
|
|
Name and Citizenship
|
|
Present and Material Occupations, Positions, Offices and Employment During the Past Five
Years and Addresses.
|
|
Fabrizio Barderi (Italy)
|
|
•
Board
member of Enel Generación Chile S.A. (August 2017—present).
Santa Rosa 76, Santiago, Chile.
•
Head of Planning and Control
of Enel Trade S.p.A. (August 2017—present).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Head of Energy Management
Latin America of Enel Trade S.p.A/Enel Generación Chile S.A. (November 2014—July 2017).
Santa Rosa 76, Santiago, Chile.
•
Head of Wholesale and
Origination of Enel Trade S.p.A. (January 2008—October 2014).
Viale Regina Margherita 125, 00198 Rome (RM), Italy.
•
Board member of Alpe Adria
Energia S.r.l (April 2009—November 2014).
Via Viola 3, 33100 Udine, Italy.
|
On August 28, 2017, the Board of Directors of Enel Generación Chile S.A. elected Mr. Barderi
to serve as a director of Enel Generación Chile S.A. until the next ordinary shareholders’ meeting. Mr. Barderi fills the vacancy created by the resignation of Mr. Francesco Buresti on June 23, 2017.
Except for Messrs. Enrique Cibié, Jorge Atton and Julio Pellegrini, who are citizens of Chile, all of the directors of Enel
Generación Chile S.A. are citizens of Italy.
A-15
The information contained in Item 6.A. of the Annual Report
on Form
20-F
for the year ended December 31, 2016 of Enel Generación Chile S.A. is incorporated herein by reference.
|
|
|
|
|
Name and Citizenship
|
|
Present and Material Occupations, Positions, Offices and Employment During the Past Five
Years and Addresses.
|
|
Juan Alejandro Candia (Chile)
|
|
•
Planning
and Control Officer of Enel Generación Chile S.A. (April 2017—Present).
•
Director of Almeyda Solar SpA
(April 2017—Present).
•
Presidente Riesco 5335, Piso 15, Las Condes, Santiago, Chile.
•
Director of Empresa
Eléctrica Pehuenche S.A. (energy company) (April 2017—Present).
•
Santa Rosa 76, Piso 10,
Santiago, Chile.
•
Substitute Director of Parque Eólico Valle de Los Vientos S.A. (renewable energy company) (April 2017—Present).
•
Presidente Riesco 5335, Piso
15, Las Condes, Santiago, Chile.
•
Presidente Riesco 5335, Piso
15, Las Condes, Santiago, Chile.
•
Substitute Director of Parque Eólico Taltal S.A. (renewable energy company)(April 2017—Present).
•
Presidente Riesco 5335, Piso
15, Las Condes, Santiago, Chile.
•
Head of Planning and Control of Market in Enel Chile S.A. (2015—2017).
•
Vice Manager in Planning and
Control of Distribution Chile in Chilectra S.A. (2013—2015).
Santa Rosa 76, Santiago, Chile.
•
Head of Planning and Control
of Integrated Functions in LATAM in Endesa S.A. (2011—2012).
Santa Rosa 76, Santiago, Chile.
|
The present business address of Mr. Juan Alejandro Candia is c/o Enel Generación Chile S.A. Santa
Rosa 76, Santiago, Chile.
Except for Mr. Valter Moro, who is a citizen of Italy, all of the executive officers of Enel
Generación Chile S.A. are citizens of Chile.
A-16
ANNEX B
INFORMATION REGARDING EGPL
Enel Green
Power Latin América
|
A.
|
History and Development
|
EGPL is a closely held stock corporation (
sociedad anónima
cerrada
) organized under the laws of the Republic of Chile. EGPL is a member of the Enel Green Power group of companies. Enel Green Power is a transnational company dedicated to electricity generation with renewable resources, which in turn is
controlled by Enel, one of the largest electricity and utility services company worldwide. Enel Green Power develops its renewable energy business and holds its assets located in Chile primarily through EGPL. EGPL’s shareholders are Hydromac
Energy S.R.L., a wholly owned subsidiary of Enel Green Power, and Enel Green Power with interests of 99.9% and 0.1%, respectively.
EGPL is a renewable
energy generation holding company engaged, through its wholly owned subsidiary Enel Green Power Chile Ltda. (“EGP Chile”), in the electricity generation business in Chile. As of December 31, 2016, EGPL had 1,036 MW of installed
capacity from 16 solar, wind, hydro and geothermal generation facilities. Of EGPL’s installed capacity as of such date, 47.5% consisted of solar power plants, 43.6% consisted of wind power plants, and 8.9% consisted of hydro and geothermal
power plants.
EGPL currently has 18 operational power plants with a total installed capacity of 1,196 MW consisting of 92 MW of hydroelectric power, 564
MW of wind power, 492 MW of solar power, and 48 MW of geothermal power. However, the 112 MW Sierra Gorda Este wind farm and the 48 MW Cerro Pabellón geothermal plant have not officially started commercial operations and are selling
electricity on a test basis.
Prior to 2013, EGPL had only 92 MW of installed capacity, from the Pullinque and Pilmaiquén hydroelectric plants. In
2013, EGPL made the decision to focus on growing its installed capacity. The goal was to reach 1 GW of installed capacity in Chile prior to 2017. EGPL began by expanding its portfolio to include wind power with the acquisition of Parque Talinay
Oriente and completion of construction on Parque Eólico Valle de los Vientos. By the end of 2013, EGPL had 272 MW of installed capacity, making it the operator with the most installed wind capacity in Chile. EGPL was awarded contracts for 162
MW of renewable energy and invested US$320 million in two new solar plants and one new wind plant.
In 2014, EGPL continued to expand by increasing
its number of employees and commencing construction on the Talinay Poniente wind farm and the Chañares, Diego de Almagro and Finis Terrae solar plants. By the end of 2014, EGPL had 507 MW of installed capacity and had completed construction
on Parque Eólico Tal Tal and the Lalackama I and II and Tal Tal solar power plants as well as the Ollagüe plant, the first
off-grid
hybrid plant.
In 2015, EGPL focused on continued growth as well as maintenance of existing facilities impacted by natural disasters. In particular, EGPL rebuilt the Diego
de Almagro solar power plant after it was damaged by floods, as well as the Talinay Oriente and Talinay Poniente wind plants which were damaged by an
8.4-magnitude
earthquake in Northeast Chile. A volcanic
eruption in Southern Chile also affected plant operations. EGPL also began construction on the Cerro Pabellón geothermal plant (the first in South America at 4,500 meters above sea level), the Los Buenos Aires and Renaico wind farms, and the
Pampa Norte solar plant. By the end of 2015, EGPL had total installed capacity of 606 MW and had completed construction of the Carrera Pinto solar plant.
In 2016, EGPL began operating the La Silla solar plant and began construction on the Sierra Gorda Este wind plant. By the end of 2016, Enel reached its goal
of 1 GW of installed capacity in Chile, well before the 2017 target.
EGPL has become a leader in Chile’s renewable energy market with a mixed
portfolio of wind, solar, hydroelectric and geothermal power. As of today, it is the largest renewable energy generation company in Chile, with almost triple the installed capacity of its largest competitor.
B-1
Capital Investments and Capital Expenditures
EGPL coordinates its overall financing strategy, including the terms and conditions of loans and intercompany advances entered into by its subsidiaries in
order to optimize debt and liquidity management. Generally, its operating subsidiaries independently plan capital expenditures financed by internally generated funds or direct financings. Although EGPL has considered how these investments will be
financed as part of its budget process, it has not committed to any particular financing structure, and investments will depend on the prevailing market conditions at the time the cash flows are needed.
EGPL’s investment plan is flexible enough to adapt to changing circumstances by giving different priorities to each project in accordance with
profitability and strategic fit. Investment priorities are currently focused on developing additional renewable energy capacity to guarantee adequate levels of reliable supply while maintaining a high standard of operational efficiency, as well as
remaining focused on the environment.
For the 2018-2022 period, EGPL expects to make capital expenditures of US$1,003 million related to investments
currently in progress, maintenance of existing generation plants and studies required to develop other potential generation projects. For further detail regarding these projects please see “D. Property, Plants and Equipment- Project
Investments.”
The table below sets forth the expected capital expenditures for the 2018-2022 period and the capital expenditures incurred in 2017,
2016 and 2015:
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Estimated
2018-2022
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2017
(1)
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2016
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2015
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(in millions of US$)
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Capital Expenditure
(CAPEX)
(1)
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1,003
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|
157
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533
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|
|
219
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(1)
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CAPEX amounts represent effective payments for each year, except for 2017, which represents budgeted amounts, and future projections.
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EGPL’s capital expenditures for 2017, 2016 and 2015 were principally related to expansion of the business and maintenance of existing projects.
A portion of its capital expenditures is reserved for maintenance, and for the assurance of quality and operational standards of its facilities. Projects in
progress will be financed with resources provided by external financing as well as internally generated funds.
EGPL is a
non-conventional
renewable
generation company with operations in Chile.
EGPL currently owns and operates 18 generation units in Chile with an aggregate installed capacity of 1,196
MW. However, 112 MW Sierra Gorda Este wind farm and 48 MW Cerro Pabellón geothermal plant have not officially started commercial operations, and therefore are not part of the national installed capacity. These power plants are selling their
energy to the system in their condition of units “in tests”. As of December 31, 2016 and December 31, 2015, EGPL owned and operated 16 generation units in Chile with an aggregate installed capacity of 1,036 MW and 11 generation
units in Chile with an aggregate installed capacity of 606 MW, respectively.
EGPL’s consolidated electricity sales in 2016 were 2,811 GWh and its
production was 2,163 GWh, a 60% increase and a 42% increase, respectively, compared to 2015. Currently, EGPL’s wind power capacity represents 47.1% of its total installed capacity in Chile, its solar capacity represents 41.1%, its hydroelectric
installed
B-2
capacity represents 7.7% and its geothermal capacity represents 4.0%. The following tables summarize the information relating to EGPL’s capacity, electricity generation and energy sales:
ELECTRICITY DATA
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Year ended December 31,
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2016
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2015
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Number of generating units
(1)
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16
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11
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Installed capacity (MW)
(2)
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1,036
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606
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Electricity generation (TWh)
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2.2
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1.5
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Energy sales (TWh)
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2.8
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1.8
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(1)
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For details on generation facilities, see “D. Property, Plants and Equipment.”
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(2)
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Total installed capacity is defined as the maximum capacity (MW), under specific technical conditions and characteristics. In most cases, installed capacity is confirmed by satisfaction guarantee tests performed by
equipment suppliers. Figures may differ from installed capacity declared to governmental authorities and customers, according to criteria defined by such authorities and relevant contracts.
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In the electricity industry, it is common to divide the business into hydroelectric, geothermal, wind, solar and other generation, because each type of
generation has significantly different variable costs. Of EGPL’s total consolidated generation in 2016, 48.8% was from wind sources, 37.5% was from solar sources, 13.8% was from hydroelectric sources and none was from geothermal sources.
The contracting electricity market is composed by final customers, distribution companies and other generation companies. Final customers identified as small
volume regulated customers, including residential customers, are subject to government regulated electricity tariffs and must purchase electricity directly from the distribution company in its concession area. These distribution companies, which
purchase large amounts of electricity for small volume residential customers, enter into contractual agreements with generators through a regulated tender process. Those identified as large volume industrial customers also enter into contractual
agreements with energy suppliers. However, such large volume industrial customers are not subject to the regulated tariff price. Instead, these customers are allowed to negotiate the energy price with generators based on the characteristics of the
service required. Law establishes specific energy consumption limits (measured in GWh) for regulated and unregulated customers. Moreover, the regulatory framework requires that distribution companies have contracts to support their forecasted
commitments to small volume customers and determine which customers can purchase energy directly from generation companies. A generation company may also sell energy to other generation companies, agreeing in a
non-regulated
context the conditions and prices. Finally, the pool market, where energy is normally sold at the spot price, is not carried out through contracted pricing.
As NCRE power plants’ generation depends directly on renewable sources (wind, radiation, water, etc.), the estimated production is variable and must be
assessed with a probabilistic approach. In order to minimize overall risks, including spot market exposure, EGPL’ selling strategy considers the previously mentioned, including diversified technologies in its portfolio and different types of
possible clients.
Operations
EGPL owns and
operates a total of 18 generation units in Chile through its subsidiaries. However, Sierra Gorda Este and Cerro Pabellón plants are still being tested. For information on the installed generation capacity for each of EGPL’s subsidiaries,
see “D. Property, Plants and Equipment.” All of EGPL’s generation units are connected to the SIC, except for Sierra Gorda, Cerro Pabellón and Valle de los Vientos generation units which are connected to the SING in northern
Chile. EGPL’s total gross electricity generation in Chile (including the SIC and the SING) accounted for 3% of total gross electricity generation in Chile during 2016.
B-3
The following table sets forth the electricity generation by each of EGPL’s generation companies:
ELECTRICITY GENERATION BY COMPANY (GWh)
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Year ended December 31,
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2016
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2015
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Enel Green Power Chile Limitada
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—
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—
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Geotérmica del Norte S.A.
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—
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—
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Almeyda Solar SpA
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50
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46
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Parque Eólico Tal Tal S.A.
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285
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267
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Parque Talinay Oriente S.A.
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176
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175
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Parque Eólico Valle de los Vientos S.A.
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246
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231
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Enel Green Power del Sur SpA
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702
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0.3
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Empresa Eléctrica Panguipulli S.A.
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705
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809
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Total
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2,163
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1,528
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Electricity sales and generation
The total industry electricity sales increased 1.6% during 2016 as compared to 2015, with a sales increase of 1.9% in the SIC and of 0.4% in the SING.
EGPL’s electricity sales reached 2,811 GWh in 2016 and 1,762 GWh in 2015, which represented a 4% and 3% market share, respectively.
EGPL supplies electricity to several regulated electricity distribution companies, large unregulated customers, other generation companies and the pool
market. All commercial relationships with its customers are governed by contracts.
Supply contracts with distribution companies must be auctioned, and
are standardized. Supply contracts with unregulated customers and other generation companies are agreed between both parties, reflecting competitive market conditions.
EGPL’s contracts are generally on a long-term basis and typically range from fifteen to twenty years. Some contracts may be automatically extended at the
end of the applicable term, unless terminated by either party upon prior notice. If EGPL experiences a
force majeure
event, as defined in the contract, it is allowed to reject purchases and it has no obligation to supply electricity to its
unregulated customers or other generation companies. Disputes are subject to binding arbitration between the parties.
B-4
ELECTRICITY INDUSTRY REGULATORY FRAMEWORK
The following chart shows a summary of the main characteristics of the Chilean electricity regulatory framework by business segment.
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Gx
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Spot Market
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Sales between generators with costs audited
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Unregulated Market
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Bilateral contracts with freely agreed prices
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Regulated Market
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Node price public auction for up to 20 years
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Capacity Payment
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Income based on power contributions during peak demand
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Tx
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Features
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Public—Open Access—Regulated Tariff
Monopoly Regime for Transmission System Operators
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Dx
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Law
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Administrative Concession (indefinite duration)
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Expansion
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Undefined
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Tariff review
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Every 4 years
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Td
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Unregulated customers
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> 5 MW
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Unregulated market (%)
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≈30%
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Gx: Generation
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Tx: Transmission
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Dx: Distribution
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Td: Trading
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Industry Overview and Structure
The Chilean electricity industry is divided into three business segments: generation, transmission and distribution. These business segments are carried out by
publicly listed private sector companies, in which generators can also trade energy with unregulated customers. The state’s role is limited to regulation, supervision and indicative investment planning through
non-binding
recommendations in the case of generation. In the transmission segment, investment planning and construction bidding processes are binding.
The following chart shows the relationships among the various participants in the Chilean electricity market:
The generation segment is comprised of a group of electricity companies that own generating plants, whose energy is
transmitted and distributed to end customers. This segment is characterized by being a competitive market, which operates under market-driven conditions. Generation plants sell their energy through contracts to distribution companies, who in turn
serve the regulated market, to unregulated customers and to other generation companies. Generators sell surpluses on the spot market. The transmission segment is comprised of a
B-5
combination of lines, substations and equipment for the transmission of electricity from generators’ production points to the centers of consumption or distribution. In Chile, transmission
is defined as the conveying of electricity over lines or substations with a voltage or tension higher than 23 kV. The transmission system operates under open access, and transmission companies may impose rights of way over the available transmission
capacity through the payment of tolls.
The distribution segment is defined for regulatory purposes as the electricity supplied to end customers at a
voltage no higher than 23 kV. Distribution companies operate under a public utility concession regime, with service obligations and regulated tariffs for supplying regulated customers.
Customers are classified according to their capacity, as follows: (i) new unregulated customers as of 2016 with connected capacity of over 5,000 kW
(existing customers who were formerly subject to the lower 2,000 kW threshold prior to 2016 will be grandfathered as of 2019); (ii) regulated customers with connected capacity up to 500 kW; and (iii) customers that choose either a regulated
tariff or an unregulated regime for a minimum period of four years, available to customers whose connected capacity falls in the range of 500 kW to 5,000 kW.
The distribution companies supply regulated customers, a segment for which the price and supply conditions are the result of tender processes regulated by the
CNE (“
Comisi
ó
n Nacional de Energ
í
a
”), and unregulated customers that have agreements with generators or distributors, which terms are freely negotiated and agreed upon.
In Chile, there are four separate interconnected electricity systems. The main systems in Chile are the SIC and the SING. The SIC services the central and
south central part of the country, where 92.2% of the Chilean population lives. The SING, which operates in the northern part of the country and where most of the mining industry is located, is where 6.3% of the Chilean population lives (according
to the 2015
CDEC-SIC
annual report). In addition to the SIC and the SING, there are two isolated systems in southern Chile that provide electricity to remote areas, where 1.5% of the population lives.
In January 2014, Law No 20,726 approved the interconnection between the SIC and the SING. The interconnection is expected to be completed by 2019. Once in
place, energy generated in one system will be able to cover a portion of any shortfalls in the other system.
The operation of electricity generation
companies in each of the two major interconnected electricity systems is coordinated by the dispatch center of the independent coordinator entity that coordinate generators, transmission companies and large customers. The Independent Coordinator
coordinates the operation of both system with an efficiency criterion in which the lowest cost producer available is usually required to satisfy demand at any moment in time. As a result, at any specific level of demand, the appropriate supply will
be provided at the lowest possible production cost available in the system. The marginal cost used is the price at which generators trade energy on an hourly basis, involving both their injections into the system and their withdrawals or purchases
for supplying their customers.
The Energy Agenda
In
May 2014, the Chilean government announced the Energy Agenda, establishing a plan to create and execute a long-term energy policy. The Energy Agenda presents several lines of action and goals to achieve in the short, medium and long term. These
objectives are lower energy prices, the incorporation of
non-conventional
renewable energy sources (“NCRE”) and promotion of the efficient use of energy. In Chile, NCRE refers to power from wind,
solar, geothermal, biomass, ocean (tides, waves and currents, as well as the ocean’s thermal gradient) and mini-hydro plants under 20 MW.
Principal Regulatory Authorities
The Chilean Ministry of
Energy develops and coordinates plans, policies and standards for the proper operation of the sector, approves tariffs and node prices set by the CNE, transmission and distribution companies. The CNE is the technical entity in charge of defining
prices, technical standards and regulatory requirements.
B-6
The SEF monitors the proper operation of electricity, gas and fuel sectors in compliance with the law in
terms of safety, quality, and technical standards.
The Chilean Ministry of Environment is responsible for the development and application of regulatory
and policy instruments that provide for the protection of natural resources, the promotion of environmental education and the control of pollution, among other matters. It is also responsible for administering the environmental impact assessment
system at the national level, coordinating the preparation of environmental standards and establishing the programs for compliance with those standards.
Chilean antitrust authorities are responsible for preventing, investigating and correcting any threats to free market competition and any anti-competitive
practices by potentially monopolistic companies. These authorities include:
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•
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Free Market Competition Tribunal (“TDLC” in its Spanish acronym). This is a special and independent jurisdictional entity, subject to the directive, correctional and economic authority of the Chilean Supreme
Court, which functions to prevent, correct and sanction threats to free market competition.
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•
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National Economic Prosecutor (“FNE” in its Spanish acronym). This is the attorney general responsible for economic matters and for investigating and prosecuting all antitrust conduct before the FNE’s
regulatory commission and other tribunals.
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The Panel of Experts acts as a tribunal in energy matters (electricity and gas) arising from
disputes between participants in the energy market and between participants in the energy market and the regulatory authority in certain tariff processes and other subject defined by law. It issues enforceable resolutions and is composed of experts
in industry matters, five engineers or economists and two lawyers, all of whom are elected every six years by the TDLC.
There are also other entities
related to the energy sector: the Chilean Nuclear Energy Commission is in charge of research, development, use and control of nuclear energy, the Chilean Energy Efficiency Agency is in charge of promoting energy efficiency, and the Center for
Innovation and Promotion of Sustainable Energies is in charge of strategic programs and projects with public financing for innovation and promotion of sustainable energies.
The Electricity Law
General
Since its inception, the Chilean electricity industry has been developed by private sector companies. Nationalization had been carried out during the period
from 1970 to 1973. During the 1980s, the sector was reorganized through the Chilean Electricity Law, known as DFL 1, allowing participation of private sector capital in the electricity sector. By the end of the 1990s, foreign companies had a
majority participation in the Chilean electricity system.
The goal of the Chilean Electricity Law is to provide incentives to maximize efficiency and to
provide a simplified regulatory scheme and tariff-setting process that limits the discretionary role of the government by establishing objective criteria for setting prices. The goal is an economically efficient allocation of resources. The
regulatory system is designed to provide a competitive rate of return on investment to stimulate private investment, while ensuring the availability of electricity to all who request it.
DFL 1 was published in 1982 and has had few important changes since then to deal with droughts, encourage investments in transmission lines and to create
long-term contracts between generation and distribution companies as part of a bid process. The present law was restated as DFL 4 of 2006, and has been supplemented with a series of regulations and standards.
Since January 2015 the regulated market is supplied by long-term auctions managed by the CNE. Tenders are carried out 5 years in advance so to give the
opportunity to news projects in the system to offer their energy.
B-7
In 2016, the Transmission Law, Law 20,936, restructured the electricity transmission system operation. The
main provisions included are:
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•
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Functional redefinition of Transmission Systems, which will now be classified into National Transmission Systems, Zonal, Dedicated Systems, development poles and international interconnections. The creation of a single
independent national coordinator, who replaced the current CDEC-SING and
CDEC-SIC
dispatching operators as of January 2017;
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•
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A new remuneration mechanism for assets with a progressive shift of all costs from generators to the end customers; and
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•
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Government assumes a main role in planning reinforcement and expansion of the grid.
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Limits and
Restrictions
According to Chilean law regarding free competition together with specific regulations applicable to the electrical industry, there
are established criteria to avoid certain levels of economic concentration and/or abusive market practices.
These sets of laws and regulations allow the
participation of companies in different activities (i.e. generation, distribution, marketing) to the extent that there is an adequate separation between them from a corporate and accounting point of view. However, in the transmission sector there
are further restrictions, mainly to guarantee adequate access to all agents. The Electricity Law defines limits for income-generating companies or distributors in the transmission segment, and prohibits the participation of transmission companies in
the segment of generation and distribution.
In addition, the Water Utility Services Law also sets restrictions on the overlapping of concessions in the
same area, setting restrictions on the ownership of the property for water and sewage service concessions and utilities that are natural monopolies, such as electricity distribution, gas or home telephone networks.
Dispatch and Pricing
In each of the two major
electric systems, the Independent Coordinator coordinates the operations of generation companies, in order to minimize the operating costs in the electricity system and monitor the quality of service provided by the generation and transmission
companies. Generation companies satisfy their contractual sales requirements with dispatched electricity, whether produced by them or purchased from other generation companies in the spot market.
Sales by Generation Companies to Unregulated Customers
Sales by generation companies may be made to distribution companies, unregulated end customers or to other generation companies under freely negotiated
contracts. To balance their contractual obligations with their dispatch, generators have to trade deficit and surplus electricity at the spot market price, which is set hourly by the Independent Coordinator based on the lowest cost of production of
the last kWh dispatched.
Sales to Distribution Companies and Certain Regulated Customers
Under Law 20,018 (
Ley Corta II
), enacted on May 19, 2005, all new contracts between generation and distribution companies to supply electricity to
regulated customers must arise from international bids. In January 2015, Law 20,805 amended the bidding process for supplying electricity to regulated customers. These amendments, among others, changed the anticipation required for the bidding
process from three to five years, extended the maximum contract period from 15 to 20 years, adopted a capped price known as “reserve price” that is kept private until the bid price is made public, and allowed for the possibility to review
the price awarded during the supply period, setting new procedures to assign energy without contracts and to regulate the short-term bidding process.
B-8
Sales of Capacity to Other Generation Companies
The Independent Coordinator determines the capacity for each power plant on an annual basis to participate in the capacity payment market. That capacity is
certain capacity which a generator may guaranteed to supply to the system during peak hours, taking into consideration statistical information and accounting time out of service for maintenance purposes and for extremely dry conditions in the case
of hydroelectric plants.
A generation company may be required to purchase or sell capacity in the spot market, depending upon its contractual
requirements in relation to the amount of electricity to be dispatched from such company and to its capacity.
Promotion of Generation from
Renewable Energy Sources
On April 1, 2008, Law 20,257 amended the General Electric Services Law. The purpose of the amendment was to promote
the development of NCRE. This law defines the different types of technologies that qualify as NCRE and establishes the obligation for generators, between 2010 and 2014, to supply at least 5% of the total energy contracted as of August 31, 2007
to be of a certain type, and to progressively increase this percentage by 0.5% annually up to a minimum of 10% by 2024.
On October 22, 2013, Law
20,698 was adopted to promote the use of NCRE and modify the previously defined NCRE minimum requirements. This law establishes a mandatory share of renewable energy sources in 2025, calculated as a percentage of the total contracted energy of each
generator. For contracts signed between 2007 and 2013, the target is 10% by 2024, while for contracts beyond 2013 the target is 20% by 2025.
Incentives and Penalties
If a rationing decree is
enacted in response to prolonged periods of electricity shortages, strict penalties may be imposed on generation companies that contravene the decree. A severe drought is not considered a force majeure event under EGPL’s service agreements.
Generation companies may also be required to pay fines to the regulatory authorities, as well as compensate electricity customers affected by shortages
of electricity. The fines are related to system blackouts due to an electricity generator’s operational problems, including failures related to the coordination duties of all system agents. If generation companies cannot satisfy their
contractual commitments to deliver electricity during periods when a rationing decree is in effect and there is no energy available to purchase in the system, the generation company must compensate the customers at a rate known as the “failure
cost” determined by the authority in each node price setting. This failure cost, which is updated semiannually by the CNE, is a measurement of how much end customers would pay for one extra MWh under rationing conditions.
Water Rights
Companies in Chile must pay an annual fee
for unused water rights. License fees already paid may be recovered through monthly tax credits commencing on the
start-up
date of the project associated with the water right. The maximum license fees that may
be recovered are those paid during the eight years before the
start-up
date.
The Chilean Constitution considers
water as a national public good on which real utilization rights are defined. That is similar to holding the private property rights over water, as set forth in article 19, paragraph 24: “The rights of individuals over water, recognized or
constituted in accordance with the law, grant their holders ownership over such rights.” Notwithstanding the foregoing, paragraph 24 also specifies legal limitations to those water rights.
The Chilean Congress is currently discussing amendments to the Water Code with the objective of making water use for human consumption, household subsistence
and sanitation a high priority. On November 22, 2016, the
B-9
Chilean House of Representatives approved an amendment which is currently being evaluated by the Agricultural Commission of the Chilean Senate. The main aspects of the amendments are as follows:
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Granting of new water rights which would be limited to a maximum period of 30 years and extendable, unless the Chilean Water Authority proves the ineffective use of resources. The extension shall be effective only for
used water rights.
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•
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The expiration of new
non-consumptive
water rights that were granted by law, if the holder does not exercise the right of use within eight years.
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•
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The expiration of new
non-consumptive
water rights already granted, if the user does not effectively use the rights within a period of eight years from the date of enactment of
the new Water Code. The term can be extended for up to four years only in justified cases such as delays in obtaining permits or environmental approvals.
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•
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In April 2017, the President modified this amendment stating that the preservation of water environmental flows to protect the ecosystem only applies to future water rights for both consumptive and
non-consumptive
water use, which would reduce the water availability for generation purposes.
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Regulation of Distribution Companies
Concessions
Distribution service concessions give the right to use public areas for building distribution lines. The concessions are given by the Chilean
Ministry of Energy for an undefined period. Distribution companies have the obligation to serve and connect the customers that make the requirement in the concession area. The president of Chile can declare a concession expired if the quality of
service does not meet certain minimum standards.
Energy Purchases
Since 2005, with the enactment of Law 20,018, energy sales between generation and distribution companies have been made by an international auction process.
After the last modification of the law by Law 20,805 in 2015, the auctions of all distribution companies are managed by the CNE. The auctions are based on distribution companies’ projections of energy demand for the coming years. The result of
the process is a “pay as bid” contract, with an extension up to 20 years. In addition, the modifications of the law establish a mechanism to supply the excess demand that is not covered by the contract.
Distribution Tariffs to End Customers
Tariffs
charged by distribution companies to end customers are determined by the sum of the cost of electricity purchased by the distribution company, a transmission charge, and the value added from distribution of electricity (“VAD”), which
allows distribution companies to recover their investment and operating costs, including a return on investment, which is set by law. The price for both generation and distribution capacity sold to customers includes a factor which reflects the
simultaneous contribution of each customer to peak capacity demand of the system as a whole. The transmission charge reflects the cost paid for electricity transmission and transformation.
The VAD is based on a
so-called
“efficient model company,” which considers the cost of building and
operating the company at the minimum cost, fulfilling quality and safety standards. It includes the annualized investment in distribution assets, the company’s operation, administration, and maintenance costs, and an expected return on
investment, before taxes of 10% per year in real terms, based on the replacement cost of assets used for the distribution business.
Generation costs are
passed on to distributors end consumers through the “Average Node Price” stated in government’s price decrees. The Average Node Price is adjusted in three instances: (1) every six months, in
B-10
January and July of each year, based on local and international indexes; (2) upon the entry of a new supply contract with any distribution company; and (3) upon indexation of a supply
contract in excess of 10%.
Regulatory Charges and Subsidies
The Chilean law deems that transitory subsidies can be granted, if the residential customer tariff increased by 5% or more within a
six-month
period. The application of this subsidy is optional and the last one was granted in 2009.
Distribution
Tariff-Setting Process
The VAD is set every four years. The CNE classifies companies into groups called Typical Distribution Areas
(“TDA”) based on economic factors that group companies with similar distribution costs, which in turn determines the equipment requirements of the network. The CNE selects one distribution company for every group and estimates its cost
under the concept of an efficient model company. At the same time, distribution companies also carry out their own studies, which are based on the same one company selected by the CNE for each TDA. The VAD of each TDA is determined in a weighted
manner with one third of the value estimated by the study of the companies and two thirds by the CNE. Preliminary tariffs, as a result of the VAD, are tested to ensure that they provide a rate of return between 6% and 14% on distribution assets.
The real return on investment for a distribution company depends on its actual performance relative to the standards chosen by the CNE for the efficient
model company. The tariff system allows for a greater return to distribution companies that are more efficient than the model company.
The tariff setting
process for the period 2016 -2020 culminated with the publication of the Decree No. 11T in August, 2017, The new tariffs will be applied retroactively to November 2016.
Associated Electrical Services
In 2013, the CNE
concluded the tariff setting process for 25 regulated associated services (which include meter rental, disconnection and reconnection of service, among others). These new prices were applied starting March 14, 2014 and will remain in effect
until the publication of a new decree, which was initially expected in November 2016. Currently, this tariff setting process is not concluded and it is expected to be completed in 2017.
Incentives and Penalties
Distribution companies
may be required to compensate end customers in the case of electricity shortages that exceed the authorized standards. These compensatory payments are equal to double the amount of electricity the distribution company failed to provide, using a rate
equal to the
so-called
“failure cost.”
Transmission Regulation
The transmission segment is comprised of a combination of lines, substations and equipment for the transmission of electricity from generators’ production
points to the centers of consumption or distribution. In Chile, transmission segment is defined as the conveying of electricity over lines or substations with a voltage or tension higher than 23 kV. The transmission system operates under open
access, and transmission companies may impose rights of way over the available transmission capacity through the payment of tolls.
According to the
General Electricity Services Law, the transportation of electricity by National transmission systems and zonal transmission systems are defined as a public service. Therefore, the transmitter has a service obligation and is responsible for the
maintenance and improvement of its facilities.
B-11
In July 2016, the Transmission Law restructured electrical transmission system operations, where. the
government assumes the main role in the planning of the transmission system, including the tender process. Among other aspects of the law, open access is extended to all transmission facilities. It unites the process of the transmission facility
qualification process of each segment into a single process, and modifies the remuneration mechanism by means of the application of a stamped rate of charge of the demand. Since April 2017, the CNE is working on the requirements and regulations
related to the implementation of the Transmission Law. Particularly, the CNE is analyzing and drafting the Coordination and Operation of National Electrical System Regulation, the Supplementary Services Regulation and the Transmission System
Regulation, all fundamental topics for the appropriate operation of the Chilean electricity sector. In this context, the CNE has started workshops with sector agents in order to discuss, analyze and to propose the best alternatives to appropriately
regulate these matters.
Zonal Transmission System Regulation
The Transmission Law redefines the previous subtransmission system as the Zonal Transmission System. The Zonal Transmission Systems are defined as voltage
lines exceeding 23 kV and are grouped geographically. There are six zonal systems defined by decree. The zonal systems are paid mainly by customers according to the tariffs fixed by decree of the Chilean Ministry of Energy. Zonal tariffs remunerate
the Zonal Transmission Annual Value, which is calculated every four years in a process carried out by the government. The annual value of each system includes efficient operation, maintenance, administration costs and annual valuation of real
investments, which are valued as new, and uses a discount rate determined by the CNE. The discount rate is calculated using a CAPM model with a minimum value of 7% after tax. If major discrepancies are discovered between the government and zonal
companies, an expert panel will resolve them based on technical aspects.
In April 2013, Decree 14 was promulgated, which established a tariff schedule
for 2011 through 2014. During 2014, studies were developed to set tariffs for zonal systems. The results of these studies should have been applied at the beginning of 2015. However, the authority ruled that the current values will remain in effect
for an additional year. Subsequently, with the application of the Transmission Law, the current values will remain in effect for another two additional years, until 2018.
Environmental Regulation
The Chilean constitution grants
citizens the right to live in a pollution-free environment. It further provides that certain other constitutional rights may be limited in order to protect the environment. Chile has numerous laws, regulations, decrees and municipal ordinances that
address environmental considerations. Among them are regulations relating to waste disposal (including the discharge of liquid industrial wastes), the establishment of industries in areas that may affect public health, and the protection of water
for human consumption.
The Environmental Law, Law 19,300, was enacted in 1994 and has been amended by several regulations, including the Environmental
Impact Assessment System Rule issued in 1997 and modified in 2001. This law requires companies to conduct an environmental impact study (“EIA” in its Spanish acronym) and a declaration of any future generation or transmission projects.
In January 2010, Law 19,300 was modified by Law 20,417, which introduced changes to the environmental assessment process and in the public institutions
involved, principally creating the Chilean Ministry of Environment and the Superintendence of Environment. Environmental assessment processes are coordinated by this entity and by the Environmental Assessment Service. In June 2011, the Ministry of
Environment published Decree 13, emission standards for thermoelectric plants applicable to generation units of at least 50 MW. The objective of this regulation is to control atmospheric emissions of particulate matter (MP), nitrogen oxides (NOx),
sulfur dioxide (SO2) and mercury (Hg), in order to prevent and protect the health of the population and protect the environment. Existing emission sources are required to meet emission limits as established in the regulation for MP emissions and for
SO2 and NOx emissions by June 2015 in highly polluted areas and by June 2016 elsewhere.
B-12
In June 2012, Law 20,600 created the Environmental Courts, special jurisdictional courts subject to the
control of the Chilean Supreme Court. Their primary function is to resolve environmental disputes within their jurisdiction and look into other matters that are submitted for their attention under the law. The law created three such courts, all of
which are in operation.
On December 28, 2012, the Superintendence of Environment was formally created and began to exercise its powers of
enforcement and sanctions pursuant to Chilean environmental regulations.
On September 10, 2014, Law 20,780 was enacted and included charges for the
emission of MP, NOx, SO2 and CO2 into the atmosphere. For CO2 emissions, the charge is US$ 5 per emitted ton (not applicable to renewable biomass generation). MP, NOx and SO2 emissions will be charged the equivalent of US$ 0.10 per emitted ton,
multiplied by the result of a formula based on the population of the municipality where the generation plant is located and an additional fee of US$ 0.90 per ton of MP emitted, US$ 0.01 per ton of SO2 emitted and US$ 0.025 per ton of NOx emitted.
This tax will be in effect beginning in 2018, taking into account the previous year’s emissions.
As of December 30, 2016, all plants of EGPL
and its subsidiaries have established methodologies to measure emissions during 2017 and pay related taxes, in line with the requirements of the Environmental Superintendence of Chile.
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C.
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Organizational Structure.
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Principal Subsidiaries and Affiliates
EGPL is part of an electricity group controlled by Enel, its Italian ultimate controlling shareholder. Hydromac Energy S.R.L., its controlling shareholder,
owns 99.9% of its shares, and Enel Green Power S.p.A. beneficially owns 100% of Hydromac Energy S. R.L. Enel is an energy company with multinational operations in the power and gas markets, with a focus on Europe and Latin America. Enel operates in
over 30 countries across four continents, produces energy through a net installed capacity of 84 GW and distributes electricity and gas through a network covering 1.9 million kilometers. With over 61 million users worldwide, Enel has the
largest customer base among European competitors and figures among Europe’s leading power companies in terms of installed capacity and reported EBITDA. Enel publicly trades on the Milan Stock Exchange. The companies listed in the following
table were consolidated by EGPL as of December 31, 2016. In the case of subsidiaries, EGPL’s economic interest is calculated by multiplying its percentage of economic interest in a directly held subsidiary by the percentage economic
interest of any entity in the chain of ownership of such ultimate subsidiary.
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Principal Companies
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% Economic
Ownership of
Each Main
Subsidiary by
EGPL
|
|
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Consolidated
Assets
of Each Main
Subsidiary on
a
Stand-alone Basis
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|
|
Revenues and
Other Operating
Income of Each
Main Subsidiary
on a Stand-alone
Basis
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|
|
|
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(in %)
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|
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(in millions of US$)
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Enel Green Power Chile Limitada
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|
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99.99
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|
|
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1,302
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|
|
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41
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Geotérmica del Norte S.A.
|
|
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81.16
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|
|
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446
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|
|
|
—
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Almeyda Solar SpA
|
|
|
100
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|
|
|
84
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|
|
|
15
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Parque Eólico Tal Tal S.A.
|
|
|
100
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|
|
|
185
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|
|
|
44
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Parque Talinay Oriente S.A.
|
|
|
61.37
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|
|
|
213
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|
|
|
27
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Parque Eólico Valle de los Vientos S.A.
|
|
|
100
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|
|
|
147
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|
|
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26
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Enel Green Power del Sur SpA
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|
|
100
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|
|
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1,058
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|
|
65
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Empresa Eléctrica Panguipulli S.A.
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|
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99.99
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|
|
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524
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|
|
|
115
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|
B-13
Principal Subsidiaries
Enel Green Power Chile Limitada
EGP Chile owns at
least a majority stake, and in many cases a 99.99% stake, in all of the generation companies that EGPL operates.
Empresa Eléctrica
Panguipulli S.A.
Empresa Eléctrica Panguipulli S.A. is a generation company, with a total installed capacity of 271 MW comprised of the
Pullinque hydroelectric power plant (51 MW), the Pilmaiquén hydroelectric power plant (41 MW), the Talinay Oriente wind power plant (90 MW), the Lalackama I solar power plant (60 MW), the Lalackama II solar power plant (18 MW) and the
Chañares solar power plant (40 MW). EGPL holds a 0.045% direct interest in Empresa Eléctrica Panguipulli S.A. and EGP Chile holds a 99.995% interest in Empresa Eléctrica Panguipulli S.A.
Geotérmica del Norte S.A.
Geotérmica del Norte S.A. is a generation company, which owns the Cerro Pabellón geothermal power plant in northern Chile with a total installed
capacity of 48 MW. EGP Chile holds a 84.59% interest in Geotérmica del Norte S.A. and Empresa Nacional del Petróleo, a state-owned Chilean petroleum company, holds the remaining 15.41% interest.
Almeyda Solar SpA
Almeyda Solar SpA is a
generation company, which owns the Diego de Almagro solar power plant in northern Chile with a total installed capacity of 36 MW. EGP Chile holds a 100% interest in Almeyda Solar SpA.
Parque Eólico Tal Tal S.A.
Parque
Eólico Tal Tal S.A. is a generation company, which owns the Tal Tal wind power plant in northern Chile with a total installed capacity of 99 MW. EGPL holds a 0.01% direct interest in Parque Eólico Tal Tal S.A. and EGP Chile holds the
remaining 99.99% interest.
Parque Talinay Oriente S.A.
Parque Talinay Oriente S.A. is a generation company, which owns the Talinay Oriente wind power plant in central Chile with a total installed capacity of 90 MW.
Enel Green Power S.p.A. holds a 34.57% direct interest in Parque Talinay Oriente S.A. and EGP Chile holds the remaining 61.37% interest.
Parque
Eólico Valle de los Vientos S.A.
Parque Eólico Valle de los Vientos S.A. is a generation company, which owns the Valle de los
Vientos wind power plant in northern Chile with a total installed capacity of 90 MW. EGPL holds a 0.01% direct interest in Parque Eólico Valle de los Vientos S.A. and EGP Chile holds the remaining 99.99% interest.
Enel Green Power del Sur SpA
Enel Green Power del
Sur SpA is a generation company with a total installed capacity of 561.9 MW comprised of the Renaico wind power plant (88 MW), the Los Buenos Aires wind power plant (24 MW), the Sierra Gorda Este wind power plant (112 MW), the Finis Terrae solar
power plant (160 MW), the Carrera Pinto solar power plant (97 MW), the Pampa Norte solar power plant (79 MW) and the La Silla solar power plant (1.7 MW). EGPL holds a 0.00004% direct interest in Enel Green Power del Sur SpA and EGP Chile holds the
remaining 99.99996% interest.
B-14
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D.
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Property, Plants and Equipment.
|
EGPL owns 18 electricity generation power plants in Chile through its
subsidiaries. A substantial portion of its cash flow and net income is derived from the sale of electricity produced by its electricity generation facilities. Significant damage to one or more of its main electricity generation facilities or
interruption in the production of electricity, whether as a result of an earthquake, flood, volcanic activity, severe and extended droughts or any other such natural disasters, could have a material adverse effect on its operations.
The following table identifies the power plants that EGPL owns, all in Chile, by company and their basic characteristics as of December 31, 2016:
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Installed
Capacity
(1)
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Company
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Power Plant Name
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Power Plant Type
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2016
(1)
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Parque Eólico Valles de los Vientos S.A.
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Valle de los Vientos
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Wind Farm
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|
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90
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Parque Eólico Tal Tal S.A.
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Tal Tal
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Wind Farm
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|
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99
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Parque Talinay Oriente S.A.
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Talinay Oriente
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Wind Farm
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90
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Enel Green Power del Sur SpA
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Renaico
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Wind Farm
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|
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88
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Los Buenos Aires
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Wind Farm
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|
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24
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|
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Sierra Gorda Este
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|
Wind Farm
|
|
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—
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|
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Finis Terrae
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Solar
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|
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160
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|
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Pampa Norte
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Solar
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|
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79
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|
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La Silla
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Solar
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|
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2
|
|
|
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Carrera Pinto
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Solar
|
|
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97
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|
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Almeyda Solar SpA
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Diego de Almagro
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Solar
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|
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36
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|
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Geotérmica del Norte S.A.
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Cerro Pabellón
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Geothermal
|
|
|
—
|
|
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Empresa Eléctrica Panguipulli S.A.
|
|
Pullinque
|
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Hydropower
|
|
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51
|
|
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Pilmaiquén
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|
Hydropower
|
|
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41
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|
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Lalackama I
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Solar
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|
|
60
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|
|
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Lalackama II
|
|
Solar
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|
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18
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|
|
|
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Chañares
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|
Solar
|
|
|
40
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|
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Talinay Poniente
|
|
Wind Farm
|
|
|
61
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Total Capacity
|
|
|
1,036
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(1)
|
The installed capacity corresponds to the gross installed capacity, without considering the MW that each power plant consumes for its own operation.
|
|
(2)
|
112 MW Sierra Gorda Este wind farm and 48 MW Cerro Pabellón geothermal plant have not officially started commercial operations, and therefore are not part of the national installed capacity and have not been
included in this table. These power plants are selling their energy to the system in their condition of units “in tests”.
|
Insurance
EGPL’s electricity generation facilities
are insured against damage due to natural disasters such as earthquakes, fires, floods, other acts of god (but not for droughts, which are not considered
force majeure
risks, and are not covered by insurance) and from damage due to
third-party actions, based on the appraised value of the facilities as determined from time to time by an independent appraiser. Based on geological, geotechnical, hydrological and engineering studies, management believes that the risk of the
previously described events resulting in a material adverse effect on EGPL’s generation facilities is remote. Claims under EGPL’s insurance policies are subject to customary deductibles and other conditions. EGPL also maintains business
interruption insurance providing coverage for the failure of any of its facilities for a period of up to 24 months, including the deductible
B-15
period. The insurance coverage taken for its property is approved by each company’s management, taking into account the quality of the insurance companies and the needs, conditions and risk
evaluations of each facility, and is based on general corporate guidelines. All insurance policies are purchased from reputable international insurers. EGPL continuously monitors and meets with the insurance companies in order to obtain what it
believes is the most commercially reasonable insurance coverage.
Project Investments
EGPL continuously analyzes different growth opportunities in Chile. EGPL studies and assesses its project portfolio and seeks new opportunities, either by
building new greenfield projects or by modernizing existing brownfield assets and improving (operationally and / or environmentally) in the performance of such assets. The expected
start-up
for each project is
assessed and is defined based on the commercial opportunities and its financing capacity to fund these projects.
Currently, EGPL has a competitive
pipeline of projects with short
time-to-market,
which is possible because of current commercial opportunities through PPA contracts. EGPL will invest
US$1,003 million from 2018 to 2022 in development of the business and maintenance, including new capacity, and maintaining high environmental standards and high standards of operational efficiency. The most important projects under development
through 2024 are detailed below and are expected to result in 1,137 additional MW of power (comprised of 980 MW of solar power, 124 MW of wind power, and 33 MW of geothermal power). EGPL’s installed capacity is expected to increase from 1.2 GW
in 2017 (including Sierra Gorda Este and Cerro Pabellón power plants) to 1.8 GW in 2022. EGPL expects that its production will increase more than 51% from 2017 to 2022 (from 3.4 TWh in 2017 to 5.2 TWh in 2022). In the majority of the
projects, EGPL will provide operations & maintenance services and maintain a local presence.
Campos del Sol I Project
The Campos del Sol I project is located in the Atacama region of Chile. It consists of a 339 MW solar power plant. This project was awarded to EGP Chile in the
DisCo Tender 2016 and is expected to reach commercial operation in 2021. The land has been secured, the environmental approval has been obtained and power purchase agreements for 2021-2045 have already been confirmed. The project has potential
synergies with the already operational Carrera Pinto solar project. The estimated total investment is expected to be US$276.9 million, of which US$3.36 was accrued as of December 31, 2016.
Azabache Project
The Azabache project is located
in the Antofagasta region of Chile. It consists of a 69 MW solar power plant. This project is expected to reach commercial operation in 2020. The land has been secured and the environmental approval has been obtained. The project has potential
synergies with and will use the same land as the already operational Valle de los Vientos wind project as well as already existing transmission line towers. It will be the first wind and photovoltaic hybrid at an industrial scale in Chile. The
estimated total investment is expected to be US$55.4 million, of which US$0.14 million was accrued as of December 31, 2016.
Renaico
II Project
The Renaico II project is located in the Araucanía region of Chile. It consists of two projects, the Las Viñas project
which consists of a 45 MW wind power plant and the Puelche project which consists of a 79 MW wind power plant. This project is expected to reach commercial operation in 2022. The land has been secured and the environmental approval is in process.
The project has potential synergies with the already operational Renaico wind project and will use already existing infrastructure (including an existing substation and transmission line). The estimated total investment is expected to be
US$187.9 million, none of which was accrued as of December 31, 2016.
B-16
Cerro Pabellón 3 Project
The Cerro Pabellón 3 project is located in the Antofagasta region in northern Chile. It consists of a 33 MW geothermal power plant. This project is
expected to reach commercial operations in 2022. The land has been secured and the environmental approval is in process. The project has potential synergies with the already operational Cerro Pabellón geothermal project and will use already
existing infrastructure (including an existing substation and transmission line). The estimated total investment is expected to be US$93.5 million, none of which was accrued as of December 31, 2016.
Campos del Sol II Project
The Campos del Sol II
project is located in the Atacama region in northern Chile. It consists of a 150 MW solar power plant. This project is expected to reach commercial operation in 2023. The land has been secured and the environmental approval has been obtained. The
project has potential synergies with the already operational Carrero Pinto solar project and the future Campos del Sol project. The estimated total investment is expected to be US$114.3 million, none of which was accrued as of December 31,
2016.
Cerro Pabellón PV Project
The
Cerro Pabellón PV project is located in the Antofagasta region in northern Chile. It consists of a 12 MW solar power plant. This project is expected to reach commercial operation in 2023. The land has been secured. The project has potential
synergies with the already operational Cerro Pabellón geothermal project and will use already existing infrastructure (including an existing substation and transmission line). The estimated total investment is expected to be
US$12.4 million, none of which was accrued as of December 31, 2016.
Sol de Lila Project
The Sol de Lila project is also located in the Antofagasta region. It consists of a 122 MW solar power plant. This project is expected to reach commercial
operation in 2023. The land has been secured and the environmental approval has been obtained. There is a possibility that this project will interconnect with the Argentinian transmission system. The estimated total investment is expected to be
US$97.9 million, of which US$0.53 million was accrued as of December 31, 2016.
Flor del Desierto Project
The Flor del Desierto project is also located in the Antofagasta region. It consists of a 50 MW solar power plant. This project is expected to reach commercial
operation in 2023. The land has been secured and the environmental approval has been obtained. The estimated total investment is expected to be US$39.4 million, of which US$0.19 million was accrued as of December 31, 2016.
Los Manolos Project
The Los Manolos project is
located in the Arica region in northern Chile. It consists of a 80 MW solar power plant. This project is expected to reach commercial operations in 2023. The land has been secured and the environmental approval has been obtained. The estimated total
investment is expected to be US$62.6 million, of which US$0.27 million was accrued as of December 31, 2016.
Valle del Sol Project
The Valle del Sol project is located in the Antofagasta region. It consists of a 116 MW solar power plant. This project is expected to reach
commercial operation in 2024. The land has been secured and the environmental approval has been obtained. The project has potential synergies with the already operational Finis Terrae I solar project. The estimated total investment is expected to be
US$91.4 million, of which US$0.42 million was accrued as of December 31, 2016.
B-17
Finis Terrae II Project
The Finis Terrae II project is located in the Antofagasta region. It consists of a 42 MW solar power plant. This project is expected to reach commercial
operation in 2024. The land has been secured and the environmental approval has been obtained. The project has potential synergies with the already operational Finis Terrae I solar project and will use already existing infrastructure (including an
existing substation and transmission line). The estimated total investment is expected to be US$36.1 million, none of which was accrued as of December 31, 2016.
Major Encumbrances
As of December 31, 2016, EGPL
has full ownership of its assets and they are not subject to material encumbrances.
Climate Change
In recent years, Chile and the region have seen an increase of developments related to NCRE and strategies to combat climate change. This has required both the
public and private sectors to adopt strategies in order to comply with the new environmental requirements, as evidenced by legal obligations at the local level, commitments assumed by countries at the international level, and the demanding
requirements of the international markets.
NCRE plants provide energy with minimal environmental impact and without CO
2
emissions. They are therefore considered technological options that strengthen sustainable energy development as they supplement the production of traditional generators.
Enel, EGPL’s ultimate controlling shareholder, announced in October 2015 that it will no longer build coal power plants because it considers the
technology to be counterproductive to its goal of being carbon neutral by 2050. Closures of existing coal power plants are scheduled at the end of their life cycles. The lost capacity will be substituted with more environmentally friendly types of
generation, focusing on NCRE. This announcement is aligned with the Energy Agenda that the Chilean government released in May 2014. Among its objectives are facilitating the incorporation of NCRE sources and promoting the efficient use of energy.
B-18
ANNEX C
OPINION OF BANCHILE ASESORÍA FINANCIERA S.A., INDEPENDENT EVALUATOR OF
ENEL GENERACIÓN
This Annex C is
a free English translation of the original Spanish language version, which reflects the substantive content of the original Spanish language document, but may not be a word-for-word translation. In the event of any discrepancy with the English
translation, the original Spanish language document will prevail.
Report to the Board of Directors of Enel
Generación Chile S.A. Banchile Asesoría Financiera S.A. November 3rd, 2017 Project Elqui C-1
This document has been prepared by
Banchile Asesoría Financiera S.A. ("Banchile") at the request of the Board of Directors of Enel Generación Chile S.A. (the “Client“ or “EGC BoD”) to act as its independent valuator under the terms of article 147 of
Law No. 18,046 in connection with the proposed corporate reorganization (the "Transaction“ or “Elqui”). Recommendations and conclusions contained herein represent the best opinion of Banchile regarding the assessment of the
Transaction at the time of preparation of this document, considering the work methodology employed and the available information. However, the conclusions contained herein could change if another background or information is considered or a
different valuation criteria not considered in the development of this report is used. Banchile shall have no obligation to communicate such variations as well as whenever the opinions or information contained herein, or the assumptions on which the
present report was prepared, are modified. This report has been prepared to be used exclusively for the purposes of the Transaction and the consideration of Enel Generación Chile S.A. (the “Company“ or “EGC”) and,
therefore, must be used exclusively in such context, and cannot be used for any other purpose without Banchile's prior and written consent. For the preparation of this report, it has been used only public information and information provided by the
Company in respect of which Banchile has assumed, without independent verification, its full and complete truthfulness, integrity, accuracy, sufficiency, consistency, and reasonableness. In the case of estimates, projections, reports or forecasts,
Banchile has assumed and is confident that those have been prepared in good faith and reasonably, based on assumptions that reflect the best available estimates and judgments by the respective management, advisor or expert, about expected results in
the future. In this way, Banchile assumes no responsibility in this regard or for the conclusions that may be derived from information that is false, erroneous or incomplete. Likewise, the conclusions of this report may be based on assumptions that
may be subject to significant market and economic uncertainties and/or contingencies such as flows, projections, and estimates, among others, in which the occurrence may be difficult to predict and that could be outside the scope of the respective
company, so that there is no certainty as to the degree of fulfillment of such assumptions. Under no circumstances the use or incorporation of such flows, projections or estimates, among others, may be considered as a representation, warranty or
forecast of Banchile with respect to its occurrence, as well as of the underlying assumptions thereof. Banchile assumes no obligation or liability for any potential results or consequences of the Transaction or its non-consummation. Future results
may be substantially different from what is supposed, assumed or suggested in this report. Therefore, Banchile assumes no liability or obligation to indemnify in the event that future results are different from the estimates, forecasts or
projections contained in this report. Banchile has not assumed any obligation or commitment to provide legal, accounting or tax consultancy services nor to perform due diligence of the companies subject matter of the Transaction. Therefore, no
content of this report should be considered, used or interpreted as legal, accounting or tax advice and any content herein that refers directly or indirectly to legal, accounting or tax aspects should be understood as a review of general aspects
that Banchile has deemed relevant to support its own analysis. Finally, Banchile has not been asked for, nor has Banchile provided any advice regarding the design, selection or structuring of the transactions that conforms the Transaction, nor with
respect to the terms or conditions or any other aspect thereof, nor services other than the preparation of this report were requested. Therefore, Banchile has not made an opinion in this report and will not issue any opinion on the possibility that
an alternative transaction or a different configuration of the companies subject to the Transaction may or may not result in greater profits for the Company and shareholders. The information contained in this document is confidential, for the
exclusive use of the Client, as long as it is not made public for the purposes for which it has been elaborated. Reproduction of this report or delivery to third parties for purposes other than those of the Transaction is prohibited unless expressly
authorized by Banchile. This report and associated executive summary are presented in English and Spanish, both of which shall constitute the same presentation; provided however, that in case of doubt as to the proper interpretation or construction
of the report, the Spanish text shall prevail. Disclaimer C-2
Table of Contents 1. Introduction 2.
Proposed Transaction Description 3. Transaction Analysis a. Strategic Considerations b. Execution Considerations c. Valuation Method d. Valuation Analysis e. Assessment of Conditions Precedent Set by Enel 4. Conclusions Appendix C-3
1. Introduction C-4
Glossary Term Definition ADTV Average
Daily Traded Volume Banchile Banchile Asesoría Financiera S.A. BoD Board of Directors Capex Capital Expenditure CAPM Capital Asset Pricing Model CNE “Comisión Nacional de Energía” COD Commercial Operation Date CPI Consumer
Price Index DCF Discounted Cash Flow DC Directors Committee Dx Electricity Distribution EBIT Earnings Before Interest and Tax EBITDA Earnings Before Interest, Tax, Depreciation and Amortization EC Enel Chile EC BoD Enel Chile Board of Directors EDC
Enel Distribución Chile S.A. EGC Enel Generación Chile S.A. EGC BoD Enel Generación Chile Board of Directors EGM Extraordinary General Meeting EGPC Enel Green Power Chile Ltda. EGPL Enel Green Power LatAm Ltda. Enel Enel SpA FV Firm
Value FCF Free Cash Flows g Expected Growth Rate Term Definition Gx Power Generation IPSA “Índice de Precios Selectivo de Acciones” Kd Debt Interest Rate Ke Cost of Equity LTM Last Twelve Months NAV Net Asset Value NOPAT Net
Operating Profit After Tax Opex Operating Expenses PPA Power Purchase Agreement RAB Replacement Asset Base Rf Risk-Free Rate RONIC Return over New Invested Capital RTP Related Party Transaction SAFP "Superintendencia de Administradoras de Fondos de
Pensiones" SEC Securities and Exchange Commission SOTP Sum of the Parts SVS "Superintendencia de Valores y Seguros" T Tax Rate TV Terminal Value Tx Transmission VDR Virtual Data Room VAD Added Value of Distribution VAS Added Value of Services VAT
Added Value of Transmission WACC Weighted Average Cost of Capital C-5
On July 3rd, 2017, EC BoD submitted a
non-binding proposal to Enel to implement a corporate reorganization of its Chilean assets (the “Transaction” or “Elqui”), that involves the following steps: Enel Chile (“EC”) will launch a tender offer
(“TO”) for up to 100% of EGC subject to reaching a minimum ownership of 75% of EGC. The TO will be fully paid in cash, but its terms and conditions will contemplate that EC Chile allocates part of the consideration that EGC shareholders
receive in the TO to subscribe EC shares (cash/stock mix)(1) EC will incorporate, through a merger by absorption, the Chilean assets of EGPL EC BoD argued that the proposed Transaction would bring several benefits to EC, such as: consolidate
power generation activities and align corporate interests in one investment vehicle in Chile, simplify minority shareholder’s structure, diversify and enhance organic growth, improve capital structure, increase liquidity and market
capitalization, and reduce holding discount(2) On August 25th, 2017, Enel submitted a response to EC’s proposal expressing its interest and asked to perform the required analysis so that Enel and EC’s shareholders can evaluate the
Transaction. In addition, Enel conditioned the approval of the Transaction to the fulfillment of certain conditions precedent: The operation should be carried out under market conditions considering the growth prospects of renewable energy in Chile
Should be accretive for EC When the process concludes, Enel’s shareholding in EC should be similar to its current shareholding and must at no time lose its controlling shareholder position and remain within the 65% maximum concentration limit
determined by EC’s bylaws After the process, EGC should no longer be subject to Title XII of D.L. 3,500 from 1980, and therefore the limits to shareholder concentration and other restrictions must have been eliminated from its bylaws
Consequently, the EC BoD and EGC BoD decided to proceed with the analysis and implement the Transaction according to Related Party Transaction (“RPT”) rules(3) Accordingly, the BoDs engaged independent financial evaluators and
appraisers, and the Directors’ Committees engaged independent financial advisors. Every director must send a formal note stating whether the transaction benefits shareholders and Directors’ Committees must release a formal note on the
Transaction. Finally, shareholders at respective EGMs must vote the Transaction(4) In the context of Elqui, EGC BoD appointed Banchile to act as its independent financial advisor Banchile’s scope of work will be equivalent to the scope
contemplated in the “Ley 18.046 de Sociedades Anonimas, Articulo 147” referred to the independent advisor role The scope of work includes: Describe the proposed Transaction Analyze the Transaction rationale and potential impacts to EGC
shareholders Assess the considerations and potential risks related to the execution of the transaction Perform a valuation of EGC, EC and EGPL in the context of the Transaction in order to: Determine a range for the share exchange ratio for the
merger between EC and EGPL Determine a range for the terms and conditions of the Tender Offer, comparing them with fundamental and market valuations Verify conditions precedent set by Enel According to Enel Chile’s Significant Event as of
October 26th, 2017. Per the letter sent by Enel Chile to Enel SpA on July 3rd, 2017. “Titulo XVI, Ley de Sociedades Anonimas (18.046)” in Chile. According to RPT rules. Background and Scope of Services C-6
Available Information and Interactions
Information Received Interactions Access to VDR including the following: Historical financial information for 2016 and 2Q’17 for EC, EGC, EGPC and EGPL Projections for the companies under Elqui’s scope Business plan for EGC and its
subsidiaries, EDC and EC for the period 2017-2022; in addition, extended business plan for EGPC and its subsidiaries for the period 2017-2026, including projected financial statements for each company Detailed projections of revenues and costs for
EGC and EGPC for the period 2018-2045 that contain expected energy production, contract and merchant energy prices, contracted energy, energy purchases and generation costs Detailed operational projections for EDC over the period 2018-2022
Normalized maintenance capex and replacement capex for EGC and its subsidiaries and EGPC and its subsidiaries Terminal value calculation methodology for EDC, EGC and EGPL Summary of contracts between EGPC and EGC Broker research reports Legal, tax
and preliminary technical due diligence reports on EGPC Other public documents of interest Management presentation of EC, EGC, EDC and EGPC Meetings with EGC’s CEO, CFO and General Counsel, among others Meeting with EGC’s commercial team
Meetings with EGC’s legal advisors to review the Transaction and its legal considerations Meetings with Enel’s modeling team to review the financial projections Meeting with EGPL legal due diligence team Q&A sessions in the VDR
Presentation of a preliminary report to EGC BoD We have not had access to the original PPAs of EGP. As of the date of this report we have only been provided access to: A summary of the main PPAs between EGC and EGPC A legal due diligence report that
describe risks associated with EGP PPAs EGC management, which has explained considerations and clauses of EGC/EGPC PPAs In this final report, we have assumed that these contracts and agreements will remain as informed in the context of Elqui,
particularly and fundamentally with regards to prices and contracted generation. In addition, we have assumed that there are no renegotiation nor early termination clauses that may significantly affect valuations Our assessment of EGPC is based on
the information received to date and the perimeter of assets and agreements listed in Appendix II C-7
2. Proposed Transaction Description
C-8
EGC EDC Summary of Proposed Transaction
Parent Investment Vehicles Operating Companies EC 100% 99.1% 60% EGPC EGPL(3) Current Situation Pro Forma Structure 100% 99.1% >75% EGC EGPC EC Indirectly through Enel Green Power SpA. Indirectly through Enel South America S.R.L. Enel has
indicated that EGPL’s assets based outside of Chile will be sold or separated ahead of the Transaction. EGC EDC ~60.6%(2) 100%(1) ~60%(2) C-9
Note: Transaction approved on the
basis of the pro forma balance sheets as of September 30th, 2017 To complete the Transaction, it is required at the EGC EGM that shareholders approve EGC to cease to be subject to “Titulo XII del D.L. 3.500 de 1980” in order for EC to
increase its interest above 65%. Requires >75% of shareholders to vote for the change in bylaws. Transaction Structure: Step by Step Transaction Steps Transaction Description Enel Conditions Precedent The operation should be carried out under
market conditions considering the growth prospects of renewable energy in Chile Should be accretive for EC When the process concludes, Enel’s shareholding in EC should be similar to its current shareholding and must at no time lose its
controlling shareholder position and remain within the 65% maximum concentration limit determined by EC’s bylaws After the process, EGC should no longer be subject to Title XII of D.L. 3,500 from 1980, and therefore the limits to shareholder
concentration and other restrictions must have been eliminated from its bylaws 4 3 3 EC Capital Increase EC launches a capital increase Enel waives its preferred rights in favor of EGC shareholders that accept the TO EC minority shareholders have
the option to waive or subscribe their preferred rights 4 EC TO over EGC EC launches a cash tender over EGC, subject to reach >75% of shares Capital increase and TO in cash 2 EDC EGC EGPC EC >50% 100% >75% 99.1% EGPL 100% Tender Offer
Capital Increase 3 4 5 Merger 5 Merger Simultaneously with the completion of the TO, EC and EGPL will merge at the exchange ratio set at EC’s EGM Enel is expected to maintain its interest in EC close to current levels Merger between EGPL and
EC 3 EDC EGC EGPC EC ~60% 100% >75% 99.1% 5 EGM Approvals 1 1 EC EGM Approval of the RPT and capital increase Approval of price (cash/shares mix) to be paid at EGC’s Tender Offer Approval of an exchange ratio for the merger with EGPL 2 EGC
EGM(1) RPT approval Voting to remove the 65% stake cap for controlling shareholders(2) EDC EGC EGPC EC 60.6% 100% 60% 99.1% EGPL 100% 1 2 EC EGM EGC EGM 1 2 C-10
2017 2018 Aug-17 Sep-17 Oct-17 Nov-17
Dec-17 1H-18 Indicative Transaction Timeline Presented by Enel TO process in accordance with SVS/SEC regulation. Dissenting shareholders may exercise their withdrawal rights up to 30 days after the EGM and sell their shares to the Company. Exercise
price of withdrawal right equivalent to the weighted average price of the 60 trading days preceding the 30th trading day prior to the EGM. Verification of conditions precedent Aug 25th Announcement of the Transaction Individual opinions from
Directors and DC EGC and EC BoD summons EGMs Communications 40d Capital Increase 45d EC EGM approves the Capital Increase Preferred rights subscription period Share registration in SVS/SEC 30d EC EGM approves the TO price TO Process(1) TO settlement
and payment Tender Offer 30d EC EGM approves the Merger Withdrawal right period(2,3) Merger becomes effective Merger between EC and EGPL 30d Closing EGMs Today Aug 30th Appointment of financial advisors by BoDs and DCs Nov 3rd Advisors present
reports to BoDs and DCs Independent Valuation Process 60d Oct 26th Advisors present preliminary reports to BoDs and DCs C-11
3. Transaction Analysis
C-12
Execution Considerations Key Areas of
Analysis Valuation of EC, EGC and EGPL Financial model and valuation of EC, EGC and EGPL under different methodologies Relative comparison with historical metrics, comparable companies and precedent transactions Determination of a range for the
share exchange ratio for the merger between EC and EGPL Determination for a range for the terms and conditions of the Tender Offer, comparing them with fundamental and market valuations Holding discount considerations Analysis of the Transaction
rationale and potential effects on EGC shareholders Analysis of proposed rationale presented at EC BoD Impact of the Transaction on EGC minority shareholders Verification of conditions set by Enel Evaluation of growth prospects and opportunities for
renewable energy in Chile EPS accretion / dilution analysis for EC Shareholders’ concentration limit considerations and other restrictions established in EC Bylaws Pro forma ownership of Enel Strategic Considerations EC, EGC and EGPL Valuation
Evaluation of the contribution to the social interest Assessment of the considerations and potential risks related to the execution of the Transaction Transaction approvals Level of subscription of minorities in EC’s capital increase
Withdrawal rights Regulatory considerations Assessment of Conditions Precedent Set by Enel C-13
a. Strategic Rationale 3. Transaction
Analysis C-14
Potential Benefits to EC as Presented
by EC BoD Consolidation of Chilean power generation activities One investment vehicle in Chile Consolidates EC’s position as a leading power company in Chile with a diversified portfolio of power generation technologies Enel’s
simplification of the minority shareholders’ structure in Chile Minority shareholders will be mostly concentrated in one single vehicle (i.e. EC) More centralized decision making process Alignment of interest in a unique investment vehicle
Reduces potential conflicts of interest that may arise from Enel’s uneven ownership in EC, EGC and EGPL Diversification and enhancement of organic growth Diversified platform with favorable growth prospects and stable cash flows from Gx and Dx
Option to diversify source of dividends and invest in a vehicle with clear growth prospects Higher market capitalization and liquidity Capital increase in the Transaction will increase EC’s market capitalization As EC float increases,
liquidity would increase due to higher attention from equity research analysts, broader investor base, inclusion in market indexes, among other factors Improvement of capital structure Capacity to fund future growth through incremental leverage In
line with 667 resolution Enel has indicated that there is a legal opinion that confirmed that there are no antitrust implications associated with the Transaction However, if the Transaction is completed, EGPC would have to comply with the requisites
of independence established in the 667 resolution Reduction of holding discount Potential reduction in administration costs, increased visibility of power assets in Chile and higher liquidity of EC may reduce holding discount P P P P
P P P P C-15
Potential Impacts on EGC Shareholders
Potential Impact EGC Shareholder That Moves to EC EGC Shareholder That Stays at EGC Alignment of interests ✓ No longer subject to potential conflicts of interest of Enel in Chile ✓ It could help reduce potential conflict of interest as
Enel’s indirect ownership in EGC (>~45%) becomes similar to that of EGPC (~60%) Diversification and growth alternatives ✓ Option to diversify source of dividends and invest in a vehicle with clear growth prospects û No expected
change in growth plan, but confirms reduced exposure to renewables at EGC, limiting value from non conventional growth opportunities Change in capital structure ✓ Ability to fund future growth through incremental leverage at EC = No expected
change in EGC’s capital structure Reduction of holding discount ✓ Depending on the TO outcome, EC’s holding discount may be reduced It would benefit from a potential reduction of EC’s holding discount as long as this is not
already incorporated into Elqui’s transaction terms Currently, brokers estimate holding discount at 10%(1) = Not relevant for EGC shareholders that stay at EGC Liquidity and market presence ✓ EC shares could become even more liquid
considering larger size, broader investor base and more diversified growth options EC will be a larger company with larger float and will continue to be included in relevant market indexes Research analysts will likely focus on EC rather than on EGC
after the Transaction û The change in the shareholding structure may significantly reduce EGC’s liquidity, narrowing down its investor base and preventing its inclusion in market indexes Taxation ✓ Most minority shareholders of EGC
would be exempt from capital gain tax if they participate in the TO, in case art.107 of tax law is applicable(2) û Some EGC shareholders that stay may lose the tax benefit in a subsequent potential exit, if EGC loses “presencia
bursatil” status(2) after the Transaction Governance rights = EC minority shareholders will maintain governance rights as there will be no change in EC’s bylaws and Enel should keep a similar stake in EC Although diluted by the portion
of the TO paid in cash, EGC minority shareholders that move to EC will benefit from such veto rights, which will be similar to those they have at EGC û EC expected pro forma ownership >75% of EGC would leave EGC minority shareholders with
very limited veto rights Refer to page 25. Some taxpayers may be tax exempt if they acquired shares in the stock market or through primary issuances from IPOs and capital increases and subsequently sold such shares in the stock market or through
public offerings (Art. 107 of DL 824). Exception only applies to shares issued by joint-stock companies incorporated in Chile, listed and traded on the stock exchange (“sociedad anónima abierta con presencia bursatil”). The
Transaction is extended to all EGC shareholders. EGC shareholders that participate in the TO would capture most of the benefits of the Transaction. C-16
Overview of EGPC(1) In Chile, EGPC is
the leading renewables developer and operator of renewable plants Installed capacity of ~1.2 GW across 18 projects as of Sep-2017 Diversified portfolio with fully operating solar PV, wind, geothermal and hydro projects Assets benefit from PPAs with
long remaining contracted life PPAs represents ~95% of its firm energy Near-term organic growth locked-in with pipeline portfolio of ~0.6 TW Diversified by technology and geographically Overview First Wind, Solar and Geothermal operator in Chile
Source: CNE, Coordinador Electrico, Systep. (1) Company that owns all EGPL’s Chilean assets. Market Positioning % Total renewable installed capacity Renewable Installed Capacity (MW) Installed Capacity Breakdown by Technology 1,196 MW The
Transaction includes the incorporation into EC of EGPC, the leading renewable energy generation company in Chile that has a total installed capacity of ~1.2 GW. EGPC EGPC Solar 10. Carrera Pinto 11. La Silla 12. Finis Terrae 13. Diego de Almagro 14.
Chañares 15. Lalackama I 16. Lalackama II 17. Pampa Norte Geothermal 18. Cerro Pabellón I y II Wind 1. Sierra Gorda Este 2. Renaico 3. Los Buenos Aires 4. Talinay Oriente 5. Talinay Poniente 6. Taltal 7. Valle de los Vientos Hydro 8.
Pullinque 9. Pilmaiquén Operating Projects C-17
b. Execution Considerations 3.
Transaction Analysis C-18
Execution Considerations
Considerations Overview Potential Actions Considered by Enel Voting Thresholds for Key Transaction Milestones EGC EGM: RPT (>2/3 approval) Change in bylaws in order to remove statutory concentration limit in EGC (65% ownership restriction)
(>3/4 of approval) EC EGM: RPT (>2/3 approval) TO and Merger terms (>2/3 of approval) Change in bylaws' approval subject to the closing of the Transaction In-depth independent analysis and comprehensive information must be presented at EC
and EGC EGMs Subscription Rights in EC’s Capital Increase EC: Minority shareholders may subscribe their preferential rights diluting Enel’s position at EC Enel should waive partially or totally its rights in favor of EGC shareholders
that Tender their shares Evaluating to set condition precedent of having enough shares after the preferred period to exchange in the TO Quantum of capital increase may be above the amount required in the fully-subscribed TO Withdrawal Rights EC
shareholders may execute their withdrawal rights before the Merger Experience in the Chilean market shows that exercising withdrawal rights is generally uncommon; it will depend on definitive Transaction terms Exercising of withdrawal rights
shouldn’t have an impact on EGC shareholders Regulatory Considerations SVS: Approval of the TO payment mechanism and subscription of capital increase SAFP: Approval to pension funds to waive their rights and acquire subscription rights of
EC’s capital increase over the counter Formal inquires to regulator have been made by EC SVS confirmed that EC can require EGC shareholders who tender their shares to allocate part of the proceeds to subscribe EC’s capital increase and
will hold a portion of the TO payment to pay for the capital increase as a condition precedent to the success of the TO SAFP confirmed that pension funds may acquire subscription rights over the counter EGPL Reorganization Enel has indicated that
EGPL’s assets based outside of Chile will be sold or separated ahead of the Transaction There could be some restrictions or preferred rights to the transfer of certain assets and or liabilities Legal opinions have been requested Some
restrictions may be mitigated as Enel is the controlling shareholder of both entities and EGPL will be the continuing entity C-19
c. Valuation Method 3. Transaction
Analysis C-20
Description of Valuation Methodologies
More relevant Less relevant Description Considerations Applies to Relevance Carter II Valuations Valuation based on appraisers’ valuation reports in connection with previous reorganization process Carter II May not reflect current market
environment and outlook Companies have changed and / or sold assets Brokers Outlook Brokers value companies through different methodologies Usually, their preferred approach is DCF Target prices are typically 12 months forward Based on public
information Public information and target prices could be inaccurate or dated To compare with current prices, target prices would need to be brought to “present value” Precedent Transactions Valuation based on prices paid in previous
transactions for similar companies Multiples form precedent transactions Key metric is FV/EBITDA Includes control premium Limited number of local transactions and public information Growth and/or other considerations add distortion DCF Present value
of the expected unlevered FCF generated by the company Reflects the intrinsic value of the company A TV can be calculated at the end of the evaluation period Captures potential growth Captures potential synergies Sensitivity to assumptions and
projections Sensitivity to the TV assumed, if applicable Valuation based on the trading prices of a company in a specific period of time Varies depending on chosen time period Listed companies only Market price may be very volatile and could be
affected by the announcement of a transaction Market Values Trading Comps Valuation based on market prices of similar companies Multiples from listed similar companies Key metric is forward looking FV/EBITDA Does not reflect a control premium nor
synergies Limited number of true comps within the region Require market value adjustments Replacement Value Cost to replace the asset base under actual market conditions For distribution: the regulatory asset base Key metric in generation is US$/MW
installed Does not reflect contracted position (pricing nor average life) Does not reflect cost structure nor operational efficiencies EDC EGC EC EGPL EDC EGC EGPL EDC EGC EC EGPL EDC EGC EC EGC EC EGPL EDC C-21
EGC Pehuenche GasAtacama Canela EGC
Equity Value Unlevered Free Cash Flow for EGC Wind Total Production (MW) TEC Coal CCGT Thermo Hydro (=) Power Generation Revenues Energy Purchases (MW) Regulated Prices Non-Regulated Prices Merchant Prices PPA Prices (-) Capex (-) Change in
Working Capital Firm Value (-) Equity Bridge + Minority Interests Adjustments Discounted at the Respective WACC (-) Opex (-) Fixed Costs (=) EBITDA (-) Tax on EBIT EDC Equity Value DCF Build-Up Approach Our DCF is built using a bottom-up
approach for EGC, EC, EGPL and their subsidiaries, starting from the revenues and costs of each company. EC Equity Value OpCo DCF EC (-) Holding Expenses and Discount HoldCo EGPL Talinay Geotermia Norte Unlevered Free Cash Flow for EGPC EGPC Equity
Value EGPC Production/Revenues (-) Equity Bridge (if applicable) EGPL Equity Value EGPL Valuation Perimeter EGC Valuation Perimeter EC Valuation Perimeter (=) Power Generation Revenues (-) Capex (-) Change in Working Capital Firm Value (-) Equity
Bridge + Minority Interests Adjustments Discounted at the Respective WACC (-) Opex (-) Fixed Costs (=) EBITDA (-) Tax on EBIT Energy Purchases (MW) Regulated Prices Non-Regulated Prices Merchant Prices PPA Prices Geothermal Total Production
(MW) Mini Hydro Solar PV Wind (-) Capex (-) Change in Working Capital Firm Value (-) Equity Bridge + Minority Interests Adjustments Discounted at the Respective WACC (-) Opex (-) Fixed Costs (=) EBITDA (-) Tax on EBIT EDC Equity Value
Unlevered Free Cash Flow for EDC (=) Distribution & Transmission Revenues EDC Dx VAD Tx VAT VAS and other services Energy Demand Regulated Revenues Unregulated clients revenues (-) Equity Bridge + Minority Interests Adjustments + Holding
Costs Adjustments C-22
DCF Valuation Forecast and Horizon
Assumptions EGC EDC EGPL Valuation date: September 30th, 2017 Equity Bridge as of September 30th, 2017 Equity Bridge provided by Enel considers adjustments related with net debt and other non-current assets and liabilities for each company
Additional adjustments to reflect minority interests in EGC and EGPL For valuation purposes, statutory corporate tax rate of 27% over EBIT No tax loss benefits assumed General Assumptions EGC standalone, Pehuenche, Canela and Gasatacama Companies
Considered Dx and Tx regulated and unregulated businesses Consolidated EGPC, Talinay and Geotermia del Norte US$ Currency CLP US$ Explicit valuation forecast: 2017-2045 Terminal value after valuation period Valuation Period Explicit valuation
forecast: 2017-2022 Terminal value after valuation period Explicit valuation forecast: 2017-2045 Terminal value after valuation period Macroeconomic Assumptions Macro assumptions provided by Enel US and Chile CPI and GDP growth End-of-year and
average currency exchange ratio (US$/CLP) For 2023 onwards currency exchange ratios forecasted with purchasing power parity method (CPI differences) Commodity prices (Henry Hub, Brent, WTI, API2 coal) Nominal US$ discount rate based on CAPM
methodology Discount Rate Nominal CLP discount rate based on CAPM methodology Nominal US$ discount rate based on CAPM methodology C-23
Estimated as a perpetuity of the
NOPAT, considering a target RONIC, according to the following formula: NOPAT based on historicals DCF Valuation Forecast and Horizon Assumptions (cont’d) EGC EDC EGPL Enel 5-Year Business Plan (2018-2022) Extended Business Plan Received
from the Company (2023-2045) Terminal Value Assumptions Projections based on the company’s contractual profile Assumes progressive normalization of hydrology Financial projections includes Los Condores project, which is currently under
construction Assumes no relevant impact from the last distribution companies public tender (2017/01) Projections based on actual tariffs in addition to new developments Assumes no changes to current regulatory returns Includes efficiencies and new
VAS projects Projections based on the company’s contractual profile Base scenario includes: Operating assets Campos del Sol that has a committed PPA Short-term awarding development projects that have been allocated PPAs awarded to EGC in the
last distribution companies public tender (2017/01)(1) Operating Margin Projections of operating margin extended up to 2045 Assumes no uncommitted PPA renewals Merchant sales after PPA expirations SG&A, other costs and Working Capital Adjusted
by CPI from 2023 onwards Working capital based on normalized days Capex and D&A Considers maintenance and replacement Capex projections to extend assets’ useful life Depreciation adjusted by CPI Not provided / available Operating Margin
Projections of operating margin extended up to 2045 Assumes no uncommitted PPA renewals Merchant sales after PPA expirations SG&A, other costs Adjusted by CPI from 2023 onwards Working capital based on normalized days Capex and D&A Considers
maintenance and replacement Capex projections to extend assets’ useful life Depreciation adjusted by CPI Operating Margin Perpetuity from 2045 onwards SG&A, other costs Perpetuity from 2045 onwards Capex Estimate based on extending
assets’ useful life in perpetuity. Considers maintenance and expansion Capex Operating Margin Perpetuity from 2045 onwards SG&A, other costs Perpetuity from 2045 onwards Capex Estimate based on extending assets’ useful life in
perpetuity. Considers maintenance and expansion Capex Cash flow projections based on Enel’s extended business plan, adjusting PPA price, Opex and Capex based on conversations with Enel. C-24
We are assuming a holding discount of
10.0% for EC based on broker research views. This percentage includes the corporate expenses at EC holding. EC Holding Discount Considerations Holding Discount Considerations Holding discount typically relates to factors that negatively affect the
market value of a conglomerate compared to its NAV, such as: Complex controlling structure, subordination of subsidiaries, different liquidity of the holding company and its subsidiaries, regulatory and agency issues, and corporate expenses at the
holding level, among other factors Accordingly, some brokers include EC's corporate expenses in their holding discount calculations Calculating the existing holding discount of EC is subjective, given that EDC market capitalization could be
distorted due to EDC’s low liquidity Determining the exact holding discount of EC after the Transaction is challenging and speculative considering: Uncertain participation at EC’s tender offer and pro forma shareholding structure
Uncertain reaction and appetite from investors after Elqui Very low liquidity of EDC adds noise to EC’s NAV calculation Lack of comparable companies to asses the true market value of EDC Uncertain reduction of corporate expenses at EC holding
Accordingly, in our valuation analysis, we have included the average discount observed by research analysts. Given the aforementioned reasons we have not assumed a change in the holding discount post transaction in absolute terms Broker Views
Median: 10.0% Source: Factset as of October 31st, 2017. Explicitly considers holding discount and holding expenses. EC Holding Discount calculated in relation to EC’s NAV. (1) Average 11.6% Aug 25th Announcement Holding Discount Historical
Evolution(2) C-25
d. Valuation Analysis 3. Transaction
Analysis C-26
Change in Share Price ADTV (%) (US$
mm) LTM Since Announcement(1) LTM Since Announcement(1) EC 11.1% 5.2% $3.5 $4.6 EGC 23.3 13.5 3.7 6.1 Peers Avg.(2) 8.5 0.2(3) 1.8 2.3 IPSA Index 31.1 8.0 NA NA Share Price Evolution LTM, Indexed (100) Market Reaction After the Announcement Since
the announcement, the share prices of EC and EGC have increased by 5.2% and 13.5% respectively, outperforming the their peers. Source; Factset as of October 31st, 2017 Announcement date: August 25th, 2017. Considers Engie Energia Chile, Colbun and
AES Gener. Excluding AES Gener, peers share prices have increased 1.6% on average since the announcement. Colbun share price has increased 0.5% and Engie Energía Chile 2.8%. Aug 25th Announcement CLP 555 CLP 74 (2) CLP 489 CLP 70 Share Price
and Volume . C-27
EGC/EC Exchange Ratio Evolution
Historically, EGC share price has been 6.5x-7.4x EC share price. After the announcement, this ratio has increased up to 7.5x. Source: Factset as of October 31st, 2017. EGC/EC exchange ratio calculated as the ratio between EGC share price value an EC
share price value of each day. EGC/EC Exchange Ratio Evolution(1) Number of shares of EC per one share of EGC, LTM prior to the announcement Aug 25th Announcement (6.9x) Prior Announcement Since Announcement LTM L6M L3M On Aug. 25th, 2017 Average
6.90x 6.97x 6.95x 7.29x Min. 6.47 6.63 6.78 7.08 Max. 7.38 7.38 7.27 7.66 C-28
Methodology Equity Value Range US$ mm
Share Price Range CLP DCF (WACC in US$) 52-Week Share Price Pre-Announcement Brokers Valuation Pre-Announcement Target Price(2) Brokers Valuation Post-Announcement Target Price(3) Trading Comps(4) (FV/2018E EBITDA) Precedent Transactions(5)
(FV/2018E EBITDA) Unaffected Price(1): US$6,287 mm EGC Valuation EGC Valuation – Equity Value Valuation analysis indicates a US$6,958-7,439 mm equity value range for EGC, implying a price per share range of CLP541-579. The implied range is
10.7%-18.3% higher than the price prior to the announcement. Notes: FX as of Oct. 1st, 2017: 637.9 CLP / USD. Market prices in CLP, all other valuations in US$. Assumed EGC unaffected price of CLP489 as of August 24th, 2017. Broker research from the
last twelve months prior the announcement. Broker research from the last twelve months. Average FV/ 2018E EBITDA multiple of EGC’s trading comps (EGC, Engie Energia Chile, Colbún, AES Gener), as of October 31st, 2017. Includes CGE/Ibener,
Duke/Ibener, Pilmaiquen/Rucatayo and GIP/Guacolda transactions. As of October 31st, 2017. EGC Recommended range Unaffected Price(1): CLP489 Current(6) CLP555 Current(6) US$7,134 mm C-29
Methodology Equity Value Range US$ mm
Share Price Range CLP DCF (WACC in CLP) Trading Comps(1) (FV/2018E EBITDA) Replacement Asset Base(2) Precedent Transactions(3) (FV/RAB) Carter II Valuations(4) EDC Valuation EDC Valuation – Equity Value Valuation analysis indicates a
US$2,403-2,595 mm equity value range for EDC, implying a price per share range of CLP1,332-1,438. Recommended range EDC Notes: : FX as of Oct. 1st, 2017: 637.9 CLP / USD. DCF in CLP, all other valuations in US$, Average FV/ 2018E EBITDA multiple of
EGC’s trading comps (Aguas Andinas, Equatorial, Luz del Sur, Edelnor), as of October 31st, 2017. RAB per informed by EDC. Includes MSIP/SAESA, AIMCO/SAESA and GNF/CGE transactions. Valuation presented by advisors in Carter II process. As of
October 31st, 2017. Current(5) US$2,291 mm Current(5) CLP1,270 C-30
EC DCF Sum-of-the-Parts Valuation
Based on a DCF SOTP approach EC valuation is US$5,899-6,330 mm equity value range, assuming a 10% holding discount(1). EC - SOTP Valuation Individual Valuation Ranges, US$ mm Equity Value - 100% (US$ mm) Max 7,439 2,595 -- --
Min 6,958 2,403 -- -- Equity Value - Adjusted by EC’s Ownership Stake (US$ mm) Max 4,464 2,571 (705) 6,333 Min 4,175 2,381 (657) 5,902 Price per Share (CLP) Max 58.0 33.4 (9.2) 82.3 Min 54.3 30.9 (8.5) 76.7 Notes: :
FX as of Oct. 1st, 2017: 637.9 CLP / USD. See rationale in page 25. Upper End Valuation Lower End Valuation (1) C-31
Methodology Equity Value Range US$ mm
Share Price Range CLP DCF (Sum of the Parts) 52-Week Share Price Pre-Announcement Brokers Valuation Pre-Announcement Target Price(1) Brokers Valuation Post-Announcement Target Price(2) Trading Comps(3) (FV/2018E EBITDA) Precedent Transactions(4)
(FV/2018E EBITDA) Unaffected Price(5): US$5,387 mm EC Valuation EC Valuation – Equity Value Valuation analysis indicates a US$5,899-6,330 mm equity value range for EC, implying a price per share range of CLP77-82. Current(6) US$5,709 mm
Recommended range Unaffected Price(5): CLP70 Current(6) CLP74 EC Notes: : FX as of Oct. 1st, 2017: 637.9 CLP / USD. Market prices in CLP, all other valuations in US$. Broker research from the last twelve months prior the announcement. Broker
research from the last twelve months. Average FV/ 2018E EBITDA multiple of EGC’s trading comps (EGC, Engie Energia Chile, Colbún, AES Gener), as of October 31st, 2017. In addition, a 10% holding discount is applied. Includes CGE/Ibener,
Duke/Ibener, Pilmaiquen/Rucatayo and GIP/Guacolda transactions. In addition, a 10% holding discount is applied. Assumed EC unaffected price of CLP70 as of August 24th, 2017. Current Price as of October 31st, 2017. C-32
EGPL Valuation EGPL Valuation –
Equity Value Valuation analysis indicates a US$1,586-1,705 mm equity value range for EGPL, implying a price per share range of CLP1,223-1,315. Recommended range EGPL Methodology Equity Value Range US$ mm Share Price Range CLP DCF(1) (WACC in US$)
Trading Comps(2) (FV/2018E EBITDA) Replacement Value(3) Precedent Transactions(4) (FV/2018E EBITDA) Notes: DCF valuation considers short term awarding projects. Average FV/ 2018E EBITDA multiple of EGC’s trading comps (EGC, Engie Energia
Chile, Colbún, AES Gener), as of October 31st, 2017. Investment cost by technology times installed capacity. Investment cost as informed by the CNE on its 2017 tariff study. Includes CGE/Ibener, Duke/Ibener, Pilmaiquen/Rucatayo and SPIC/Pacific
Hydro transactions. C-33
EC Pro Forma Valuation Summary EC, EGC
and EGPL Equity Valuations US$ mm Illustrative - 75% interest in EGC Illustrative - 100% interest in EGC EC pro forma valuation range will depend on the TO participation. For example, if EC reaches a 75% interest in EGC, EC pro forma equity value
range will be US$8,531 - 9,153 mm. However, if EC reaches a 100% interest in EGC, EC pro forma equity value range will be US$10,270 -11,013 mm. Exchange Ratio (Shares) EGC/EC EGPL/EC Upper bound 7.5x 14.9x Lower bound 6.6 17.2 Pro Forma EC Equity
Valuation US$ mm Upper End Valuation Lower End Valuation C-34
EGC/EC Exchange Ratios Banchile
suggested valuation range implies an exchange ratio range of 6.6x-7.5x shares of EC per one share of EGC. EC Share for Each EGC Share at Various Prices Upper End Exchange Ratio Lower End Exchange Ratio Pre Announcement Averages Announcement Date
(August 24th) LTM: 6.9x L6M: 7.0x L3M: 7.0x 6.9x Current (October 31st) 7.5x EC Price per Share (CLP) EGC Price per Share (CLP) 7.1x 6.9x 6.8x 6.7x 6.6x 7.2 7.1 6.9 6.8 6.7 7.3 7.2 7.0 6.9 6.8 7.4 7.3 7.2 7.0 6.9 7.5 7.4 7.3 7.2 7.0 $541 551 560 570
579 $76.7 $78.1 $79.5 $80.9 $82.3 Historical EGC/EC Exchange Ratio C-35
e. Assessment of Conditions Precedent
Set by Enel 3. Transaction Analysis C-36
Analysis of Conditions Precedent Set
by Enel Cash available at EC: US$100 mm. Excluded from initial condition precedents presented by EC, however EC has informed that this condition must be met in order to execute the Transaction. Similar Enel pro forma ownership in EC (%) EPS
accretive for EC (%)(1) EC to maintain a healthy financial leverage level(2) Enel’s pro forma stake at EC of ~60% EPS calculated based on average net income in 5-year projection Cost of debt (pre-tax) at EC of 4% in US$ EC must maintain their
investment grade Pro forma net debt/EBITDA of 2.0x - 2.5x Post transaction ownership of Enel at EC within 59%-65% range EC’s EPS post-transaction > EC’s EPS pre-transaction Pre-transaction net debt/EBITDA figures as of December 2017,
per business plan Net debt/2017E EBITDA < 2.5x EC BoD must define EGC/EC and EGPL/EC exchange ratios for the Transaction Exchange Ratios EC BoD must define the cash / stock mix for the TO Cash/Stock Mix The participation on the tender offer is
uncertain EC could achieve from 75% to 100% ownership of EGC Tender Offer Participation Key Factors that Determine the Fulfillment of Enel’s Conditions Precedent Approach to Verify Enel’s Conditions Precedent Board Level Decision Points
to be Approved at EGMs Exogenous Factor Condition Banchile Approach Guidance 1 2 3 C-37
Ranges of Potential Transaction Terms
Meets Enel’s conditions Does not meet Enel’s conditions EC Stake in EGC Post TO: 75% EC Stake in EGC Post TO: 85% EC Stake in EGC Post TO: 95% EC Stake in EGC Post TO: 100% Cash Consideration (%) (Assumption) EGP Valuation Range (US$ mm)
EGC / EC Share Exchange Ratio Range (x) Enel Pro Forma Ownership in EC (%) EC Pro Forma EPS Increase (Decrease) (%) EC Pro Forma Net Debt / EBITDA (x) Cash Consideration (%) (assumption) EGP Valuation Range (US$ mm) EGC / EC Share Exchange Ratio
Range (x) Enel Pro Forma Ownership in EC (%) EC Pro Forma EPS Increase (Decrease) (%) EC Pro Forma Net Debt / EBITDA (x) Results Results 3 2 1 3 2 1 60% 65% 60% 65% 1,586 1,705 1,586 1,705 1,586 1,705 1,586 1,705 6.6x 7.5x 6.6x 7.5x 6.6x 7.5x 6.6x
7.5x 6.6x 7.5x 6.6x 7.5x 6.6x 7.5x 6.6x 7.5x 65.1% 65.1% 65.6% 65.6% 65.5% 65.5% 66.0% 66.1% 63.0% 62.7% 63.5% 63.3% 63.6% 63.4% 64.1% 64.0% 0.1% (2.1%) (1.3%) (3.6%) 0.6% (1.6%) (0.9%) (3.1%) 2.9% 0.1% 1.5% (1.3%) 3.6% 0.9% 2.2% (0.6%) 1.6x 1.7x
1.6x 1.7x 1.7x 1.7x 1.7x 1.7x 1.9x 2.0x 1.9x 2.0x 2.0x 2.1x 2.0x 2.1x 60% 65% 60% 65% 1,586 1,705 1,586 1,705 1,586 1,705 1,586 1,705 6.6x 7.5x 6.6x 7.5x 6.6x 7.5x 6.6x 7.5x 6.6x 7.5x 6.6x 7.5x 6.6x 7.5x 6.6x 7.5x 61.0% 60.5% 61.5% 61.1% 61.8% 61.5%
62.4% 62.0% 60.1% 59.5% 60.6% 60.0% 61.0% 60.5% 61.5% 61.1% 5.5% 2.1% 4.1% 0.7% 6.5% 3.3% 5.1% 1.8% 6.7% 3.1% 5.3% 1.7% 7.9% 4.4% 6.4% 2.9% 2.2x 2.3x 2.2x 2.3x 2.3x 2.4x 2.3x 2.4x 2.4x 2.5x 2.4x 2.5x 2.5x 2.6x 2.5x 2.6x C-38
4. Conclusions C-39
EGC shareholders that participate in
the Transaction would capture several benefits: Diversification: join a company that combines both generation (conventional and renewable) and electricity distribution Growth: gain exposure to the attractive renewable sector through EGPC, the
largest non-conventional renewable generation company in Chile that has a relevant portfolio of advanced greenfield projects, which could support growth in the medium and long term Governance: reduce potential conflicts of interest between EGC and
EGPC Holding discount: in case EGC shareholders’ acceptance in the TO is high, holding discount of EC (estimated by Banchile at CLP8.5-9.2 per share) could potentially be reduced; however, the likelihood of such scenario and the magnitude of
such reduction is unpredictable However, the Transaction is not neutral to EGC shareholders that don’t participate in the TO. Shareholders that remain in EGC might be affected mainly by: Deteriorated liquidity of EGC’s stock after the TO
Controlling shareholder of EGC will obtain stronger governance rights (i.e. supra-majority quorums) A potential loss of tax benefits if EGC loses “presencia bursátil” status(1) Key Conclusions The fact that the TO for EGC and
EC’s capital increase will be executed simultaneously minimizes the execution risks for EGC shareholders Also, the fact that the approval of terms and conditions will occur concurrently (e.g. changes in the bylaws, RPT approvals, TO and merger
terms) minimizes uncertainties for EGC shareholders However, the level of subscription of EC’s minority shareholders in the capital increase might impact the execution of the Transaction. EC may reduce this impact by: Setting as condition
precedent having enough shares after the preferred period to exchange in the TO, and/or Establishing quantum of capital increase above the amount required in the fully-subscribed TO, among other alternatives Execution Considerations Strategic
Considerations Some taxpayers may be tax exempt if they acquired shares in the stock market or through primary issuances from IPOs and capital increases and subsequently sold such shares in the stock market or through public offerings (Art. 107 of
DL 824). Exception only applies to shares issued by joint-stock companies incorporated in Chile, listed and traded on the stock exchange (“sociedad anónima abierta con presencia bursatil”). Under our recommended valuation ranges,
the Transaction would contribute to the corporate interest of EGC shareholders that participate in the TO. C-40
Key Conclusions Based on our
assessment of the information provided, the following valuation ranges reflect prevailing market conditions for each company in the context of the Transaction: EGC valuation ranges imply a share price 10.7% - 18.3% higher than the share price prior
to the announcement(1) This implied premium would represent an additional incentive for EGC shareholders to tender their shares in the TO Recommended Valuation Ranges EC US$6,330 mm CLP82/share US$5,899 mm CLP77/share EGC US$7,439 mm CLP579/share
US$6,958 mm CLP541/share EGPL US$1,705 mm CPL1,315/share US$1,586 mm CLP1,223/share Equity Value and Share Price (in US$ mm and CLP, respectively) In order to analyze the fulfillment of the conditions precedent set for the Transaction under the
recommended valuation ranges, two key additional assumptions need to be considered: Cash consideration percentage in the TO (mix of cash and shares): we have assumed 60%-65% EC’s pro forma credit profile: we have assumed a threshold of 2.0x -
2.5x net debt / EBITDA based on EC’s guidance Under the recommended valuation ranges and assumptions set forth herein: Assuming 60%-65% cash consideration, if EGC shareholders’ acceptance in the TO is high (e.g. >85% participation),
conditions are satisfied under most scenarios (please refer to page 38) If EGC shareholders’ acceptance in the TO is low, the fulfillment of the conditions will depend on the definitive exchange ratios and additional factors approved at the
EGMs (please refer to page 38) Conditions Precedent EGC / EC EGPL / EC 7.5x 6.6x 17.2x 14.9x Number of shares of EC per 1 share of EGC Number of shares of EC per 1 share of EGPL Exchange Ratios Assumed unaffected EGC share price as of August 24th,
2017 of CLP489. Recommended valuation ranges and verification of conditions precedent. C-41
Appendix C-42
I. Support Materials Appendix
C-43
Source: Company filings and Factset as
of October 31st, 2017. Fx: CLP/US$ 637.9. Notes: (1) IPSA members with market cap above US$700 mm, excluding holding companies (e.g. AntarChile and Quiñenco) and others companies (such as Enel Americas, Ripley, Security, ILC, Sigdo Koppers,
Banmedica). Companies with market cap below US$700 mm that are not included: SalfaCorp, Embonor, Watts, Viña San Pedro, Gasco). Benchmarking of EC/EGC Stock Liquidity ADTV 6M (US$ mm) Float (US$ mm) Market Cap (US$ mm)(1) 0.26% 0.10% 0.20%
0.13% 0.15% 0.27% 0.12% 0.15% 0.16% 0.20% 0.17% 0.15% 0.18% 0.13% 0.23% 0.18% 0.31% 0.17% 0.18% 0.14% 0.22% 0.70% 0.57% 0.12% 0.11% 0.24% 0.50% ADTV / Float Float (US$ mm)(1) Liquidity of IPSA Selected Companies EC pro forma EC pro forma EGC pro
forma Based on recommended valuation ranges. EGC’s pro forma float EGC’s pro forma float EGC EC C-44
WACC Methodology × Equity Cost
Rate (“Ke”) Ke based on CAPM Company’s target long term capital structure Capitalization over assets Company’s target long term capital structure Debt over assets After-tax cost of debt determined by
current market spreads for the subject company Equity Risk Premium Equity market risk premium based on historical observed returns on the market Levered Beta Adjusted beta of comparable companies in relation to the MSCI Global Index Risk-Free Rate
(“Rf”) Risk free rate calculated as the US 30-year treasury bond plus 10-year US$ CDS spread for Chile(1) Tax Rate (“T”) Statutory marginal tax rate in which the company’s debt is predominantly issued Debt Cost Rate
(“Kd”) The expected long-term new-issue yield for the subject company based on its target capital structure WACC Discount rate for unlevered cash flows Asses market conditions and company specific risks + × × WACC will be
calculated using CAPM method for each of business (conventional Gx, renewable Gx, Dx, and Tx) in order to address company / industry specific risks and returns. Gx Comps Engie Energia Chile AES Gener Colbun Dx Comps Equatorial Luz del Sur Edelnor
Aguas Andinas = + For EDC, Rf is Chile’s 30-year CLP bond (BCP-30). C-45
II. Perimeter of Projects and
Contracts of EGPL Appendix C-46
Projects and Contracts of EGPL
Considered in Analysis Projects in Operation Solar Diego de Almagro Chañares Finis Terrae I Tal Tal Valle de los Vientos Carrera Pinto Lalackama I Lalackama II Los Buenos Aires Renaico Cerro Pabellon Sierra Gorda Este Pilmaiquen Pullinque
Talinay Poniente Talinay Oriente La Silla Pampa Norte Greenfield Projects Pipeline As listed in VDR – File 10.1.2 Main PPAs As listed in VDR – File 8.1.1 Adjustments considering awarded PPAs in distribution companies 2017/01 public
tender C-47
Banchile Asesoría Financiera S.A.
C-48
ANNEX D
OPINION OF ASSET CHILE S.A., ADDITIONAL INDEPENDENT EVALUATOR OF ENEL GENERACIÓN
This Annex D is a free English translation of the original Spanish language version, which reflects the substantive content of the original Spanish
language document, but may not be a word-for-word translation. In the event of any discrepancy with the English translation, the original Spanish language document will prevail.
Elqui Plan – Enel Generación
Chile S.A. Final Report for the Board’s Directors Committee November 3rd, 2017 D-
Disclaimer D- This valuation report (the
“Report”) has been prepared by ASSET Chile S.A. (“ASSET” or “ASSET Chile”) as part of its independent advisory to the Board’s Directors Committee of Enel Generación Chile S.A. (“BoDC”) in
the context the Elqui Plan. ASSET provided this Report to the BoDC (in its capacity as such) for the exclusive benefit and use of the BoDC in connection with and for purposes of its evaluation of the proposed Reorganization process (as defined in
Section 1 of this Report) and this Report is not rendered to or for the benefit of, may not be used or relied upon by, and shall not confer rights or remedies upon any person (including any current or future security holder of Enel Generación
Chile S.A. (“EGC”), Enel Chile S.A. (“EC”), Enel Distribución Chile S.A. (“EDC”) or Enel Green Power Latin America (“EGPL”), or any of their affiliates) other than the BoDC. These materials do not
constitute a recommendation to any security holder as to how to vote or act in connection with the proposed Reorganization or any related matter. This Report has been performed for the BoDC to whom such materials are directly addressed and delivered
in connection with an actual mandate or engagement and may not be used or relied upon for any purpose or by any other person or party other than as specifically contemplated by a written agreement with ASSET. This Report is based on information
provided by or on behalf of EC and/or other participants of the Reorganization. ASSET assumes no responsibility for independent investigation or verification of such information (including, without limitation, data from third party suppliers) and
has relied on such information being complete and accurate in all material respects. To the extent such information includes estimates and forecasts of future financial performance prepared by or reviewed with the managements of EC and/or other
participants of the Reorganization or obtained from public sources, ASSET has assumed that such estimates and forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of such managements (or,
with respect to estimates and forecasts obtained from public sources, represent reasonable estimates). No representation or warranty, express or implied, is made as to the accuracy or completeness of such information and nothing contained herein is,
or shall be relied upon as, a representation, whether as to the past, the present or the future. These materials were designed for use by specific persons familiar with the business and affairs of EC, EGC, EDC and EGPL. This Report contains
conclusions based on economic, financial and market information that were valid at the moment of the Report’s redaction. Consequently, it is understood that any event, condition, or situation happening after the delivery of this Report by
ASSET to the BoDC could affect the validity of the Report and it conclusions. This Report is not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. ASSET
does not provide legal, compliance, tax or accounting advice. Accordingly, any statements contained herein as to tax matters were neither written nor intended by us to be used and cannot be used by any taxpayer for the purpose of avoiding tax
penalties that may be imposed on such taxpayer. If any person uses or refers to any such tax statement in promoting, marketing or recommending a partnership or other entity, investment plan or arrangement to any taxpayer, then the statement
expressed herein is being delivered to support the promotion or marketing of the transaction or matter addressed and the recipient should seek advice based on its particular circumstances from an independent tax advisor. ASSET did not make any
statement in this Report and will not make any statement to the extent of alternative reorganization strategies or different configurations that could, or not, result in better terms for any of the parties involved in the Reorganization.
Agenda Section 3: Conclusions 35 Section
1: Background 7 Section 2: Analysis 12 2.2. Strategic Considerations 14 2.3. Valuations 18 1.1. Transaction Description 8 1.2. ASSET Chile Role 11 2.4. Reorganization Terms and Conditions 27 D- 2.1. Structure 13 2.5. Example: Mid Case Analysis 33
Section 0: Executive Summary 3
Executive Summary D- ASSET Chile Role
ASSET Chile has been retained by the EGC Board’s Directors Committee to act as their independent appraiser and to issue a report (“Report”) regarding the proposed Reorganization. According to the Title XVI of Law 18,046, the Report
must include ASSET Chile’s opinion on: The Reorganization benefits to the company and/or the shareholders. The price, terms and conditions that define the Reorganization and whether they are at market conditions by the time the Reorganization
is approved. To perform this advisory, ASSET Chile had access to, among others, Financial Statements of the companies, operational and financial projections for the operating companies, written Q&A with the operating companies’ management
teams, management meetings, and legal, technical and tax due diligence reports on EGPL from independent consultants. ASSET Chile did not perform on-site due diligence, nor conducted on its own or through consultants any further due diligence on the
companies. Reorganization Description The Reorganization involves the execution of two consecutive steps: (i) a tender offer for EGC shares, and (ii) merging by absorption of EGPL by EC. The second step automatically occurs if the first one is
successful. Step 1 – Tender Offer: EC’s tender offer for EGC to acquire up to 100% of the shares of the company. The successful execution of the tender offer is subject to the following: Step 2 – Merger by absorption of EGPL by EC:
EGPL is fully owned by Enel. The merger by absorption will be paid to Enel through an exchange of shares between EC and EGPL. Enel has defined that, on top of the conditions described above, the Reorganization must be EPS accretive for EC, EC must
not risk its investment-grade status, and Enel should hold a similar percentage of shares of EC as it has before the Reorganization (i.e. 60.6%).
Executive Summary D- Conclusions
Underlying Assets Valuation: The valuation methodology and approach used by ASSET Chile included DCF, Multiples (both comparable companies and transactions), sell-side market analysts views, and trading values of the traded companies. The valuation
results for EGC, EDC, and EGPC, are shown in the following table: EC was valued using a sum-of-the-parts (“SOTP”) methodology and considering its current market capitalization, its holding discount is approximately 17.0%. Given the noise
produced by the announcement of the Reorganization, this holding discount is not necessarily representative. Determining the Exchange Ratios for the Reorganization: Exchange Ratios are a function of a series of different variables, one of them and
the most relevant, is the relative value of the underlying assets (defined above). The others can be divided into two groups: (i) assumptions that are to be defined and become then inputs for the determination of the exchange ratios offered: holding
discount at EC level, mix of cash and shares to be offered in exchange of EGC shares, and the tender offer premium on EGC shares; and (ii) variables that are unknown and will be a result of the transaction: percentage of acceptance of the tender
offer on EGC, the percentage of EC minority shareholders that subscribe its preferential right (“POP”) on the EC capital increase for the tender offer and the number of EC minority shareholders that will exercise their withdrawal rights
for the merger. Our analysis includes the following assumptions: Holding discount should be considered at 10%, similar to the trailing twelve months (“TTM”) holding discount of the company. A tender offer premium between 10-14% over
Market Price (CLP 570-590 per share). No EC minority shareholder will concur to the capital increase planned at EC nor will use their withdrawal rights. We have performed a sensitivity analysis for different relative valuations outputs, different
percentages of tender offer acceptance, and for different mix combinations of cash and shares. The following charts show our estimation for the Exchange Ratios for EGC Tender Offer and for EGPL merger. EGC (CLP billion) EDC (CLP billion) EGPL (US$
million) Low Medium High Medium Low Medium High Enterprise value 5,246 5,353 5,595 1,694 2,834 2,899 2,991 Equity value 4,417 4,524 4,766 1,599 1,578 1,643 1,735 Share price 538 552 581 1,390 1.91 1.99 2.10
Executive Summary D- The Exchange Ratio
for EGC Tender Offer, assuming a tender offer mix of 100% stock, should be in the range of 7.2 and 8.5, and the Exchange Ratio for EGPL merger, under the same assumption, should be in the range of 15.1 – 19.0. Market Terms and Benefit to the
company and/or its shareholders: Market Terms: the final proposal and its specific terms – especially regarding price, composition, and exchange ratios – has not yet been offered by EC to the different parties, so we cannot specifically
render an opinion on that. However, if the final offer is in the value range specified earlier in this document, we understand that the Reorganization would then be within market terms for a transaction of this kind. Benefit to the company and/or
its shareholders: Regarding EGC normal course of business or the company, we estimate that the Reorganization will have none or minimum impact. On its decision-making process, as long as EGC maintains a base of minority shareholders, and
particularly given that its controlling shareholder will keep a potentially competing operation independent of EGC, these processes will not be simplified or shortened. It is true that the controlling holding gap between EGC and EGPC will be reduced
as a result of the transaction, but this does not necessarily, on its own, reduce any potential conflict of interest or friction existing today. We estimate then, the Reorganization is neutral for EGC. For those shareholders who decide to accept the
tender offer that will be presented, and assuming it is within the ranges discussed earlier – and therefore on market terms – we see this as an opportunity to capture the full value of its current holding plus a premium, and, if so
decided, to fully align their interest with the controller. We estimate then, the Reorganization is positive for the shareholders. Certain shareholders may decide not to accept the tender offer, regardless of the fact they may face the risk of a
liquidity discount after the tender offer is accomplished. We assume these Shareholders may prefer to remain as direct shareholders of EGC because risks selection focus (i.e. Chilean conventional power generation business only), portfolio
diversification reasons, and / or different views one the value of the underlying value going forward. All these reasons are plausible and legitimate and are just a reflection of their preference given the option to choose freely otherwise. In
conclusion, the Reorganization is, in our view, in the benefit EGC and/or its shareholders. To be clear, we believe its effect is neutral/positive or neutral, but in no case detrimental.
Agenda Section 3: Conclusions 35 Section
1: Background 7 Section 2: Analysis 12 2.2. Strategic Considerations 14 2.3. Valuations 18 1.1. Transaction Description 8 1.2. ASSET Chile Role 11 2.4. Reorganization Terms and Conditions 27 D- 2.1. Structure 13 2.5. Example: Mid Case Analysis 33
Section 0: Executive Summary 3
Section 1: Background D- 1.1 Transaction
Description Recent Developments On July 3rd, 2017 Enel Chile’s (“EC”) board of directors sent a letter to Enel SpA (“Enel”), the controlling shareholder, proposing a corporate reorganization (the
“Reorganization”) to consolidate Enel’s participation in the power generation industry in Chile in one investment vehicle. The proposed Reorganization consists of a tender offer of EC over Enel Generación Chile S.A.
(“EGC”) followed by a merger (by absorption) of Enel Green Power Latam (“EGPL”) by EC. The tender offer will be declared successful if EC is able to acquire at least an additional 15.02% shareholding in EGC. EC’s
Reorganization proposal described a list of expected benefits as a result of the transactions: Consolidation of Enel’s power generation business in Chile in one vehicle. Simplification of the corporate structure. Alignment of interests between
shareholders through a single investment vehicle. Business diversification and organic growth. Optimization of the current capital structure at EC level. Higher liquidity and market capitalization of EC. Alignment with Resolution 667. Reduction of
the holding discount at EC. On August 25th, 2017 Enel’s board approved the plan to restructure its Chilean operations. Enel’s board replied to EC that the proposal was aligned with the corporate structure simplification process that Enel
is currently undertaking worldwide, however, Enel established a set of minimum conditions to provide final approval of the Reorganization (the “Restrictions”): All the operations considered in the Reorganization must be carried out at
market terms. The Reorganization must be Earnings Per Share (“EPS”) accretive for EC (see Section 2.4 the for specific definition used). After the Reorganization, Enel has to maintain a similar shareholding positions as it has today in
EC (currently 60.6%). In addition, Enel must never lose control during the Reorganization or exceed the statutory limit of 65% of shareholding in EC. EGC must waive the statutory shareholding concentration limit and the other restrictions defined in
Title XII of Law Decree 3,500 of 1980. EC must hold, after the Reorganization is complete, at least 75% of EGC. On August 25th, 2017 EC’s board announced the intention to implement the Reorganization. The Reorganization was declared a related
parties transaction (or “OPR” to use its Spanish acronym), in accordance with Title XVI of Law 18,046. On August 28th, 2017 EGC’s board acknowledged EC’s plan. On September 1st, 2017 the Directors Committee of the board of
EGC appointed ASSET CHILE S.A. (“ASSET Chile”) as their independent appraiser for the Reorganization.
Expected Transaction Execution Structure
of the Reorganization The Reorganization involves the execution of two consecutive steps: (i) the tender offer for EGC shares, and (ii) merging by absorption of EGPL by EC. The second step only occurs if the first one is successful. Step 1 –
Tender Offer: EC’s tender offer for EGC to acquire up to 100% of the shares of the company. The successful execution of the tender offer is subject to the following: EC’s board has to call for an Extraordinary Shareholders Meeting
(“ESM”) to approve the tender offer and the acquisition. Additionally, the ESM has to approve the issuance of shares to finance both the tender offer and the merger. EGC’s board has to call an ESM to approve a change in the company
bylaws. The Reorganization requires the removal of the statutory shareholding concentration limitation of 65% as stated in EGC’s bylaws. The tender offer will be paid in cash but a portion of that cash will be used to purchase newly issued EC
shares (resulting in the equivalent of a tender offer using a mix of cash and stock – the “Tender Offer Mix”) (1) . EC must at all times retain control of EGC. To declare the tender offer successful, EC must retain at least 75% of
the shares of EGC (post-tender offer). Step 2 – Merger by absorption of EGPL by EC. EGPL is fully owned by Enel. The merger by absorption will be paid to Enel through an exchange of shares of EC and EGPL. EC EGC Nov 3rd Nov 10th Dec 20th
1H’ 18 Independent appraisers submit their final reports Independent appraisers submit their final reports Independent Committee issues its reports & Directors issue individual opinions Independent Committee issues its reports &
Directors issue individual opinions The board approves the final terms of Reorganization and calls an EGM to approve the tender offer, the merger and the issuance of shares to finance those transactions The board of directors calls an EGM to change
the company bylaws EC’s EGM approves the tender offer, the merger and the issuance of shares to finance those transactions EGM approves the change in the bylaws Timings and steps of the proposed Reorganization Nov 9th D- Section 1: Background
1.1 Transaction Description Oct 26th Independent appraisers submit their preliminary reports Independent appraisers submit their preliminary reports On Thursday October 26th, 2017 the company announced via an Essential Fact that the tender offer
will be paid exclusively using cash but that a portion of that cash will be used to acquire newly issued EC shares. On our opinion, in what relates to the analysis contained in this Report, this is equivalent to offering a mix of cash and stock to
EGC shareholders.
D- Step 1: EC’s tender offer on
EGC EC Enel 100% EDC1 EGC EGPC2 EGPL 100% 60.6% 60.0% 99.1% Tender offer EC Enel EDC EGC EGPC 100% ~60.6% >75.0% 99.1% Step 2: Merger by absorption of EGPL EC Enel 100% EDC EGC EGPC EGPL 100% >50.0% >75.0% 99.1% Merger by absorption The
following charts describe the sequential steps of the Reorganization and the expected simplified final structure: (1) Enel Distribucion Chile S.A. (“EDC”). (2) Enel Gren Power Chile (“EGPC”) holds the operating vehicles and
assets. Section 1: Background 1.1 Transaction Description
Section 1: Background 1.2 ASSET Chile
role As previously stated, ASSET Chile was retained by the Board’s Directors Committee of EGC to act as their independent appraiser and to issue a report (“Report”) regarding the Reorganization. According to Title XVI of Law
18,046, the Report must include ASSET Chile’s opinion on: The Reorganization benefits for the company and/or its shareholders. The price, terms and conditions that define the Reorganization by the time the Reorganization is approved, are at
market terms. To perform this advisory, ASSET Chile had access to: Audited Financial Statements for the companies (EC, EGC and EGPL) FY2016 and 3Q2017. 2016 20-F Forms for EC and EGC. Operational data of the companies through a virtual data room.
Such information included the business plan and operational projections for each company (EC, EDC and EGPC). Written Questions and Answers (“Q&A”), both from ASSET Chile and from the other appraisers involved in the Reorganization.
Meetings with the management of each company, held on September 26th, 2017. In addition, ASSET Chile had access to meetings with EC and EGC’s management. Public and market information available. Legal, technical and tax due diligence reports
on EGPL performed by independent advisors. Site visits were not included. The Reorganization process analysis was subject to a “clean hands” status, which allowed ASSET Chile to have meetings with other appraisers involved in the
Reorganization. ASSET Chile was extremely cautious with the confidentiality of the information provided during the advisory process, in order to comply with Resolution 667. D-
Agenda Section 3: Conclusions 35
Section 1: Background 7 Section 2: Analysis 12 2.2. Strategic Considerations 14 2.3. Valuations 18 1.1. Transaction Description 8 1.2. ASSET Chile Role 11 2.4. Reorganization Terms and Conditions 27 D- 2.1. Structure 13 2.5. Example: Mid Case
Analysis 33 Section 0: Executive Summary 3
Section 2: Analysis D- 2.1 Structure
Valuation EGC EGPL EDC EC Holding discount at EC Tender Offer Premium % of EGC accepting the tender offer % of EC shareholders using POP % of EC shareholders using WR New financial debt in EC Tender Offer Mix New shares in EC Reorganization Terms
& Conditions Methodology Assumptions Results Variables Restrictions Conclusions ASSET Chile has structured the analysis in four sections: i) Strategic Considerations ii) Valuations iii) Reorganization Terms and Conditions and iv) Conclusions. In
the Valuation section, valuation ranges on a stand-alone basis are provided for the operating companies EGC, EDC, and EGPL. The methodology used to value each company is explained later in this document. The value of EC is derived from the
underlying assets and is used to estimate EC’s NAV and the current holding discount. In the Reorganization Terms & Conditions chapter, the variables and assumptions affecting the Reorganization terms are discussed. The assumptions include:
i) the relative valuation of the companies ii) the holding discount and iii) the tender offer premium offered to EGC shareholders. Variables that will not be known until after the Reorganization finalizes are: i) the number of EGC shareholders
accepting the tender offer, ii) the number of EC shareholders using their preferential subscription right (“POP”), and iii) the number of EC shareholders that will use their withdrawal rights (“WR”) for the merger. All of the
above will affect both the number of shares that must be issued by EC and the amount of cash needed to fund the tender offer. Such tender offer mix must also comply with the Reorganization Restrictions. The set of Restrictions limit the universe of
possible solutions. Taking all of these into account, it is possible to estimate Reorganization Terms & Conditions that would comply with both the benefits that are expected from this Reorganization and the Restrictions. Strategic considerations
Results Intrinsic Value Holding Discount
Section 2: Analysis 2.2 Strategic
Considerations (1/4) The Reorganization, as designed and presented, has been proposed mainly as a strategic step to produce a series of benefits, both for EC and EGC shareholders. Some of these benefits are just corrections of former misalignments
between shareholders, while others are new potential optimizations going forward. Additionally, Enel has established a set of specific restrictions which the Reorganization and its execution must comply with. Finally, the complexity of the structure
of the transaction proposed and its execution steps generate other implications, which must be considered in the analysis. This section addresses the benefits, restrictions and implications of the transaction (the “Strategic
Considerations”), their potential impact, the considerations relevant to the analysis, and our qualitative conclusions on each of these. Simplification of the corporate structure Alignment of interests Currently, Enel invests in power
generation in Chile through two separate subsidiaries: EC for conventional technologies and EGPL for non-conventional renewable energy (“NCRE”) technologies. Perception of misalignment (conflicts) of interests between EC and Enel:
currently, Enel has different strategies and shareholding positions on its two power generation vehicles in Chile. Stated Benefits D- Issue/Impact Description Consideration/Finding The Reorganization is, in our view, a benefit for Enel, but not
necessarily for EC. As long as a material base of minority shareholders stays at the EGC level, the resulting structure does not necessarily represent a benefit for EC nor for EGC. It does open information of EGPC for EC and EGC shareholders, which
may reduce frictions, but will not eliminate the existing Related Party Transactions procedures going forward. This applies both for commercial and administration potential synergies. However, we do not see it as a detriment for EGC minority
shareholders, and in a worst case scenario it is neutral. EC minority shareholders have no information concerning EGPL. Given conventional and non-conventional technologies complementary nature, the existing corporate structure produces friction and
may be inefficient. NCRE is expected to keep growing in the future while conventional technologies will only experience discrete growth. EC shareholders are structurally biased towards the second one, while its controlling shareholder is the
opposite. The Reorganization effectively gives EC shareholders access and exposure to the NCRE business and from that perspective aligns them with the interests of the controlling shareholder. Enel should also desist from creating a separate
investment vehicle in the future. An important consideration, though, is value: alignment is important, but it must be at the right valuation. For EGC minority shareholders, the Reorganization does not eliminate the misalignment, it reduces the
controller shareholding gap, but that does not imply that (post-Reorganization) EGC shareholders will have access to the NCRE business. Also, those shareholders that stay in EGC will be subject to a stronger controlling position of Enel in EGC.
Issue/Impact Description Consideration/Finding
Section 2: Analysis 2.2 Strategic
Considerations (2/4) Optimization of current capital structure We do not see material value arising from an increased leverage at EC level. Stated Benefits (continued) Higher liquidity and market capitalization The minority shareholders of EGC that
accept the tender offer will enlarge EC’s free float and therefore may increase the shares trading volume and as a result its liquidity. Also, the merger with EGPL will increase EC’s market capitalization. D- Business diversification and
organic growth EC only invests in conventional power generation and electricity distribution. The Reorganization would allow the minority shareholders of EC to access the NCRE business. Similar to the discussion in “Alignment of
Interest”. Similar to the situation “Alignment of Interest”, this is true for EC, but not necessarily for EGC shareholders that do not accept the tender offer. Issue/Impact Description Consideration/Finding EC is overcapitalized
compared to similar companies in the market. As of September 30th, 2017, the company has a Net Debt/EBITDA ratio of approximately 1.1x. According to EC, the Reorganization would result in an increase of the debt proportion of the company through (i)
debt funding for the tender offer and (ii) the consolidation of EGPC’s financial debt following the merger with EGPL. Capital structure optimization benefit is mainly a function of the tax exposure of each company. New debt is expected to be
allocated at EC level. EC, because of its holding nature, has little tax exposure, and the expected effective tax rate for EC is close to 0%. Issue/Impact Description Consideration/Finding Although it is true that the free float and liquidity of EC
shares will potentially increase, this change is not expected to produce any material impact on value given that current float, market capitalization, and trading volumes are enough to avoid discounts to its market valuation due to these reasons.
The higher the level of acceptance, the higher the market capitalization of EC and its free float. Issue/Impact Description Consideration/Finding
Section 2: Analysis 2.2 Strategic
Considerations (3/4) Aligned with Resolution 667 Resolution 667 is intended to avoid the vertical integration of EC and requires the separation of its power generation business from the distribution business. Stated Benefits (continued) D- Reduction
of holding discount Holding discounts are theoretically the function of a series of elements, among them cascade holdings, minority shareholders’ influence on those cascade subsidiaries, inefficient diversification of the underlying
businesses, and potential inefficient financial structures. Is difficult to assess beforehand which element, or set of elements, is the one driving the holding discount at EC level. Issue/Impact Description Consideration/Finding The merger between
EC and EGPL would require EGPC to comply with the same rules defined in Resolution 667. We do not see this as material in terms of value for EGPC or EC. Issue/Impact Description Consideration/Finding Having a material acceptance of the tender offer
on EGC shares, goes in the right direction in terms of theoretically reducing the holding discount at EC level, however predicting its behavior and reduction, if any (see Section 2.4), is highly speculative. According to market analysts, EC is
currently valued by investors considering a holding discount of approximately 10% in average. The Reorganization may result in this discount being reduced.
Section 2: Analysis 2.2 Strategic
Considerations (4/4) D- Other considerations Restrictions Enel has declared and imposed some specific restrictions to declare this transaction successful. These restrictions refer to its direct and indirect holdings of the underlying businesses,
financial compliance of the resulting companies, and market considerations. Issue/Impact Description Consideration/ Finding All the operations considered in the Reorganization must be carried out at market terms. The Reorganization must be Earnings
Per Share (“EPS”) accretive for EC (see section 2.4 for the specific definition used). After the Reorganization EC cannot risk its current credit rating, implying that the resulting financial leverage must be within an acceptable range.
After the Reorganization, Enel must maintain a similar shareholding position as it has today in EC (currently 60.6%). In addition, Enel must never lose control of EC during the Reorganization. After the Reorganization EC must hold at least 75.0% of
EGC, which implies that EGC current shareholders must waive the statutory shareholding concentration limit and the other restrictions defined in Title XII of the Law Decree 3,500 of 1980. We believe these Restrictions are within reasonable
controlling shareholders’ requirements and do not force detrimental solutions on minority shareholders. Tax implications According to the preliminary information provided, there are no material tax effects arising from the Reorganization.
Synergies According to the preliminary information provided, no additional synergies among the companies are expected from the Reorganization. Execution risks We do not see significant execution risks for the EGC shareholder relating to the
acceptance of the tender offer in respect of being left in a worst position for having accepted it. EGC’s free float and liquidity The more successful the tender offer is, the worse the position of the minority shareholders that decide not to
accept the offer. They will be left in a highly illiquid position, possibly affecting negatively the valuation of the shares. In addition, there might be issues arising from a possible loss of stock market presence (“presencia
bursátil”) therefore affecting preferential tax treatment. Change of control at EGPL EGPL holds financial debt with local third parties that is subject to change of control clauses. According to the company, these provisions are not a
significant risk given the continuing relationship with the institutions providing the financing.
Section 2: Analysis D- 2.3 Valuation
Methodology DCF model construction The valuation date for this preliminary report is September 30th, 2017. ASSET Chile estimated the net asset value (“NAV”) of the underlying assets of the companies (EGC, EDC and EGPC) and their
subsidiaries using a combination of different valuation methodologies and/or approaches: (i) discounted cash flows (“DCF”) (ii) trading multiples of comparable companies (iii) transactions of comparable companies or assets (iv) market
value and (v) sell side analysts’ views. For the DCF valuation, ASSET Chile based its financial models on the business plans provided by the companies which were critically reviewed. Such business plans included short and medium term forecasts
for revenues, expected energy generation volume, contracted energy, average energy spot prices, average contract prices, variable costs, gross margins, CAPEX, among others for each company. The projections for each company were made in the reported
currency. The terminal value assumed for EGC and for EGPC were calculated using EV/EBITDA multiples on years 2040 and 2045, respectively. In the case of EDC, ASSET Chile used the Key Driver Value methodology (suggested by the management of EDC),
considering a RONIC as same as the calculated WACC to discount the cash flows. Comparable companies’ trading multiples for EGC included mainly Chilean comparable companies. For EDC and for EGPC, comparable companies from other regions were
considered. Comparable transactions were used for EGPC. For EGC and EDC, the last twelve month trading history was reviewed. Betas were obtained from comparable companies for each company. Revenues (Variable and Fixed Costs) EBITDA (Tax) (Capex)
(Delta Working Capital) Free Cash Flows Unlevered (Financial Debt) Cash and equivalents Equity Value Enterprise Value Discount Rates EGPC(1) EGC(2) EDC(2) Risk free rate 2.52% 3.25% 3.25% Country Risk Premium(3) 1.84% 1.84% 1.84% Unlevered Beta 0.63
0.65 0.58 Market Risk Premium 6.0% 6.0% 6.0% Ke: cost of equity 9.6% 9.7% 9.4% Kd: pre tax cost of debt 5.5% 4.5% 4.5% Tax Rate 27% 27% 27% Kd: post tax cost of debt 4.0% 3.3% 3.3% D/(D+E) 35% 20% 25% WACC 7.7% 8.4% 7.9% Rate for EGP is nominal
denominated in US$. Rates for EGC and EDC are nominal denominated in CLP. Equity country risk premium as of October 20th, 2017. (Minority interests)
Section 2: Analysis D- 2.3 Valuation -
Enel Green Power Latin America Description DCF Considerations (1/2) In recent years, EGPC has positioned itself as the largest diversified NCRE company in Chile, with approximately 30% market share by installed capacity. Currently, the company has
an operating portfolio of 1,187 MW of solar PV, wind, geothermal and hydroelectric assets. Also, EGPC counts with a diversified pipeline of approximately 1,135 MW of new projects. EGPC sells most of its electricity through long term contracts. As of
June, 2017 EGPC contracted energy was approximately 94% of its annual net power production. Approximately two thirds of the contracted energy is sold directly to EGC. The 5-year business plan and the accompanying information provided by EGPC
considers three main growth drivers looking forward: Operational efficiency and synergies among current operations. Development of new generation capacity. Production PPAs with virtually no exposure to the spot price. ASSET Chile reviewed in detail
the company’s business plan, with a special focus on energy price projections, contracting strategy assumptions, growth perspectives and other matters deemed to be relevant for valuation purposes. Accordingly, ASSET Chile based its DCF
valuation on the company’s business plan and performed a separate analysis to include the effects of some issues or considerations. Those considerations are presented here. Commercial strategy: as explained during the management presentations,
EGPC has pursued a growth strategy in which the company only builds power projects if they have secured long term contracts to sell their energy. Accordingly, the business plan considers that EGPC is able to secure all of its future energy contracts
as production PPAs. Moreover, the Business Plan estimates that EGPC will secure energy contracts at a price that, on average, is not necessarily related to the expected spot price. This business plan assumption is regarded by ASSET Chile as
optimistic. First, EGC business plan assumes that it will secure energy contracts at a price similar to the prevailing average annual spot price. Thus, to be consistent with this assumption, ASSET Chile analyzed an alternative scenario in which the
future contracts’ prices for EGPC assets are at price levels similar to the spot price. Second, if the contracts signed by EGPC are on a production basis, it is reasonable to assume that these should be signed with a price discount. Evidence
of this discount can be found in the agreement signed between EGC and EGPC during the last electricity distribution tender process held during 2016, in which the EGPC price was approximately 2/3 of that achieved by EGC in the energy auction.
Therefore, we included a modification to the business plan considering that EGPC follows a contracting strategy consistent with that of EGC, and suffers a 10% discount on price. Project pipeline development: According to EGPC the development
portfolio is divided into two categories: short-term (417 MW) and mid-term (414 MW). Following the latest tender offer whose results were recently announced, EGPC should be able to secure a portion of the short term pipeline.
Section 2: Analysis D- 2.3 Valuation -
Enel Green Power Latin America DCF Considerations (2/2) Valuation Minority positions: EGPL owns a series of minority positions in other subsidiaries of EGP across Latin America. According to the information provided, these positions will be divested
or split prior to the Reorganization. Therefore, they were not included in the valuation. Lawsuits: During 2017, EGPC has been involved in a claim promoted by Arbiodo mining company for the use of the land where Taltal wind farm is located.
According to the company, based on independent legal advise, there is no contingency considered for this lawsuit. Hence, no disbursements or contingencies associated with this issue were included in the valuation of EGPL. Energy contracts between
EGPC and EGC: EGPC’s energy sales to EGC amount to an expected total of 4,9 TWh per year of which the majority are under production PPAs. According to the evidence shown by EGC to ASSET Chile, the contracts and agreements that have been
executed between both companies in the past have been signed at price levels that are lower than the prevailing market prices at the time of the agreement. The price differences likely account, among other potential reasons, for the risks assumed by
EGC when committing to purchase energy under production PPAs or nodal risks. ASSET Chile has weighed and factored-in the abovementioned considerations in its value assessment. Both the transaction and the trading multiples demonstrate a wide range,
which could be explained by companies with different growth perspectives and “yield companies”. The median value of the comparable transactions is 10.4x and of the comparable companies 11.4x. We are assigning no value to the medium-tem
pipeline. This scenario is consistent with the multiples’ median values. Taking all this into account, ASSET Chile concludes that EGPL Enterprise Value is between US$ 2,834 million and US$ 2,991 million, which is between 1.10x-1.15x the book
value of the assets (US$ 2,587 million). Assuming a net financial debt of US$ 1,189 million and deducting the non-controlling interests, the equity value of EGPL would be between US$ 1,578 million and US$ 1,735 million (equivalent to a price per
share range of US$ 1.91 to US$ 2.10)(1) 8.1x 8.4x 13.7x 12.8x 11.2x 10.6x Currently, EGPL is a limited company, and according to Enel, it will be transformed to a “Sociedad Anónima” prior to the Reorganization, with 827.205.371
shares. EV/EBITDA 2018E
Section 2: Analysis D- 2.3 Valuation -
Enel Generación Chile EGC owns and operates a technology diverse portfolio of 25 power plants with an aggregate total installed capacity of 6.3 GW. EGC project portfolio includes one project under construction (a 150 MW hydroelectric facility,
Los Cóndores) and few other projects, mainly related to upgrading existing open-cycle dual-fuel facilities into CCGTs and battery energy storage systems. The company expects its EBITDA to grow underpinned by operational efficiencies, better
hydrology, additional capacity, and other assumptions. The 5-year business plan for EGC (and subsidiaries) shows that EGC will continue generating strong and stable cash flows from operations and that significant changes are neither expected from
operations nor from its capital structure. Moreover, the projections provided by EGC assumes no additional capacity (other than Los Cóndores), and no revenues or costs items other than the usual. ASSET Chile reviewed in detail the
company’s business plan, with a special focus on energy price projections, contracting strategy assumptions, growth perspectives and other matters deemed to be relevant for valuation purposes. Accordingly, ASSET Chile based its discounted cash
flow valuation on the company’s business plan and raised some issues (“Considerations”) and discussed them in detail with the company’s management. Those Considerations are presented here. Description DCF Considerations (1/2)
Contracting strategy: according to EGC, in the future the company will sell its non-contracted energy at the prevailing average annual spot price. This means that the company will act as a price taker i.e. there is no underlying commercial strategy.
The effect of this assumption is particularly relevant during the following ten years, when the energy price is expected to be specially low to later recover. Considering that EGC has one of the most diversified and efficient power generation
portfolios in Chile and counts with vast commercial capabilities, it should be capable to secure contracts at a price similar to the expected 5-year or 10-year average spot price. This is equivalent to assuming a contracting price higher than the
one proposed by EGC, particularly in the short and medium term. Such an assumption, although speculative, might positively affect EGC’s value. We have not included a “contracting price curve” into our analysis, however, we have
made the base case scenario consistent to the discount rate and to that of EGPC valuation. Coal facilities: according to EGC, coal-fired power plants will continue to operate and are not expected to be shut down. Following Enel’s announcement
in 2015 that the company will phase out future investments in coal, ASSET Chile believes there is a risk that Enel will not overhaul the Bocamina power plants in the future and therefore that they will shut down after their lifespan expires. Such an
assumption we believe to be neutral to value given the energy price expectations, the significant CAPEX that would have to be incurred, and how far this effect is timewise.
Section 2: Analysis D- 2.3 Valuation -
Enel Generación Chile DCF Considerations (2/2) Los Cóndores: the hydroelectric project currently under construction has suffered from significant delays and cost overruns. It is expected that the company is yet to spend significant
resources before the project enters into operations. ASSET Chile’s assessment is that this project’s NPV is today close to zero and possibly negative. According to EGC, the company is determined to finalize the construction of the
project. ASSET Chile assumes that the company has better information concerning the profitability of the project and therefore assumes that the effect on value of abandoning as compared to that of continuing with Los Cóndores is close to
neutral. Ancillary services: according to EGC, it is not expected that new regulation remunerating ancillary services to the system will benefit the company in the future. Given the irruption of intermittent energy, the system will increasingly need
ancillary services that offer reliability to the electric system. Today these services are provided by the existing capacity and this is likely to remain the case for several years. However, there is broad agreement in the industry that new
regulation accounting for an efficient provision of these services should be put in place in order to foster new firm capacity capable of stabilizing the grid in the future. This new regulation will likely offer the ancillary services with an
adequate/better remunerating scheme. ASSET Chile believes EGC’s view on this matter to be conservative and that there exists a probability that EGC might benefit from the provision of ancillary services in the future. It is also probable that
ancillary services remuneration will benefit only new facilities. ASSET Chile has weighed the abovementioned considerations in its value assessment and has determined its overall impact to be neutral to positive. However, making any attempt to
perform a quantitative assessment is believed to be too speculative and therefore the DCF valuation does not include cash flows associated with them. Valuation 8.8x 10.7x 9.0x 8.9x 7.0x 8.0x 9.0x EV/EBITDA 2018E In the last months, sell-side
analysts have priced EGC in a range of between 8.0x to 9.0x EV/EBITDA. This is equivalent to the upper range of the market cap observed during the last twelve months (before the Reorganization announcement). On the other hand, comparable companies
have on average higher valuation multiples, which could be reasonably explained by the limited growth perspectives of EGC. All in all, ASSET Chile estimates that EGC Enterprise Value is in the range of CLP 5,246 billion and CLP 5,595 billion.
Assuming a net financial debt of CLP 736 billion, and deducting the non-controlling interests, the equity value of EGC would be between CLP 4,417 billion and CLP 4,766 billion (equivalent to a price per share range of CLP 538 to CLP 581).
9.6x
Section 2: Analysis D- 2.3 Valuation
– Enel Distribución S.A. Considerations EDC is one of the largest electricity distribution companies in Chile with over 1.85 million clients. The company holds a concession of 2,105 km2 and supplies more than 15 TWh/year to residential
and industrial clients in 33 municipalities of the Metropolitan Region in Chile. EDC also holds electricity transmission assets. EDC has a diversified client portfolio which supports EDC’s growth in non-core unregulated businesses. EDC has a
Regulated Asset Base (“RAB”) of US$ 868.5 million and US$ 1,450 million in transmission and distribution assets, respectively(1). The 5-year business plan provided by the management estimates that the EBITDA will grow based on two main
growth drivers looking forward: OPEX efficiency plan and process improvements. The growth of Value Added Services (“VAS”). ASSET Chile reviewed in detail the business plan provided, with a special focus on the asset base, the cost
structure, the VAS and its projection, long-term growth perspectives and other topics considered important for the valuation. ASSET Chile considers it important to take into account some issues or considerations regarding EDC’s long-term
projections beyond 2022. Key drivers for the long-term growth. Since a large portion of the DCF value is explained by the terminal value, it is especially important to analyze the long-term growth fundamentals supporting its calculation(2). Future
changes to any of these assumptions could have an impact on EDC’s value. Increment in the long term electricity demand explained by expected low energy prices. We believe this view to be optimistic as the introduction of distributed
generation, in-situ solar panels, and an increasing penetration of energy efficient appliances and lighting systems would potentially offset this effect maintaining the consumer’s electricity demand growing at organic rates. Changes in the
regulation that could affect EDC’s profitability. The management is neutral about the long-term regulation of key variables such as (i) the allowed regulated return on assets, (ii) the assets’ base to be considered in the calculation of
the regulated tariff, and (iii) more stringent regulatory requirements in terms of quality supply and modernization. No particular assumptions have been made on these matters. Development of non-regulated business. It is speculative to estimate the
VAS growth rate and how successful EDC would be in introducing such business. Therefore, in the long-run, new investments were assumed to have a similar return as the current investments(3). Description (1): According to the CNE’s tariff
revision process of 2013 and 2014, respectively. (2): The Key Driver Value method was applied in order to estimate the Terminal Value. (3): The underlying assumption is that the RONIC (Return On New Invested Capital) equals the WACC when calculating
EDC’s terminal value through the Key Driver Value Formula.
Section 2: Analysis D- 2.3 Valuation
– Enel Distribución S.A. In addition to the DCF, ASSET Chile used three complementary approaches: Comparable trading multiples: trading multiples show a wide range of values, mainly explained by the dissimilar business structures and
regulations to which the different companies are exposed. Analysts’ coverage: since EDC is not directly covered by sell-side analysts, the analysts’ coverage multiplies were estimated indirectly using sell-side researches of EGC and EC.
EDC’s historical market capitalization for the last twelve months. Taking all this into account, ASSET Chile believes that the best estimation of EDC’s value is the one obtained using the DCF methodology based on EDC’s business
plan and the terminal value assumptions made by ASSET Chile. Given the above, for purposes of this analysis, ASSET Chile will use its DCF valuation of the company that shows an Enterprise Value of CLP 1,694 billion, an Equity Value of CLP 1,599
billion(1) and a price per share of CLP 1,390, instead of using a range. The current market valuation of the company(2) implies an 10% discount over EDC’s NAV. EDC’s shares have a low average traded volume (ADTV of US$ 2.5 thousand)
which supports the idea of a market discount on EDC’s share price. 5.5x 11.0x 7.8x 10.4x 7.2x 8.5x (1): The net financial debt considers (i) financial debt with Enel Chile and other short-term borrowings and (ii) financial receivables and cash
equivalents. (CLP 90 billion). 8.5x Valuation EV/EBITDA 2018E (2): As of October 23th, 2017.
Section 2: Analysis D- 2.3 Valuation
– Enel Chile S.A. Description Valuation - SOTP TTM Holding Discount(2) EC is the holding company of EGC and EDC. It owns 99.1% of EDC and 59.98% of EGC. This company has no operational assets, however it earns income for the provision of
services to its subsidiaries and through financial investments and loans provided to other companies within the Enel group. The graph on the right shows the estimated value of EC based on the intrinsic valuation (using the expected values) of the
underlying assets’ equity value. The intrinsic value of EC’s position in EGC and EDC, adjusted by the current shareholding position, are CLP 2,713 billion and CLP 1,585 billion, respectively. In that scenario, the sum-of-the-parts
(“SOTP”) valuation for EC is CLP 4,452 billion (including cash at EC), while EC trades at a value of CLP 3,679 billion (as of October 20th, 2017)(1). The foregoing means that EC currently trades at 17% discount over its NAV. The value of
the holding discount in this case is CLP 773 billion. Such a holding discount can be explained by facts further analyzed in Section 2.4. The holding discount on EC obtained by the SOTP valuation is a bit higher than – but within the range of
– the historical discount that the market applies to EC shares. The graph on the right shows that the historical holding discount of EC in the trailing twelve months has an average value of 10%. For purposes of this Report, and in order to
evaluate the terms of the Reorganization further explained in this Report, ASSET Chile will assume a 10% holding discount on EC. Average 10.0% (1): Source: Capital IQ, October 20th, 2017 (2): Calculated using the market value of EC, EGC and
EDC
The following table summarizes our
valuation results. As mentioned, the valuation of EC has been done using a SOTP and assuming a 10% holding discount, in accordance with EC’s TTM holding discount (see next section for further discussion on the holding discount). Accordingly,
the EC price per share (pre-Reorganization) is: Lower range: CLP 80.4 Medium range: CLP 81.6 Higher range: CLP 84.3 The Exchange Ratios for the Reorganization are discussed in Section 2.4 – “Exchange Ratios”. For illustrative
purposes, above we provide a table with the exchange ratios resulting directly from our valuation. These ratios do not reflect the effects that certain assumptions and variables of the Reorganization will have on the Reorganization Exchange Ratios.
Such assumptions and variables are discussed in the following pages. Thus, the relative valuations shown above are only referential and not intended to, and shall not be directly used for calculating the Exchange Ratios for the Reorganization.
Section 2: Analysis D- 2.3 Valuation Valuation summary EGC (CLP billion) EDC (CLP billion) EGPL (US$ million) Low Medium High Medium Low Medium High Enterprise Value 5,246 5,353 5,595 1,694 2,834 2,899 2,991 Equity Value 4,417 4,524 4,766 1,599
1,578 1,643 1,735 EV/EBITDA 2018E 9.0x 9.2x 9.6x 8.5x 10.6x 10.8x 11.2x Share Price 538 552 581 1,390 1.91 1.99 2.10 EC shares per 1 share of: Low Medium High EGC 6.7 6.8 6.9 EGPL(1) 14.3 15.4 16.4 (1) Assuming an Exchange Rate of 630
CLP/US$
Section 2: Analysis D- 2.4 Terms of
the Reorganization Introduction Having obtained the NAV/market valuation of the companies involved in the Reorganization is just the first step in analyzing the terms under which the Reorganization should be made. Given the complexity of the
proposed Reorganization and the potential effects it may have on the involved companies’ shareholders, it is necessary to analyze the terms of the Reorganization in a broader context. As explained in detail in Section 1, although the
Reorganization is proposed in steps that are sequential (i.e. tender offer and then merger), from the perspective of any shareholder it must be understood as a single transaction for the parties involved. One of the most relevant conclusions arising
from the above, is the fact that the tender offer over EGC shares should consider exchanging shares of an already-merged EC. The foregoing is the case because any EGC minority shareholder would be invited to exchange his EGC shares for EC stock
knowing that the latter will be subject to a merger with EGPL shortly thereafter. Thus, it is important to analyze the impacts that any set of given terms and assumptions of the Reorganization as a whole may have on the different shareholders
specially in regards to dilution effects. This includes, among others considerations: The tender offer premium. The assumed post-Reorganization holding discount on EC. The Tender Offer Mix and how it is funded.
D- According to market practice, it is
common that a tender offer includes a premium over the market price of the target share. Such premium aims to encourage the minority shareholders to accept the tender offer, and/or recognize and share value unlocked or value created by the
transaction that would be captured by the acquiring party, and/or compensate for the consolidation of a controlling position. How much premium to offer in a tender would depend on a number of things, including whether the tender offer aims to allow
the prospective acquirer to gain control over the target company. Market Price in a tender offer, according to Title XXV of the Chilean Securities Market Act (Law 18,045), is the weighted average of the target’s trading price between the 90th
and the 30th trading day prior to the tender offer acquisition date (“Market Price”). The Market Price of EGC before the Reorganization announcement was approximately 518 CLP/share, which is close to the median value of the sell-side
analysts for EGC, without including the Reorganization effects. Historic analysis shows that non-controlling tender offer premiums in Chile in the last 8 years have an average of 15.6% and a median of 14.0%, ranging from 7% to 34%, when the premium
exists. The current share price of EGC is 571.8 CLP (as of October 20th close). This price is 10% above the Market Price. It is reasonable to assume that the market might have adjusted the price to the expected tender offer premium and therefore
assume that 10% is the expected premium. One could also assume only a portion of the tender offer premium has already been priced in by the market. Thus, ASSET Chile believes that the tender offer should consider a price per share of between CLP 570
and CLP 590 (tender offer premium between 10%-14%). The minimum tender offer price (CLP 570) implies a 9.5 EV/EBITDA 2017e multiple on EGC, a 17% premium over the announcement date share price, a 10% over the Market Price and a 3% premium over the
expected value of our EGC valuation. Section 2: Analysis 2.4 Terms of the Reorganization Tender Offer Premium Market Price*: 518 CLP Announcement: 489 CLP Market Price ~60 trading days ~30 trading days Tender Offer Premium Evidence (Chile) Date
Offeror Company Premium 22-05-2017 GEN Agunsa 26.4% 11-12-2016 GEN Portuaria Cabo Froward 10.0% 27-12-2015 ILC AFP Habitat 6.6% 14-12-2014 Quiñenco Invexans 29.9% 05-11-2013 Grupo Paz Paz Corp 0.0% 21-01-2011 Agrosuper Sopraval 33.9% 31-08-2010
Casa Saba Farmacias Ahumada 18.0% 22-03-2010 ILC AFP Habitat 0.0% Average 15.6% Median 14.0% Tender offers not aimed at acquiring control:
Section 2: Analysis D- 2.4 Terms of
the Reorganization Holding Discount According to our valuation results, EC currently trades at a discount to its NAV. This discount is attributable to at least two effects: (i) a rather small liquidity discount at EDC, and to a larger extent to (ii)
EC being a holding company. There is extensive literature and research examining the causes of such a discount affecting holding structures(1), with many of them listing a subset of the following reasons: Overhead costs. Slowing down of
decision-making processes due to hierarchies. Agency costs and inefficient allocation of resources (“tunneling”). Forced diversification to the average portfolio investor. Likewise, some studies mention certain benefits of counting with
a holding structure, which include: Improved cash management. Tax optimization. Centralized reporting. Operational synergies. In any case, the literature concludes that most of the time the costs of holding structures outweigh their benefits. Among
the Reorganization benefits put forward by EC is the belief that the holding discount of EC will diminish or disappear after the Reorganization. ASSET Chile’s view is that assuming that the holding discount will vary as an effect of the
Reorganization is possible but speculative. Therefore, ASSET Chile believes that such an assumption should not be used for calculating the Terms of the Reorganization. The main reasons for such assumption are the following: First, none of the
reasons listed above is significantly changed after the Reorganization: EC still exists with essentially the same overhead costs. Decision processes’ dynamics are unlikely to be affected by the Reorganization, unless 100% shareholding of EGC
is reached. No new corporate governance practices are proposed as part of the Reorganization. EC will now include a new asset class – a fully renewable subsidiary – on its portfolio. Second, assuming any reduction on EC’s holding
discount for calculating the terms of the Reorganization only puts in risk EGC and EGPC shareholders’ value in the Reorganization: If the terms of the Reorganization are calculated assuming that EC’s holding discount will disappear or
diminish after the Reorganization is completed, EC will have to offer fewer shares to EGC minority shareholders and to EGPL shareholders as part of the Reorganization. Then, if EC’s current holding discount prevails or does not diminish as
expected, both EGC minority shareholders and EGPL shareholders will be negatively affected. Conversely, if the terms of the Reorganization assume that EC’s holding discount after the Reorganization is going to prevail at the current level, and
ex-post it diminishes (or disappears), all post-Reorganization shareholders at EC, including former EC shareholders, will be positively affected. See for example: Holding Discounts and Business Groups Optimal Bailout of Subsidiaries, Dec 2011.
Fernando Lefort and Rodrigo Gonzalez.
During the tender offer, the current
minority shareholders of EGC will be offered EC shares and cash. The exchange ratio (“Exchange Ratio”) will provide a relation of how many shares of the post-Reorganization EC the EGC shareholder must receive for each EGC share tendered.
The exchange ratios are primarily a function of the relative valuation of the companies (see Section 2.3). However, in this case, other considerations must be factored in: depending on both the holding discount and the tender offer premium
assumptions, the Exchange Ratio of EC shares to one share of EGC (and to one share of EGPL) will vary. This is a consequence of a dilution occurring on EC stock price given that extra shares would be needed to account for both the premium (if any)
and the holding discount when exchanging shares (both with EGPL and with EGC). The dilution affects the post-Reorganization EC share price, thus affecting the Exchange Ratios of the Reorganization. The number of EGC minority shareholders accepting
the tender offer may also affect the exchange ratio: the more EGC minority shareholders accepting the tender offer, the more shares EC has to offer and thus the larger the potential dilution on EC’s. Additionally, the mix of shares v/s cash
also may impact the Exchange Ratio, but on a minor extent. The more the cash, the less the dilution. For illustration purposes, assuming that the tender offer is 100% for stock, the Exchange Ratio will be between 7.2 and 8.5 (shares of EC to one
share of EGC). To calculate this Exchange Ratio range, we have used the range of valuation presented in Section 2.3 of this document, a 10% holding discount and the tender offer price range of CLP 570 to CLP 590. Section 2: Analysis D- 2.4 Terms of
the Reorganization Exchange Ratios 7.2 8.5 The Exchange Ratio of EC shares to EGPL is between 15.1 to 19.0 and in the mid range of valuation is between 16.5 - 17.3. The holding discount used to calculate the Exchange Ratios shown above assumes that
the historic holding discount will prevail in percentage terms. Under the assumption that the historic holding discount will prevail but on absolute terms (dollar amount), the exchange ratios shown above shift, ranging from 6.9 to 7.8 (instead of
7.2 to 8.5). All the above assumes that the valuation of the companies involved is within the ranges mentioned in Section 2.3. A 100% conservative view (for EGC and EGPL shareholders), avoiding any speculation on both the resulting holding discount
and/or the percentage of acceptance of EGC tender offer, and assuming the higher end of our valuation ranges, would be to agree on the higher end of the Exchange Ratio described above. 8.1 7.5
Section 2: Analysis D- 2.4 Terms of
the Reorganization Tender Offer Mix (1/2) According to what has been informed, EC is planning to fund the tender offer using cash but will retain some of that cash to purchase newly issued EC shares on behalf of the EGC shareholders that accept the
tender offer, which is equivalent to offering a mix of cash and stock. Given the Restrictions, the mix of cash and stocks that EC can offer for the tender offer is relatively constrained. The Restrictions and their effects are explained below:
Statutory limit: Enel wants to maintain a shareholding over EC similar to that of today after the Reorganization and cannot surpass the statutory limit of 65%. Given that after the merger with EGPL, Enel will gain shareholding percentage at EC, the
Tender Offer Mix has to dilute Enel. Dilution: Enel has stated that it has to maintain percentage control of ECL at all times during the Reorganization. Depending on how the Reorganization is performed, this may put a cap on Enel’s dilution
and therefore on the amount of additional shares that ECL can offer. EPS accretion: the Reorganization has to be EPS accretive to EC (the EPS calculated as the 5-year average). Issuing too many shares during the tender offer and/or the merger with
EGPL could affect this condition. Credit Rating: EC wants to maintain its current credit rating. This puts a cap on the amount of additional debt that EC can bear and therefore to the cash portion of the tender offer mix. According to what has been
informed by the company, a consolidated net debt to EBITDA ratio up to 2.5 will be acceptable by credit rating agencies. To calculate a reasonable Tender Offer Mix that complies with the abovementioned conditions and which does not detriment EGC
shareholders, it is necessary to make assumptions regarding (or control the outcome) of the following variables: The percentage of EGC minority shareholders that will accept the tender offer: according to the Restrictions, a minimum equivalent to
15.02% of the current shareholding of EGC should accept the tender offer for it to be valid. However, the percentage of EGC minority shareholders that will accept the tender offer is unknown: this could range from 15% to 40%. Thereby, it is
impossible to know with certainty the number of new shares that will “remain” issued after the tender offer period finalizes. The percentage of EC minority shareholders that will use their POP and/or WR: EC’s shareholders will have
preferential subscription rights (“POP”) for the capital increase that will be made at EC to fund the tender offer. If many of EC’s minority shareholders subscribe the capital increase shares during the POP, then: (i) Enel will
have to dilute to a larger extent; (ii) the post-Reorganization EPS of EC could be affected; and (iii) the additional debt requirements for funding the cash portion of the mix would be smaller. According to the information provided by the company,
EC expects that none or only a very small portion of their minority shareholders will use their POP. Also, the number of minority shareholders of EC exercising their WR may have an impact on the cash requirements and would potentially positively
affect the post-Reorganization EPS. Same as with the POP, it is expected that none to a minor portion of EC shareholders will use this right. The preferences of the current EGC minority shareholders: current EGC minority shareholders may have
certain preferences about being paid with cash or stock. The preferred mix will likely vary from one type of shareholder to another. However, ASSET Chile believes that such preference is, in general terms, for cash rather than for stock. The
additional debt at ECL: as mentioned, a maximum of 2.5x EBITDA of financial debt can be held at EC. The final amount (and conditions) of such debt will be relevant not only to comply with the leverage condition but also to avoid affecting the EPS of
EC post-Reorganization.
Section 2: Analysis D- 2.4 Terms of
the Reorganization Tender Offer Mix (2/2) The final outcome of the (i) number of EGC minority shareholders accepting the tender offer, and (ii) the percentage of EC minority shareholders using their POP, will only be known after the tender offer
finalizes. Therefore, it is key that the tender offer mix is flexible enough so that the Reorganization has the highest probability of success. The mix of stock and cash that maximizes the probability of success vary depending on the scenario
analyzed. Scenarios are built by fixing relative valuations between EGC and EGPL, holding discount and tender offer premium (or tender offer price for EGC shares). For illustrative purposes, we analyze three different scenarios to determine the
tender offer mix that would maximize the probability of complying with the Restrictions (“Optimal Tender Offer Mix”), considering the following common assumptions for the three scenarios: A holding discount of 10% is used to estimate the
exchange ratios. None of the current EC minority shareholders use their POP nor their WR. The new debt is taken at a cost of 4% in US$ and EC also uses US$ 100 million of available cash to fund the tender offer. The table below details the set of
assumptions to define the three cases: The next section analyzes, as an example, Case 2 (Mid Case), in regards to the universe of possible combinations of the Tender Offer Mix and the post-Reorganization shareholding position of each shareholder for
each tender offer acceptance case. Assumption Case 1 Case 2 (Mid Case) Case 3 Tender offer Price (CLP/share) 570 580 590 Valuation range for EGC Low Mid High Valuation range for EGPL High Mid Low Optimal Tender Offer Mix 35% stock 36% stock 37%
stock
The Mid Case results are the
following: Under the Mid Case, the 100% stock Exchange Ratio of EC to EGC shares is between 7.7 and 8.1. A tender offer mix of 36% stock would mean that the EGC shareholder will receive 64% of the tender offer price in cash and the remainder in EC
shares. The Mid Case assumes a tender offer price of CLP 580, therefore: CLP 371.2 of each share is paid in cash. CLP 208.8 of each share is paid using EC shares. Assuming that under the Mid Case 35% of the current EGC minority shareholders accept
the tender offer: The Post-Reorganization EC price per share would be: CLP 75.2. Hence, the Exchange Ratio would be 2.78x Then, under the Mid Case, it is verified the compliance of the Restrictions: Enel final shareholding in EC: 61.4%. EPS
Accretion: +0.9%. EC Leverage: 2.32. The EGC minority shareholders that accepted the tender offer will hold 11.3% of the post-Reorganization EC. Section 2: Analysis D- 2.5 Example: Mid Case Analysis Results % of EGC Shareholders accepting the tender
offer 40 39 38 37 36 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 % of tender offer paid in stock 60% 59% 58% 57% 56% 55% 54% 53% 52% 51% 50% 49% 48% 47% 46% 45% 44% 43% 42% 41% 40% 39% 38% 37% 36% 35% 34% 33% 32% 31% 30%
29% 28% 27% 26% 25% 24% 23% 22% 21% 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% Credit Rating EPS accretion Statutory limit (1) The Restriction limiting the dilution of Enel in EC so it never holds less than 50% of the total shares is shown using
the dashed line. Assuming that the Reorganization is executed in a way that simultaneously transfers EC shares to EGC minority shareholders and to EGPL shareholders (i.e. Enel), this condition would not apply. Dilution (1)
According to the assumptions and
results presented for the Mid Case, it is possible to estimate the EC shareholders base final outcome of the Reorganization in compliance with all the Restrictions under the Mid Case. The graph on the right shows the final shareholding position of
the current (Enel original shares, EC minority shares) and the new shareholders of EC (Enel new shares, EGC minority shares). The shadowed area shows unfeasible scenarios given the Restrictions under the Mid Case. Considering only feasible
solutions, the results are the following: EPS Accretion: EPS is defined as the average earnings per share of EC during the period 2018 – 2022. Considering the Mid Case, a 36% stock tender offer mix, and depending on the percentage of EGC
shareholders that accept the tender offer, the Reorganization is EPS accretive for EC in the range of 0.0% - 1.67% compared to the pre-Reorganization EPS. In addition, the Reorganization must comply with the 2.5x Net Debt to EBITDA maximum ratio
post-Reorganization. Since the cash amount of the tender offer mix will be mostly financed with financial debt on EC level, the more EGC shareholders accept the tender offer, the more debt EC will have to raise. The Mid Case results in that the
financial leverage of EC ranges from 2.2x and 2.5x. Therefore, it complies with the restriction. Enel will hold between 60.4% and 62.5% of EC. The EGC minority shareholders that accept the tender offer will hold between 9.8% and 12.7% of EC,
depending on how many decide to accept the tender offer. Section 2: Analysis D- 2.5 Example: Mid Case Analysis Post-Reorganization EC shareholders 12.7% 26.8% 19.2% 41.3% 5.1% 29.3% 20.4% 45.1% EC shareholders after the Reorganization EGC minority
shareholders accepting the tender offer Unfeasible solutions due to Restrictions
Agenda Section 3: Conclusions 35
Section 1: Background 7 Section 2: Analysis 12 2.2. Strategic Considerations 14 2.3. Valuations 18 1.1. Transaction Description 8 1.2. ASSET Chile Role 11 2.4. Reorganization Terms and Conditions 27 D- 2.1. Structure 13 2.5. Example: Mid Case
Analysis 33 Section 0: Executive Summary 3
Section 3: Conclusion D- Market Terms
and Benefit of the Company and/or its Shareholders As stated earlier, and requested by law, this report must include ASSET Chile’s independent opinion on: (i) market terms of the transaction proposed, and (ii) whether the transaction, in that
part that impacts EGC, contributes to the benefit of the company and/or its shareholders. The above is consequence of the Reorganization being declared, and treated therefore, by both Boards of Directors of EC and EGC, as an OPR (EGPL in absence of
minority shareholders does not need to declare it as such). While for EC and EGPC the Reorganization directly affects its ongoing businesses, for EGC the effect is more subtle or indirect. The Reorganization does impact EGC shareholders directly,
but not necessarily EGC business. Having stated the above, and in reference to the opinions we must render here, as ASSET Chile we can state the following: Market Terms: The final proposal and its specific terms – especially regarding price,
composition, and exchange ratios – has not yet been offered by EC to the different parties, so we cannot specifically render an opinion on that. However, if the final offer is in the value range specified earlier in this document, we
understand that the Reorganization would then be within market terms for a transaction of this kind. Benefit to the company and/or its shareholders: Regarding EGC normal course of business of the company, we estimate that the Reorganization will
have none or minimum impact. On its decision-making processes, as long as EGC maintains a base of minority shareholders, and particularly given that its controller will keep a potentially competing operation independent of EGC, these processes will
not be simplified or shortened. It is true that the controlling holding gap between EGC and EGPC will be reduced as a result of the transaction, but this does not necessarily, on its own, reduce any potential conflict of interest or friction
existing today. We estimate then, the Reorganization is neutral for EGC. For those shareholders that decide to accept the tender offer that will be presented, and assuming it is within the ranges discussed earlier – and therefore on market
terms – we see this as an opportunity to capture the full value of its current holding plus a premium, and, if so decided, to fully align their interest with the controlling shareholder. We estimate that the Reorganization is positive for the
shareholders. Certain shareholders may decide not to accept the tender offer, regardless of the fact they may face the risk of a liquidity discount after the tender offer is accomplished. We assume these shareholders may prefer to remain as direct
shareholders of EGC because risks selection focus (i.e. Chilean conventional power generation business only), portfolio diversification reasons, and / or different views on the value of the underlying business going forward. All these reasons are
plausible and legitimate and are just a reflection of their preference given the option to choose freely otherwise. For EGC shareholders then, the Reorganization – if executed on market terms – is either neutral or positive. In
conclusion, the Reorganization is, in our view, in the benefit of EGC and/or its shareholders. To be clear, we believe its effect is neutral or positive, but in no case detrimental.
Contact Information D-
ANNEX E
OPINION OF LARRAÍN VIAL SERVICIOS PROFESIONALES LTDA., INDEPENDENT EVALUATOR OF ENEL CHILE
This Annex E is a free English translation of the original Spanish language version, which reflects the substantive content of the original Spanish
language document, but may not be a word-for-word translation. In the event of any discrepancy with the English translation, the original Spanish language document will prevail.
Project Elqui November 3, 2017 Report for Enel Chile S.A. Board of Directors
E-1
Important Information LarrainVial Servicios Profesionales Limitada
(“LarrainVial”) was hired by Enel Chile S.A. (“Enel Chile”) to act as independent evaluator to its Board of Directors (the “Board”) with respect to the Proposed Transaction, as the term is defined below. The scope of
this advisory service is defined by Law No. 18,046 in its article 147, which makes reference to independent evaluators This report was prepared in Spanish; any translation into another language is merely for reference
and, therefore, the Spanish version must prevail for all purposes This report must be read as a whole; any dissemination or partial distribution thereof must be previously authorized by LarrainVial In
preparing this report, LarrainVial has relied on information provided by Enel Chile, Enel Generación Chile (“Enel Gx”), Enel Green Power Latin America Limited (“EGP Latam”) and their respective advisors, in addition to
public information, in respect of which LarrainVial cannot guarantee, directly or indirectly, its accuracy, precision, authenticity, validity or completeness. Likewise, LarrainVial has relied on the estimates, projections and forecasts received and
trusts they have been prepared in good faith by the respective administration, advisor or expert. Although LarrainVial has analyzed such projections and considers that they are reasonable estimates, it assumes no responsibility with respect to the
information reviewed or the conclusions that may arise from any error or inaccuracy of the aforementioned information The analysis and conclusions of this report constitute the best view or opinion of LarrainVial at this date
in relation to the Proposed Transaction based on the information that was available. These conclusions are based on market conditions, financial conditions, economic contingencies and regulations in effect at the date of the report, with the
understanding that future events, developments or situations that may modify the conclusions set forth herein could occur. LarrainVial does not undertake any obligation to revise or update this report, nor to communicate any variations that may
arise from new developments LarrainVial is acting as financial advisor to the Board and has not assumed any commitment or obligation to provide legal, accounting, or tax services, or to conduct a due diligence process for the
companies subject to the Proposed Transaction. The contents of this report should not be considered as legal, accounting or tax advice. Any reference, directly or indirectly, to legal, accounting or tax aspects should be understood as a general
analysis in the context of the financial analysis carried out by LarrainVial
E-2
Content I. Executive Summary II. Description of the Proposed Transaction III. Analysis
of Strategic Reasons for the Proposed Transaction IV. Analysis & Considerations for Valuation Ranges V. Conclusions VI. Appendices I. Stock Market Context II. Valuation Parameters III. Other Relevant Transactions
E-3
Chapter I Executive Summary
E-4
Executive Summary Larrain Proposed Vial Transaction Servicios Profesionales (as defined
below) Ltda. (“LarrainVial”) has been hired by Enel Chile to assist its Board and act as independent evaluator in the evaluator Role of independent contributes This report to considers the social a interest
description of the transaction, an analysis of the effects and potential impact for Enel Chile, including whether it conditions In addition, of at the the transactions request of described Enel Chile,
below this in report a way includes that contributes a valuation to the of social Enel interest Chile, Enel of Enel Gx Chile and EGP Latam, and the estimation of the in On a July
merger 3, 2017, through Enel absorption Chile proposed with EGP to Enel Latam, SpA the (“Enel”) generation a corporate assets restructuring of
non-conventional
(the “Proposed renewable
Transaction”) energy it owns in which in Chile Enel Chile (the “Merger”) incorporates, . The proposal conditions this merger to declare a successful mixed Tender Offer, that is, in cash and in shares, of Enel Chile for up to 100% of
Enel Gx (the “Tender Offer“). The success of the Tender Offer would be fulfilled if Enel Chile manages to achieve a controlling stake greater than 75% of Background and the share capital of Enel Gx description of
the On earnings August per 25, share 2017, (“EPS”) Enel of SpA Enel welcomes Chile and the that proposal Enel maintain incorporating an ownership some percentage conditions therein, in Enel Chile such similar as that
to the the transaction current one, should among increase others the transaction subject Enel Chile to the also rules informed established that the in operation, Chile that which govern contemplates operations between the two
related stages parties mentioned above that make up a single integral operation, will be As part of of October the cash 26, will 2017, be required Enel Chile for subscribing communicated shares as
material of Enel Chile fact (Hecho by the vendors Esencial) that the Tender Offer will be paid entirely in cash and that social Based interest on the information of Enel Chile received and complies and analysis with the
undertaken, requirements the of Proposed Enel Transaction, in the terms described in this report, contributes to the and The above performance or in line of with Enel the Chile local and market, Enel
Gx which shares are since good the indicators announcement that confirm of the the Proposed above the Transaction market’s has positive been view above of local the transaction
comparable stocks The estimated price and exchange ratio ranges for the Proposed Transaction are as follows: Tender Offer
Price: between CLP 534 and CLP 586 per Enel Gx share Enel Chile (Tender Offer &
Merger) between CLP 80.2 and CLP 86.6 per share of Enel Chile Tender Offer Exchange
Ratio: between 6.38 and 7.01 Enel Chile shares for each Enel Gx share Tender Offer Cash
%: between 57.0% and 62.6%, determined by the price of the Tender Offer Conclusions EGP Latam Equity
Value: between USD 1,633 million and USD 1,880
million Merger Exchange Ratio: between 15.04 and 17.31 Enel
Chile shares for each EGP Latam share Gx The will result be of higher the Tender (lower), Offer depending is uncertain. on whether However, the it is final reasonable values of to the assume Merger that
and the Tender final ownership Offer are percentage more (or obtained less) favorable by Enel for Chile Enel in Gx’s Enel minority shareholders ratios) At the same in which time, Enel considering
Chile and fixed its shareholders results for the obtain Tender equivalent Offer, there results are in different terms of combinations the average EPS of company for the 2018-2022 prices (and period therefore compared of exchange to the current
scenario fixed With regards maximum to the leverage Tender for Offer, Enel Chile, the greater the greater the percentage the price of of the cash Tender to be used, Offer, the the greater lower the the percentage benefit in
terms of cash of allowed EPS for Enel in the Chile. Tender Assuming Offer a
E-5
Chapter Description II of the Proposed Transaction
E-6
Description of the Proposed Transaction Background On July 3, 2017, Enel Chile
sends to Enel a proposal for a corporate restructuring in which Enel Chile would incorporate, in a merger through absorption with Enel Latam, the
non-conventional
renewable energy generation assets it owns in
Chile. The proposal conditions this merger to declare a successful mixed tender offer, in cash and in shares, on the part of Enel Chile for up to 100% of Enel Gx. The success of the Offer would be fulfilled if Enel Chile manages to achieve a
controlling percentage greater than 75% of the share capital of Enel Gx In this proposal Enel Chile states that the purpose of the Proposed Transaction is to consolidate a vehicle that maximizes its Open Power strategy, in
which renewable energy has a high priority In addition, Enel Chile establishes that the Tender Offer for up to 100% of Enel Gx seeks that (i) Enel’s stake in Enel Chile does not exceed the statutory maximum limit of
65% and (ii) the optimization of cash flow and financial capital structure of Enel Chile, increasing it EPS This proposal was sent to local securities and insurance regulator Superintendencia de Valores y Seguros
(“SVS”) on July 4, 2017 as reserved material fact (Hecho Esencial Reservado), therefore neither the shareholders of Enel Chile nor the market in general were aware of it until August 25, 2017, as explained
below On August 25, 2017, Enel Chile communicated to all shareholders and the market in general, as material fact (Hecho Esencial), that having received a favorable reception of the Proposed Transaction from its
controlling shareholder, with unanimous approval from members of the Board, it would initiate all work, analysis and steps leading to the execution of the corporate restructuring initiative In this communication, Enel Chile
released the letter sent by Enel in which it states that the Proposed Transaction is in line with some of its strategic objectives such as the simplification of the structure of minority shareholders in Chile and the consequent alignment of
interests. In addition, Enel indicates that the minimum conditions that the Proposed Transaction should comply with in order to have its support would be the following: 1. That the operation is carried out on market terms, taking into account the
growth perspectives for renewable energy in Chile 2. That an increase in the net earnings per share of Enel Chile be obtained 3. That Enel maintain at the end of the process a shareholding in Enel Chile similar to its current stake and without at
any time losing its controlling status, according to the statutory limit of maximum shareholder concentration stipulated at 65% 4. That, after the process, Enel Gx cease to be subject to Title XII of D.L. 3500 of 1980, eliminating from its bylaws
the limitations to share concentration and other restrictions specified therein The Proposed Transaction contemplates two stages that make up the whole operation: 1. Tender offer, by Enel Chile for Enel Gx shares, to be
declared successful subject to certain conditions described further below 2. Merger between EGP Latam and Enel Chile, considering its new shareholder base resulting from the tender offer described above In addition, Enel Chile
establishes that it will submit the described transaction to the norms established in Chile that govern related-party transactions. That is why Enel Chile, Enel Gx and EGP Latam, and their respective Board of Directors and board Committees in the
case of Enel Chile and Enel Gx, hired independent evaluators and experts to study the Proposed Transaction As of October 26, 2017, Enel Chile communicated as material fact (Hecho Esencial) that the Tender Offer will be
paid entirely in cash and that part of the cash will be required for subscribing shares of Enel Chile by the vendors
E-7
Description of the Proposed Transaction Scope of LarrainVial work and available
information Scope of LarrainVial Work LarrainVial was hired as independent evaluator of the Board of Enel Chile with respect to the Proposed Transaction. The scope of this service is defined by Law
No. 18,046 in its article 147, which makes reference to independent evaluators This report, at the request of the Board, considers the following aspects: Description of the proposed
restructuring Analysis of the strategic reasons and potential impact on the value with respect to the Proposed Transaction, in order to estimate if it contributes to the social interest of Enel
Chile Valuation of Enel Chile, Enel Gx, EGP Latam in the context of the Proposed Transaction Decision regarding the exchange ratio of the merger between Enel Chile and EGP
Latam Evaluation of the most convenient terms and conditions of the Tender Offer, ensuring it contributes to the social interest of Enel Chile, and that it is in line with the requirements of Enel It is
expressly noted that this report does not consider an analysis of alternative restructurings other than the Proposed Transaction, since it is not within the scope of the advisory service to the Board Additionally, the report
does not consider an assessment of whether the Proposed Transaction is fair in price, terms and conditions to those that will prevail in the market at the time of its approval, since no specific proposal has been made by the companies or their
Boards of Directors in relation to the stock swap of the Merger, the price per share of Enel Gx in the tender offer, the percentage of the price to be paid in Enel Chile shares, nor the exchange ratio of the portion of the Tender Offer to be paid in
Enel Chile shares Available Information To prepare this report, LarrainVial used public information of the companies that are part of the Proposed Transaction, information of other electricity generation and distribution
companies in Chile and international markets, and information of the markets in which they trade In addition, LarrainVial had access to a Virtual Data Room with information on the Proposed Transaction, of Enel Chile and its
subsidiaries, and EGP Latam and subsidiaries LarrainVial participated in
face-to-face
meetings and telephone
calls: Management presentations of Enel Chile, Enel Gx, Enel Distribución (“Enel Dx”) and EGP Latam held on September 26, 2017 Work meetings and telephone calls with management and
financial advisors of Enel Chile, Enel Gx, Enel Dx, and EGP Latam LarrainVial asked questions to Enel Chile, which were answered through the Virtual Data Room, along with questions from other advisors
E-8
Description of the Proposed Transaction Description of the Proposed Transaction Current Situation After the
Proposed Transaction Enel SpA Enel SpA Public Public Enel Chile Enel Chile 39.38% 60.62% 100%
35-40%
60%-65%
II. Merger I. Tender Offer Enel Chile EGP Latam Enel Chile
Public Public Enel Gx Enel Gx 100% 40.02% 59.98% 99.09%
75%-100%
99.09% 100%
0-25%
Enel Gx Enel Dx EGP Chile Enel Gx Enel Dx EGP Chile The
transaction consists of a Merger by incorporating EGP Latam into Enel Chile and a Tender Offer by Enel Chile to acquire up to 100% of the shares issued by Enel Gx owned by the minority shareholders of Enel Gx. Both transactions are subject to
compliance with the requirements described on page 7 of this report, in addition to the requirements described below. The Enel Chile offer for Enel Gx will be a mixed tender offer, in cash and shares, and should contemplate
the following: In order to carry out the mixed tender offer, and to be able to pay part of the same in Enel Chile shares, Enel Chile must proceed to the realization of a capital increase to incorporate the minority
shareholders of Enel Gx participating in the Offer The Tender Offer would be declared successful provided that Enel Chile reaches a percentage higher than 75% of the share capital of Enel Gx The
foregoing is subject to a statutory amendment to Enel Gx, inasmuch as it is necessary to eliminate the limitations on the stock concentration allowing Enel Chile to acquire up to 100% of Enel Gx shares The second stage of the
transaction contemplates the merger through absorption of EGP Latam with Enel Chile, considering its new shareholder base resulting from the tender offer described above. The conditions of the merger must be approved prior to
the launch of the tender offer and should only be subject to the success of the Tender Offer. That is, the conditions for the stock swap of Enel Chile, for each share of EGP Latam, must be independent of the Enel Chile’s final equity stake in
Enel Gx
E-9
Description of the Proposed Transaction EGP Latam EGP Chile’s Current Assets and
Location 100% owned by Enel Green Power, a global renewable Operating and PPA awarded assets Projects2 energy company present in more than 19 countries, with Cerro Pabellón, 48 MW, 345 GWh over 39 GW installed in more
than 1,160 plants (16 GW Los Manolos, 80 MW excluding
dam-powered
hydro) Finis Terrae, 160 MW dc, 411 GWh Cerro Pabellón PV, 12 MW EGP Chile is renewable energy generator Pampa Norte, 79 MW dc, 208 GWh
Cerro Pabellón 3, 33 MW the largest in Chile (excluding
dam-powered
hydro) with 1,195 MW of installed Valle de los Vientos, 90 MW, 219 GWh Valle del Sol, 116 MW capacity Finis Terrae II, 42 MW Sierra
Gorda Este, 112 MW, 298 GWh Expansion projects for more than 1,135 MW, of which 339 Azabache, 69 MW Taltal, 99 MW, 309 GWh MW already have a long-term power purchase agreement Flor del Desierto, 50 MW (PPA) Lalackama I, 60 MW
dc, 159 GWh Sol de Lila, 122 MW Lalackama II, 18 MW dc, 52 GWh Campos del Sol II, 150 MW Chañares, 40 MW dc, 94 GWh Diego de Almagro, 36 MW dc, 81 GWh Campos del Sol, 339 MW, 952 GWh1 Evolution of EGP Chile Installed Capacity and Technologies
Carrera Pinto, 97 MW dc, 258 GWh 2012 2013 2014 2015 2016 2017 La Silla, 2,7 MW dc, 5 GWh Talinay Poniente, 61 MW, 170 GWh Hydro Hydro Hydro Hydro Hydro Hydro Wind Wind Wind Wind Wind Talinay Oriente, 90
MW, 213 GWh Tecnologies Solar Solar Solar Solar Renaico II, 124 MW Los Buenos Aires, 24 MW, 86 GWh Geother mal Renaico, 88 MW, 280 GWh Facilities 2 4 8 10 17 18 Pullinque, 51 MW, 199 GWh Installed
Pilmaiquén, 41 MW, 226 GWh 92 180 311 486 1,005 1,195 Capacity (MW) Generation Wind 564 MW Wind 124 MW 0.5 0.6 1.0 1.5 2.2 3.2 Solar 832 MW Solar 641 MW (TWh) Hydroelectric 92 MW Geothermal 33 MW Source: EGP Chile
Geothermal 48 MW Total: 798 MW Total 1,536 MW Source: EGP Chile 1 Non operative project but it already has a long term power purchase agreement from 2022 onwards 2 EGP Latam classified projects in two
groups, according to an estimated date this into for account the signature for defining of the the PPA valuation contracts. range EGP Latam valuation takes
E-10
Chapter Analysis III of Strategic Reasons for the Proposed
Transaction E-11
Analysis of Strategic Reasons for the Proposed Transaction Reasons to justify the transaction from Enel
Chile’s perspective 1 Growing role of renewable energies in the global context Strategic 2 Future challenges in the industry, and technology and business integration 3 High competitiveness of renewable energies in the
expansion of the domestic power sector Industry/ Tactic 4 Combination and complementarity of traditional and
non-conventional
renewable technologies 5 Alignment of interests in a single investment
vehicle 6 Reduction of holding company discount 7 Increased liquidity of the stock Financial 8 Capital structure optimization 9 Technological diversification and decreased operational risk Enel Chile would become the first
Chilean operator of renewable generation, conventional generation and
distribution E-12
Analysis of Strategic Reasons for the Proposed Transaction Analysis for reasons that would justify the Proposed
Transaction (1/4) 1 Growing role of renewable energies in the global context The decline in costs that renewable energy has seen in recent years has allowed them to compete directly with traditional sources of electricity
generation without the need for state subsidies or additional incentives, triggering an explosive growth of generation projects based on these technologies1 At the global level, the installed capacity of renewable energy
increased from 843 TW in 2000 to 2,006 TW in 2016² response The role these that these types new of technologies sources of energy have had, deliver and to are the expected
needs of each to continue market having in terms in of emerging development markets time, is construction, significant and modularity, is the result, among among other other characteristics things, of the quick
2 Future challenges in the industry and technology and business integration plants, The development such as wind of
non-conventional
turbines, and intermittent
renewable plants, energy such poses as important solar plants, challenges require from special the operational synchronization and strategic with conventional point of view. sources. On a On large the
scale, other variable hand, distributed generation generation and advances in storage technology must be integrated into systems whose structural design considers discrete units of large-scale instantaneous generation integral
The incorporation perspective, of from EGP Latam energy into generation Enel Chile to distribution, will allow Enel always Chile complying to face future the current challenges regulatory such as framework energy
efficiency, energy storage and distributed generation, from an new This era integration for energy. is in This line is with in line the with definition global of trend Enel’s “transforming Open
Power strategy, energy utilities and hence companies of Enel like Chile, Enel as from a platform simple for producers growth with and the distributors vision of of participating energy to services more openly suppliers in a and systems
optimizers” 3 3 High competitiveness of renewable energies in the expansion of the domestic power sector The result of the last tender for electricity supply awarded, at the date of this report, which had an average award
price of USD 47 per MWh4, had a significant share of will renewable be awarded energies during that November were the 2017 most competitive in the process. This result could be ratified, and even surpassed (i.e. obtaining a lower price) for the
current tender that restricted As such, local to increasing industry its growth installed seems capacity, to be strongly limiting its influenced possibilities by renewable of generating sources. value In for this its sense,
shareholders if the Proposed Transaction does not materialize, Enel Chile is clearly the The use geographical of these technologies context, the availability of renewable resources, and the growing
restrictions imposed on traditional sources, make Chile a significant player in the world in Finally,
non-conventional
renewable energy (wind, solar, geothermal, biomass,
run-of-river
hydro, among others) could already be considered conventional technologies: To date they represent 16.8% of the local market in terms of
installed capacity and 13.9% in terms of generation in the last 12 months5 Important global players with local presence have discarded the development of new projects with some conventional technologies such as
coal blocks Public policies that encourage have focused the development on increasing of solar the relative projects weight of these types of energy sources in the local matrix, such as public tenders
for energy supply with time 1 According to the National Renewable Energy Laboratory (U.S. Department of Energy), the investment cost of a fixed solar PV plant fell from $ 4.6/W in 2010 to $ 1.0/W in 2017 ² Source: IRENA, 2017 renewable capacity
statistics 3 Report of Enel’s Board on the acquisition of the minority interest of Enel Green Power in January 2016 4 Source: Chilean National Energy Commission (CNE) 5 Source: Generadoras de Chile, Electrical Market
Bulletin, Generation Sector May 2017
E-13
Analysis of Strategic Reasons for the Proposed Transaction Analysis for reasons that would justify the Proposed
Transaction (2/4) 4 Combination and complementarity of traditional and
non-conventional
renewable technologies the The pure combination growth of of traditional renewable technologies
energy. The such relative as hydroelectric decrease in exposure dams, gas to or current coal, with hydro
non-conventional
risk of Enel Chile renewables and the such potential as solar
benefits or wind, of seems future equally commercial important offers than or development of projects combining different technologies are examples of this From Enel Chile’s point of view, the Proposed Transaction will
allow it to have exposure to a mix of technologies and assets in which it had not been able to participate in to date1 as well as integrate the
know-how
of Enel Green Power, a global leader in renewable
energy, to its asset base and projects is As not a result a necessary of the Merger, condition Enel for Chile this to and occur, EGP Latam being under could benefit the same from investment the complementarity vehicle would
between facilitate traditional it from a practical and renewable point of generation view sources. Although this transaction In savings any case, in the it should short term be noted from that an operational, according to
administrative the information or financial reviewed, point the companies of view. In do fact, not this expect report the considers Proposed the Transaction quantitative to generate impact of additional any eventual benefits operational, or cost
administrative or financial synergies from the transaction to be insignificant within the analysis 5 Alignment of interests in a single investment vehicle eliminating The incorporation potential of EGP conflicts Latam of into
interest Enel Chile existing would in enable the development the integration of the in a generation single vehicle business of all that, the generation if the current and distribution structure were investments to be maintained, of the Enel could
group affect in Chile, the minority shareholders of Enel Chile and Enel Gx Given that the market may be punishing the existence of the conflict of holding EGP Latam or Enel Gx as a vehicle through which to develop certain
generation projects2, it is reasonable to think that if companies lessen their potential conflicts of interest and reduce their agency problems, this could be beneficial to their valuations 6 Reduction of holding company
discount it The net difference assets value between (NAV) the is commonly market capitalization known as a of holding a parent discount company or or premium. holding In company situations in relation where the to the parent
sum company of the market and its values subsidiaries of the parts are listed that make on a up stock the exchange, whole, or these discounts or premium may be calculated directly from market prices management, This eventual
differences discount is between attributed cash to different flow rights reasons (economic such rights) as: agency and control problems rights between (political the rights), controlling liquidity and minority differences
shareholder between holding and between assets shareholders and those of and its subsidiaries, parent or holding company tax costs, costs specific to the holding company, the conglomerate effect (negative diversification),
holding company extraordinary costs to rescue subsidiaries against possible bankruptcies3, among others4. At the same time, there are generally accepted arguments for considering that a holding and company the possibility may have of a premium
extracting over private its subsidiary profits from such a subsidiary as operational to the and holding financial controller synergies or tunneling resulting from the combined control of different companies, risk
diversification discount. The discount However, that would Enel Chile’s occur between case is more a holding complex company since, and despite a sole the subsidiary, fact that both when Enel both Chile are and publicly
Enel traded Gx have and high have liquidity, high liquidity, Enel Chile could also be participates defined as in a “pure” Enel Dx holding which has low or practically no liquidity, and any discount analysis requires, therefore, an estimate
of the economic value of this subsidiary 1 Except for the Canela I and Canela II wind power plant of 78 MW in total 2 Lefort, Walker, 2005, “The Effect of Corporate Governance Practices on Company Market Valuation and Payout in Chile” 3
Lefort, González, 2011, “Holding Company Discount and Business Groups Optimal Bailout of Subsidiaries”, Working Documents 34, UDP, Faculty of Economics and Business 4 Specific cases in Chile are studied in the
works of (i) Lefort, González, 2010, “On Holding Discounts Determinants”, y (ii) Gálvez, 2009, “El Descuento por Holding en el Mercado Chileno, 1993-2007: Evolución y Análisis
Estadístico”, Thesis for Masters, Pontifical Catholic University, Faculty of Economics and Management
E-14
Analysis of Strategic Reasons for the Proposed Transaction Analysis for reasons that would justify the Proposed
Transaction (3/4) 6 Reduction of holding company discount (continued) Based on market prices (daily close) of Enel Chile, Enel Gx and Enel Dx since the beginning of its simultaneous listing1, it can be concluded that Enel
Chile has had a holding discount of around 11%. However, if the market value of Enel Dx is adjusted, this discount increases to 16% (detail on Appendix I) of This the holding Tender discount Offer, Enel implicit Chile in
significantly market prices increases could be its explained ownership by stake an alternative in Enel Gx, to reducing invest directly the liquidity in Enel of Gx the compared share, and to therefore investing in rendering its holding the Enel
option Chile. to invest If, as a directly result could in Enel be Gx eliminated, more difficult, benefiting it could the be shareholders concluded that of Enel the Chile holding discount could decrease, and in a scenario where
Enel Chile would have close to 100% of Enel Gx shares, it 7 Increased liquidity of the stock Both The Proposed effects would Transaction increase requires the stock a capital market increase capitalization of Enel of Chile the
that company enables assuming the realization that the of Proposed the Merger Transaction and allows is realized the payment at fair of prices part of and the in Tender line with Offer those in shares. of the market Meanwhile,
the number of Enel Chile shares in the hands of investors other than its controlling shareholder, or free float, will also increase if the transaction is executed, which will mean a potential increase in the liquidity of the
stock2 well In addition, as be potentially the increase considered in the free to float be part valuation of new would indices. cause This Enel increase Chile in to the increase weighting its relative of
indices weighting would in lead the passive stock market investment indices funds in which following it is indices currently to present, generate as a buying environment for the stock, thus increasing, at least in the short term, the value of Enel
Chile shares Although there is evidence that companies in Chile with low liquidity have higher capital costs than highly liquid stocks3, and therefore the latter tend to have better transaction, valuations than would the
necessarily former, because benefit Enel its valuation Chile already in the enjoys long high term liquidity in the local market, we do not necessarily believe that the increase in liquidity, as a result of the 8 Capital structure
optimization conditions There are multiple when evaluating points of the view suitability to assess of one whether capital one structure capital over structure another is better than another. Different
perspectives such as financial or fiscal may have opposite interest For example, expenses from may a purely reduce, fiscal and perspective, in the extreme it is advisable eliminate, to increase the payment significantly of
corporate the indebtedness taxes. However, of a company from a financial that has point a positive of view net this profit may so that turn the out increase not to be in convenient if the higher indebtedness has a relevant impact on debt
cost from We will this consider point of that view, one a capital capital structure structure is more better indebted than another, than another, from a considering financial point
the of same view, assets if it generates to be financed, value for will the be company´s more convenient shareholders. than a structure In a simplified that is way, less debt indebted does by not (i) generate a
lower tax a significant payment increase due to higher in the financial cost of the expenses debt of the most leveraged structure and (ii) a lower discount rate required, provided that the increase in 1 Enel Chile began trading on
April 22, 2016 after the division of Enersis into Enersis Americas and Enersis Chile, today Enel Americas and Enel Chile respectively 2 The Appendix I analyses the Selective Share Price Index (IPSA), which groups the main 40 listed companies in
the BCS, showing the correlation between liquidity and the free float valued in millions of USD 3 An ongoing study by the International Monetary Fund concludes that shares with low liquidity in the Chilean capital market would have an average annual
capital cost of 350 bps more than those with high liquidity (Brandao-Marques, 2016, Working Paper, “Stock Market Liquidity in Chile”, IMF Working Paper, WP/16/223)
E-15
Analysis of Strategic Reasons for the Proposed Transaction Analysis for reasons that would justify the Proposed
Transaction (4/4) 8 Capital structure optimization (continued) The increase net financial this debt debt ratio as as of a result June 30, of (i) 2017 the absorption of Enel Chile of EGP is 1 Latam .0x
its that consolidated has a more EBITDA leveraged and structure, it is expected and (ii) that that following a high portion the Proposed of the Tender Transaction, Offer Enel for Enel Chile Gx would to be paid in cash will be financed through
debt in Enel Chile Given the magnitudes involved, and the internal restrictions imposed by Enel Chile on its level of indebtedness, Enel Chile should not see its credit risk nor its risk classification1 significantly modified
and therefore its cost of long-term financing should not be altered 9 Technological diversification and decreased operational risk The financial performance of Enel Chile without a transaction are influenced by the hydrology
present in the country, generating uncertainty in future cash flows exposure On the other to the hand, spot EGP energy Chile’s market, assets generate are characterized less uncertainty by greater of their operational
future flows predictability, which, coupled with long-term energy sales contracts and therefore their low present Hence, if value the Proposed of its future Transaction flows, and materializes, thus have
a positive Enel Chile impact would on reduce its valuation its market risk, which could impact the implicit discount rate at which the market calculates the Other significant considerations of the Proposed Transaction
Resolution 667 In essence, Resolution 667 of the Resolution Committee of October 30, 2002 states: That different Enel companies Chile (as a representing continuing independent company of business
Enersis S .units A.) must “, maintain the development of electricity generation and distribution activities “separately, through That Enel Chile, Enel Gx and Enel Dx (as continuing companies of Enersis, Endesa and Chilectra) must maintain
independent external boards and audits, and that That character these companies “ “should continue to be subject to the supervision of the SVS and observe the provisions applicable to public limited companies, even
if they lose In line with the above mentioned, the Proposed Transaction is in line with Resolution 667 1 Following the announcement of the Transaction, Feller Rate assigned “CreditWatch with developing implications” to Enel Chile and Enel
Gx, without providing further indications as to levels of indebtedness or effects that would trigger indicated a change in that the there CreditWatch could be or a change risk ratings in its . classification In turn, Fitch if Ratings Enel Chile
indicated exceeds that the under ratio certain of net financial parameters debt of divided indebtedness by EBITDA it could of 2 .change 0x Enel Chile’s Outlook from Positive to Stable, though it would not affect the
rating. Finally, S&P
E-16
Chapter IV Analysis & Considerations for Valuation
Ranges E-17
Analysis & Considerations for Valuation Ranges Methodology to determine the valuation range for Enel
Chile, Enel Gx and EGP Latam in the context of the Proposed Transaction General Considerations Methodology to identify plausible transaction ranges
given the restrictions Taking into account local and international market practices 1
for transactions of this type, and considering the DCF Valuation Value range information available, the Discounted Cash Flow (DCF) methodology was used to determine the value ranges for 2 Control with other methodologies and Enel Chile, Enel Gx and
EGP Latam in the context of the Adjusted value range Proposed Transaction references In addition to the DCF, the following references were used as Maximum debt for Enel Chile to maintain Maximum amount payable in cash and
control variables: 3 its risk rating therefore cash % of the Offer Market prices (Enel Gx and Enel Chile) Prices analysts (Enel 4 Increase in Earnings per Share (EPS) Frontier condition estimated by
market Gx and Enel Chile) Comparable market companies that trade in Chile or in Similar ownership of Enel in Enel Chile Frontier condition 5 international markets Transactions of renewable companies
(EDF, Iberdrola, EGP) Results in the context of a single transaction The main objective is to find the value ranges of the companies involved in order to determine the final Tender Offer for Enel Gx Merger EGP Latam-Enel Chile
conditions of the Proposed Transaction: Price of Enel Gx shares, percentage of cash to be Swap ratio for Enel Chile shares in Price of Enel Gx shares considered in the price and swap ratio of Enel shares in exchange for each
EGP Latam share exchange for each Enel Gx share Swap ratio of Enel Chile shares in exchange for each EGP % of cash payment in Swap Ratio Latam share tender offer An additional analysis was carried out to
determine the combinations of these conditions that from a perspective of Price per share of Enel Chile shares the Enel Chile shareholders would be indifferent from a financial point of view It is important to note that, since
the outcome of the Offer is uncertain and the range of possible results is broad, the analysis was based on specific result scenarios which were Frontier scenarios from an EPS then sensitized to different tender offer
scenarios perspective for Enel
Chile E-18
Analysis & Considerations for Valuation Ranges Results based on discounted cash
flow Base-case DCF Valuation (USD mn) EV/EBITDA P/E Enterprise Value Net Financial Equity Price per share Company Minority Interest Equity Value (E) 1 (EV) Debt (NFD) Bridge (CLP ) 2017e 2019e 2017e
2019e Enel Gx 8,860 1,067 167 435 7,221 561 10.9x 8.1x 11.7x 11.6x Enel Dx 2,734 142 0 66 2,527 1,398 9.9x 8.1x 12.2x 12.3x Enel Chile2 11,331 759 3,080 534 7,004 90.9 10.6x 8.0x 12.5x 12.5x EGP Latam A3 3,148 1,194 126
-52
1,880 1,4474 12.9x 11.1x 37.7x 18.6x EGP Latam B3 2,901 1,194 126
-52
1,633 1,2574 12.2x 10.2x 32.7x 16.2x 1 Exchange rate USD 1 = CLP 636.8 (November 02, 2017) 2 Obtained
by the sum of individual shares of Enel Gx, Enel Dx and Enel Chile 3 Financial estimates of EGP Latam A consider the execution of all projects detailed in the financial forecast whereas EGP Latam B does not consider cash flows from some projects
that still don’t have PPA 4 EGP Latam is a Limited Liability Company, the price per share considers a future transformation to a Public Limited Company with 827,205,371 shares Equity Value based on discounted cash
flow¹ (USD mn, CLP for price per share, times for EV/EBITDA 2019e) Premium or discount Current Share price share on price the day (Oct of 24, the 2017) announcement (Aug 25, 2017) announcement DCF
vs. DCF spot vs. CLP 489 CLP 549 Enel Gx CLP 534 CLP 586 8.0x 8.6x 15% 2% CLP 1,250 CLP 1,270 Enel Dx CLP 1,354 CLP 1,445 12% 10% 7.9x 8.4x CLP 70 CLP 73 CLP 87.2 CLP 94.1 Enel Chile 7.9x 8.5x 29% 24% 2 CLP 80.2 CLP 86.6 Range
with holding discountïƒ 18% 14% 7.5x 8.1x EGP Latam CLP 1,257 CLP 1,447 10.2x 11.1x 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 (USD mn) 1 Estimated valuation range with WACC
+/-0.2%
and terminal value growth of +/- 0.2%, except EGP Latam whose range was estimated based on the execution or not of some projects. 2 Holding discount considered: 8%, estimated as
50% of the median daily holding discount for Enel Chile (see Appendix 1)
E-19
Analysis & Considerations for Valuation Ranges Estimated value range Equity
Value based on DCF and Control Methodologies (USD mn, CLP for implicit price per share) Price per share on the day of the announcement (August 25, 2017) Premium or discount Current price per share (October 24, 2017) CLP 489 CLP 549 announcement DCF
vs. DCF spot vs. DCF CLP 534 CLP 586 15% 2% Enel EV/EBITDA 19e1 CLP 531 CLP 574 Gx Market Analysts2 CLP 466 CLP 550 (USD mn) 0 2,000 4,000 6,000 8,000 10,000 CLP 1,250CLP 1,270
Premium or discount announcement DCF vs. DCF spot vs. Enel DCF CLP 1,354 CLP 1,445 12% 10% Dx EV/EBITDA 19e1 CLP 1,641 CLP 1,734 (USD mn) 0 2,000 4,000 6,000 8,000 10,000 Premium or discount CLP 70 CLP 73 announcement DCF vs.
DCF spot vs. DCF (sum of parts) CLP 87.2 CLP 94.1 29% 24% Enel CLP 80.2 CLP 86.6 18% 14% DCF with discount holding Chile Market Analysts2 CLP 74 CLP 78 (USD mn) 0 2,000 4,000 6,000 8,000 10,000 DCF2 CLP 1,257 CLP 1,447 EGP 1
EV/EBITDA 19e CLP 1,226 CLP 1,335 Latam Comparable transactions3 CLP 1,274 CLP 1,384 (USD mn) 0 2,000 4,000 6,000 8,000 10,000 1 Detail of comparable companies used in Appendix II 2 Analyst reports prior to the announcement of the Proposed
Transaction by Bci, Bice, Credicorp, Goldman Sachs, Scotiabank and LarrainVial. Median for Enel Gx CLP 520 per share, median for Enel Chile CLP 77 3 Valuation range of comparable transactions based on the average and median of Iberdrola/Iberdrova
Renovables, EDF/EDF Energies Nouvelles and Enel / Enel Green Power (see Appendix III)
E-20
Analysis & Considerations for Valuation Ranges Considerations regarding frontier conditions of the
Proposed Transaction Cash portion of Offer according to maximum debt objective Increase in Earnings Per Share For the estimated valuation range, the greater the percentage of cash in the Due to the debt
assumed to pay for the tender offer and the low contribution to tender offer, the lower the number of Enel Chile shares that are issued for the the earnings of EGP Latam during the first post-transaction years, under certain purpose of paying the
transaction, and therefore, the greater the increase in the scenarios of transaction prices and Offer results, the annual EPS is less than the estimated EPS for Enel Chile scenario of continuity The assumption was made that
Enel Chile has USD 100 million in cash for the Therefore, the EPS that is meant to increase will be the average EPS of the tender offer and that the additional amount will be financed through financial 2018-2022 period
(“ÄEPS”) debt at an annual cost of 4% The EPS of Enel Chile will depend on: The total cash required by Enel Chile to pay part of the tender offer will depend on the price of the offer for
Enel Gx and on the final result of the offer (i) the price of the Offer, which in turn determines its cash portion, and the swap ratio with Enel Chile shares, In addition, the cash payment is limited by
the level of maximum indebtedness (ii) the swap ratio for the Merger with EGP Latam, and desired by Enel Chile. In this regard, a desired maximum level of net financial debt (NFD) of 2.5x the estimated EBITDA for 2017 was
considered, in a scenario (iii) the result of the tender offer where 100% of the minority shareholders of Enel Gx decide to sell in response to the Offer (limit scenario) Thus, from the perspective of
Enel Chile, in relation to its EPS, there are different percentage of the Offer price to be paid in depends then combinations of Offer prices and share swap ratios, and of exchange ratios for The maximum cash the merger, to
which it is indifferent: on the tender offer’s price per share For the definition of the proposed range, a safety margin was defined of 0.1 times NFD/EBITDA over the maximum indebtedness accepted by the company % owned by
Enel in Enel Chile post transaction similar to current Thus, taking as a reference a price range for the offer between CLP 534 and CLP 586 per share, and considering a maximum NFD/EBITDA 2017e ratio of 2.4x, the maximum cash
percentage that can be contemplated by the offer is between It will be assumed that an acceptable range for Enel is between 60% and 65% of 57.0% and 62.6%, according to the table below: the final ownership of Enel
Chile Based on DCF values of Enel Gx, Enel Chile, and EGP Latam discussed in the previous pages, and taking into account the cash percentages described above, Price Enel Gx CLP 534 561 586 this restriction is met in any Tender
Offer scenario in which Enel Chile ends with Maximum cash % % 62.6% 59.6% 57.0% 77.5% of Enel Gx shares or more (results in the next page) 75% Times 1.67x 1.67x 1.67x Consolidated 2017e DFN/EBITDA 80% Times 1.81x 1.81x 1.81x 85% Times 1.96x 1.96x
1.96x for Enel Chile according to ownership % in Enel Gx 90% Times 2.11x 2.11x 2.11x post takeover 95% Times 2.25x 2.25x 2.25x 100% Times 2.40x 2.40x 2.40x
E-21
Analysis & Considerations for Valuation Ranges Estimated range of variables to define in the Proposed
Transaction Exchange Ratios Tender Offer for Enel Gx Price per share for Enel Gx CLP 534—CLP 586 Between 6.38 y 7.011 Enel Chile shares for % of cash as payment for Offer 57.0%—62.6% each Enel Gx share Price Per Share for Enel Chile CLP
80.2—CLP 86.6 Between 15.04 and 17.312 Enel Chile
EGP-Enel
Chile Merger shares for each EGP Latam share Equity Value for EGP Latam USD 1,633mn—USD 1,880mn Price Per Share for EGP Latam CLP 1,257
– CLP 1,447 1 Estimated range based on Enel Chile’s price per share obtained by DCF and the maximum and minimum price per share range for Enel Gx 2 Estimated range based on Enel Chile’s price per share obtained by DCF and the maximum
and minimum price per share range for EGP Latam Frontier conditions results based on Tender Offer results1 % Enel Enel Chile SpA de Average 2022e EPS 2018- DAverage 2018-2022e EPS NFD/EBITDA 2017e Current Situation 60.6%
CLP 7.63—0.51x 75.0% 65.6% 7.55
-1.0%
1.67x 80.0% 64.5% 7.64 0.1% 1.81x Enel % in Chile’s Enel Gx ownership post 85.0% 63.4% 7.72 1.2% 1.96x Tender Offer 90.0% 62.4% 7.79 2.2%
2.11x 95.0% 61.4% 7.87 3.2% 2.25x 100.0% 60.4% 7.94 4.1% 2.40x 1 Tender Offer CLP 561 per share; 59.6% in cash; Enel Chile price CLP 83.6 per share; EGP Latam price USD 1,756 million
E-22
Analysis & Considerations for Valuation Ranges Frontier scenarios from an EPS perspective for Enel
Chile Frontier of ÄEPS=0%1 based on tender offer result and fixed Enel Chile price Frontier of ÄEPS=0% based on Enel Chile price and tender offer at 90% Equity Value for EGP Latam Price per Enel Chile share: CLP 83.6 Equity Value for EGP
Latam Enel Chile’s final ownership in Enel Gx at 90% (USDmn) (USDmn) 2,300 2,300 EPS lower than EPS lower than in 2,100 current situation 2,100 current situation 1,900 1,900 Tender
Offer-95%
CLP 86.6
1,700 1,700 CLP 83.6 Tender
Offer-90%
1,500 Tender
Offer-85%
1,500 CLP 80.2 Zone Tender
Offer-75%
Zone ÄEPS > 0%
ÄEPS > 0% 1,300 1,300 500 520 540 560 580 600 620 500 520 540 560 580 600 620 Price per share for Enel Gx (CLP) Price per share for Enel Gx (CLP) Frontier of ÄEPS=0% based on tender offer result and fixed exchange ratio Frontier of
ÄEPS=0% based on exchange ratio and tender offer at 90% Equity Value for EGP Latam Tender offer exchange Equity Value for EGP Latam Enel Chile’s final ownership in Enel Gx at 90% (USDmn) ratio 6.71x2 (USDmn) 2,300
2,300 EPS current lower situation than in EPS lower than in Swap 6.38x Tender
Offer-95%
current situation 2,100 2,100 Tender
Offer-90%
Swap 6.71X 1,900 Tender
Offer-85%
1,900 Swap 7.01x 1,700 Tender
Offer-75%
1,700 Zone 1,500 Zone 1,500 ÄEPS > 0% ÄEPS > 0% 1,300 1,300 500 520 540 560 580 600 620 Enel Gx (CLP/shr.)
500 520 540 560 580 600 620 74.5 77.5 80.5 83.5 86.4 89.4 92.4 Enel Chile (CLP/shr.) 78.4 74.5 81.5 77.5 84.6 80.5 87.8 83.5 90.9 86.4 94.0 89.4 97.2 92.4 6.38x 6.71x 6.71x 6.71x 6.71x 6.71x 6.71x 6.71x 6.71x Exchange
Ratio 71.3 74.2 77.0 79.9 82.7 85.6 88.4 7.01x 1 The cash percentage for the tender offer in all the tables is determined by the price per share of Enel
Gx, according to the ratio on page 21 2 The exchange ratio is calculated from the DCF results for Enel Gx and Enel Chile with a discount equivalent to CLP 561 per share and CLP 83.6 per share, respectively
E-23
Chapter V Conclusions
E-24
Conclusions Conclusions (1/2) The Proposed Transaction, as defined in this report, is
seen generating benefits for Enel Chile and, therefore, for its shareholders: global The Proposed and local Transaction level, while would at the allow same Enel time Chile it would participation enable the in company the
unconventional to better face renewable the future energy challenges segment of that integration has seen of high generation growth at the technologies perspective that (traditional encompasses and new), all from in addition generation to addressing
to electricity energy distribution efficiency, and energy storage and distributed generation from an integral Renewable Transaction technologies would enable have Enel proven Chile to to access be more
an competitive interesting group than traditional of growth alternatives projects that for would the expansion generate value of local to headquarters the company and the Proposed From discount, a financial gives greater
perspective, liquidity the to Proposed the stock, Transaction optimizes aligns the capital Enel’s structure interests and in Chile reduces in a risk single for investment the company vehicle, by incorporating potentially reduces technologies
the holding with a higher level of operational predictability This capital implies increases that required the Proposed to execute Transaction the Merger is positive and the for Tender Enel Chile Offer, shareholders fall
within the to the ranges extent specified that the in price this report for EGP as Latam, beneficial for Enel to those Gx and for the shareholders The performances, market has higher reacted than
positively the market since in the general announcement and higher of than the their Proposed main Transaction. comparable Both shares Enel in the Chile local and energy Enel Gx sector shares have had
positive The estimated price and exchange ratio ranges for the Proposed Transaction are as follows: Tender Offer Price between CLP 534 and CLP 586 per Enel Gx share Enel Chile
(Tender Offer & Merger) between CLP 80.2 and CLP 86.6 per share of Enel Chile Tender Offer Exchange Ratio between 6.38 and 7.01 Enel Chile shares for each Enel Gx share Tender Offer Cash %
between 57.0% and 62.6%, determined by the price of the Tender Offer EGP Latam Equity Value between USD 1,633 million and USD 1,880
million Merger Exchange Ratio between 15.04 and 17.31 Enel Chile shares for each EGP Latam share
E-25
Conclusions Conclusions (2/2) Different possible scenarios for the participation of Enel
Gx minority shareholders in the tender offer generate different final scenarios for the transaction: offer Considering by Enel that Gx minority there is an shareholders important component should be of cash payment, the
greater the tender offer price for Enel Gx, the greater the acceptance of the offer, In addition, the more assuming beneficial a constant the transaction price for will each be of in the terms three of companies EPS for Enel
(Enel Chile Gx, shareholders. Enel Chile and Conversely, EGP Latam), a lower the greater EPS scenario the participation for Enel Chile in the tender shareholders would be expected if Enel Chile obtains only a 75% stake in Enel
Gx In PTO spite outcome, of these not conditions, all frontier there conditions exists a are combination fulfilled of the parameters within the proposed range for valuation and exchange ratios that for
some In a scenario where the result of the tender offer is fixed, there are combinations of exchange ratios for the Merger and the Tender Offer in which Enel Chile is indifferent from an EPS
perspective Considering a fixed Enel Chile price, a “high” value for Enel Gx combined with a “low” value for EGP Latam could generate the same expected EPS as a combination of “low” for Enel Gx
and “high” for EGP Latam However, if the price of Enel Chile is not what is fixed, but the exchange ratio between Enel Chile and Enel Gx, Enel Chile could increase the price for Enel Gx (implicitly increasing that of
Enel Chile) and, at the same time, increase the price for EGP Latam implicit in the Merger, maintaining the same expected profit in terms of EPS Within the proposed ranges for company valuations, or exchange ratios, it can be
further concluded that: The higher the price of the tender offer, the lower the maximum cash percentage to be included in the offer to keep a reasonable indebtedness ratio The greater the percentage of
cash in the tender offer, the more convenient it is for Enel Chile in terms of EPS
E-26
Appendices Appendix I: Stock Market
Context E-27
Appendix I: Stock Market Context Market reaction since the announcement of the Proposed Transaction Price per
share for Enel Chile and Enel Gx (CLP) Since the date of the transaction announcement, Enel Chile and Enel Gx shares have outperformed those of other energy sector companies in Chile Enel Gx Enel
Chile Furthermore, Enel GX has had a performance above market since the Day of the announcement 70.5 489.0 announcement whilst Enel Chile, even though it outperformed the IPSA index for two months, due to recent variations, it
is now in line with average market Average of previous 30 working days 71.8 505.4 performance Average of previous 60 working days 72.7 507.0 Since the transaction announcement, the market capitalization of Enel Chile is
strongly explained by the variation of the market capitalization of Enel Gx until Current at 02/11/2017 73.3 548.5 October 16, 2017. From that date onwards, there has been variations in the market capitalization of Enel Chile and Enel Gx
Current/Day of the announcement 104% 112% Current/Average previous 30 working days 102% 109% Current/Average previous 60 working days 101% 108% Profitability of industry companies since announcement day (%) Variation in market capitalization²
since announcement day (USD mn) Enel Chile Enel Dx Enel Gx Enel Chile Enel Chile proportional 3 Enel Gx Enel Américas 1,400 AES Gener Colbún
E-CL
IPSA (exc. Enel Chile & Enel Gx)¹
1,200 120% 1,000 112% 800 110% 106% 104% 600 102% 400 100% 100% 101% 96% 200 96% 90% 0
25-Aug
4-Sep
14-Sep
24-Sep
4-Oct
14-Oct
24-Oct
25-Aug
4-Sep
14-Sep
24-Sep
4-Oct
14-Oct
24-Oct
Source: Bloomberg at November 2, 2017 1 Calculated by weighing the returns of the shares according to their relative weighting in the IPSA index 2 Converted to dollars using the historical exchange rate
3 Calculated as the change in the market cap of Enel Gx with respect to the initial date and weighted by the participation of Enel Chile in this company
E-28
Appendix I: Stock Market Context Considerations regarding the free float and liquidity of Enel Chile stock
Liquidity vs. free float of companies that make up the IPSA ADTV LTM (USDmn) There companies, is a positive measured correlation as the Average between Daily the liquidity Traded Volume of the (ADTV), 20 IPSA Other energy IPSA
companies companies R² = 0.5793 and the free float 15 Enel Chile in Tender Offer scenario Enel Chile
(OPA-100%) If
the tender offer is successful, that is,
Enel Chile obtains at least a Enel Chile 10
(OPA-75%)
USD 75% ownership 1.1 billion to in Enel a minimum Gx, Enel of Chile’s USD 2.0 free billion
float and will a increase maximum from of 5 USD 3.5 billion Free float (USDbn) Considering the trend curve of IPSA companies, the ADTV would 0 increase from USD
3.6 million to USD 5.6 million at the lower 0 1 2 3 4 5 6 limit and USD 7.8 million at the upper limit IPSA Weighting vs. Free Float Other Stock Market Indices % Enel Chile tend to have a IPSA Weighting
(%) Companies with higher free float in value IPSA 2.71% greater relative weighting in the stock market indices to 10% IGPA 2.43% Enel Chile INTER – 10 5.88% which they belong, so an increase in the free float would 8%
(OPA-100%)
mean an increase in the relative weight of the share in IGPA – LARGE 3.91% those indices Enel Chile 6%
(OPA-75%)
Chile—65
6.21% In addition, the increase in the free float of Enel Chile R² = 0.9574 Emerging Markets 0.05% would allow the stock to enter new indices that have 4% Emerging Markets Latin America 0.36% liquidity or minimum size
requirements that it previously 2% IPSA energy comapnies Emerging Markets IMI 0.03% did not qualify for Other PSA companies Chile n.d. Enel Chile in tender offer scenario 0% Chile IMI 2.94% The bullish
increase environment in the weight for the of stock the indices among would passive generate a 0 1 2 3 4 5 6 Chile 15 n.d. Emerging Markets 0.09% investment funds that follow indices and may increase the Free float (USDbn)
value of the share, at least in the short term Valuation Multiple vs. Free Float P/U 2017e (times) EV/EBITDA 2017e (times) On the other hand, there is no clear correlation, at least in the 40x 40x sample used, between the
implicit market valuation multiples R² = 0.0036 30x 30x and the valued free float of IPSA companies This independence between the variables analyzed becomes 20x 20x even more noticeable when companies with an ADTV of less
10x R² = 0.0771 10x than USD 0.5mn are eliminated from the sample 0x Free float (USDbn) 0x It is reasonable to have an effect when a company with scarce liquidity significantly increases its free float3, although it is not 0 1 2 3 4 5 6 0 1 2 3
4 5 6 obvious that this also happens with companies that already Free float (USDbn) have significant liquidity Source: Bloomberg November 2, 2017 1 Size of bubbles represents the average market capitalization during 2017 to October 24,
2017. The red bubbles correspond to
E-CL,
Colbún, AES Gener, Enel Américas, Enel Chile and Enel Gx
E-29
Appendix I: Stock Market Context Enel Chile holding discount The holding discount or
premium is set when there is a difference between the Different authors2, based on statistical studies of real Chilean cases, conclude that market assets that value compose of a parent it at or market holding value. company
The latter and the is often sum of referred the parts to as of the the NAV even is holdings calculated that directly, have all trade their at assets a discount listed in on relation the stock to market, the NAV and therefore the company’s net
asset value or NAV It is difficult to separate the pure holding discount (a Some of the main reasons usually given for the existence of holding discounts are underlying asset, both with reasonable liquidity, asparent in the
company case of with
IAM-Aguas
a single as follows: Andinas) of other effects such as the portfolio effect, or agency problems between Agency problems shareholders
between and administration the controlling and minority shareholder and more However, than information one asset, from such the as Quiñenco Chilean market and Antarchile, suggests that have
holdings a higher that holding own Liquidity differences between holding shares and that of the companies that discount than those with a single underlying asset such as IAM integrate its portfolio Tax
costs at the holding level The case of is special although both Enel Chile underlying assets, Enel Gx and Enel Holding company’s own expenses Dx, trade in the stock market,
the former has a high liquidity, while for the latter Eventual bail-outs of subsidiaries facing bankruptcy to preserve the liquidity is low or practically nil controlling group’s reputation1 If market
Enel the prices of Gx and Enel Dx are used for the calculation of Enel Portfolio or conglomerate effect Chile’s NAV, the average daily holding discount since April 29, 2016 is 11%,
the On the other hand, there are also reasons that would suggest the existence of a discount at the time of the announcement was 10% holding premium other However, regulated the market businesses value
of or Enel its valuation Dx would done be undervalued by discounted if compared cash flows. to Operational and financial synergies resulting from the combined control of different companies EV/EBITDA
Considering an the adjustment median from to the April value 29, of 2016 Enel is Dx 16% based and on the a multiple discount of at 9.0x the Diversification of risk LTM private time of the announcement was also
16% Possibility company or of tunneling extracting profits from a subsidiary to the holding Discount of key holding companies in Chile3 (%) Antarchile Quiñenco Almendral ADTV Holding Discount 60% 4 Holding Listed Assets
holding IAM Enel Chile Enel Chile Min. Max. Current Median Average (USDth) 50% IAM Aguas Andinas 842
-1%
17% 5% 8% 8% 40% 40% Antarchile Empresas Copec, Colbún 644 35% 51% 40% 43% 43% 30% Almendral
Entel 224 6% 32% 15% 21% 21% 30% Invercap Cap 145
-315%
36%
-13%
11%
-18%
20% 19% 15% Quiñenco B.Chile, CCU, CSAV, others
717 21% 52% 30% 37% 36% 10% 13% Enel Chile Enel Gx, Enel Dx 3,772 4% 23% 13% 11% 12% 5% Enel Chile4 Enel Gx, Enel Dx adjusted 3,772 11% 24% 19% 16% 17% 0%
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Sources: Company reports and Bloomberg at November 2, 2017 1
Lefort, González, 2011, “Holding Company Discount and business Groups Optimal Bailout of Subsidiaries”, Working Document 34, UDP 2 Lefort, González, 2010, “On Holding Discounts Determinants”, and Gálvez,
2009, “El descuento por Holding en el Mercado Chile, 1993-2007: Evolución y Análisis Estadístico”. Thesis for Masters, PUC 3 In order to calculate the NAV of each holding company, the market capitalization of the
subsidiaries that it consolidates was added, the net financial debt of the holding company was subtracted and the individual EBITDA of the holding company and that of the unlisted subsidiaries was added, estimated as the difference between the sum
of the listed subsidiaries and the holding company, valued at the EV/EBITDALTM of the holding company in its respective period, and adding the book value of the investments with minority interests 4 Considers the equivalent value of Enel
Distribution valued at 9.0x EV/EBITDA LTM
E-30
Appendix I: Stock Market Context Relation between Enel Chile and Enel Gx share prices Market Capitalization
(USD bn)¹ Daily Market Capitalization² of Enel Chile vs. Enel Gx
Pre-Announcement There
is a clear positive Enel Gx Enel Chile Market Cap— Enel Chile (USD bn)¹
correlation between the market Enel Gx adjusted² Enel Chile adjusted² cap of Enel Chile and Enel Gx 8 7.6 8 A 10% variation in the market 7.2 y = 0.5197x + 2.024 cap of Enel Gx translates into 7 6 approximately a 6%
variation R² = 0.8638 in the market cap of Enel 6.1 6 4 Chile 5.7 Market day 5 2 Min. date : Apr 22, 2016 Transaction Enel Dx implicit Max. date: Aug 25, 2017 4 Announcement 0
Apr-16
Sep-16
Feb-17
Jul-17
0 2 4 6 8 10 Market Cap—Enel Gx (USD bn)¹ Share
Price Enel Chile/Enel Gx (times) Share Price of Enel Chile vs. Enel Gx
Pre-Announcement
Pre-Announcement
Post-Announcement Enel Chile Share Price
(CLP) Min. Market date: day Apr 22, 2016 Enel The value Dx can that be the estimated market from gives to 8.0 120 Max. date: Aug 25,2017 the relationship
between the market prices of Enel Chile and 100 y = 0.14x 7.5 Enel Gx R² = 0.5776 7.5x 80 The above assumes that the value y = 0.0883x + 26.617 7.0 Median before announcement: 7.0x 60 R² = 0.8869 analysis of Enel Dx period is
constant during the 40 value is CLP 6.5 Enel Dx implicit The 26.6 implicit per share Enel of Dx Enel Chile, Transaction 20 equivalent to USD 2,071 million 4,
Announcement 6.0 0 a the 18%
DCF-based
discount with valuation respect to
Apr-16
Sep-16
Feb-17
Jul-17
0 200 400 600 800 Enel Gx Share Price (CLP) Source: Bloomberg at November 2, 2017 1 Historic exchange
rate 2 Market cap considers dividend distribution 3 Value of Enel Dx implicit in the relation of market prices for Enel Chile and Enel Gx represents a 17% discount compared to the
DCF-based
value specified on
Chapter
IV E-31
Appendices Appendix II: Valuation
Parameters E-32
Appendix II: Valuation Parameters Main parameters and conventions used in DCF valuations Construction of free
cash flow Valuation Criteria Operational information Enel Gx individual and subsidiaries with minority stakes, Enel Dx, Enel Chile Assets Revenues, cost individual and EGP Latam consolidated and subsidiaries with minority
stakes & expenses Prepared by company management for all the companies and all assets (+) EBITDA Forecasts companies
Business Plan through for 2017-2022 2045 period and gross margin details of generation (-) Depreciation and amortization (=) Operating Result (EBIT) Currency of cash USD for Enel Gx, Enel Chile and EGP Latam (-) Taxes over
EBIT flow to discount CLP for Enel Dx (+) Depreciation and amortization (-) CAPEX September Latam 30, 2017 to December 31, 2045 for Enel Gx, Enel Chile and EGP (-) Working
capital investment Valuation Period (=) Free Cash Flow September 30, 2017 to December 31, 2022 for Enel Dx Discount rate 1 WACC Valuation Date September 30, 2017 (=) Enterprise Value (EV)
(-) Net Financial Debt2 Tax Rate 27% (-) “Equity Brigde” 3 adjustments (-) Minority interest WACC Calculation Per Company (=) Equity Value Enel Gx Enel Chile EGP Ch. Enel
Dx Enel Dx USD USD USD USD CLP Unleveraged Beta 0.60 0.58 0.65 0.55 0.55 Leveraged Beta 0.75 0.72 1.12 0.75 0.75 Rate free of risk US T 20 years 2.66% 2.66% 2.66% 2.66% 1 Weighted Average Capital Costs (WACC) Premium for
country risk 1.10% 1.10% 1.10% 1.10% 2 Net financial debt = Financial debt – Cash & Cash equivalents 3 Corresponds to adjustments provided by the management that Rate free of Chile risk 3.76% 3.76% 3.76% 3.76%
4.91% considers, besides net financial debt, accounts receivable and accounts Premium for market risk 6.50% 6.50% 6.50% 6.50% 6.50% payable, accounting provisions and dividends to be paid, among other Tax rate 27.0% 27.0%
27.0% 27.0% 27.0% Company D/P Ratio 0.33 0.33 1.00 0.49 0.49 Company D/(D+P) Ratio 0.25 0.25 0.50 0.33 0.33 Cost of the debt 5.00% 5.00% 5.00% 5.00% 6.15% Premium over risk free 1.24% 1.24% 1.24% 1.24% 1.24% Cost of equity 8.61% 8.45% 11.07% 8.62%
9.77% WACC 7.4% 7.2% 7.4% 7.0% 8.0%
E-33
Appendix II: Valuation Parameters Valuation methodology based on comparable multiples Valuation Methodology
Multiples of comparable companies EV/EBITDA Valuation Multiples Enterprise EV Name Country Market Cap 2019 Value (EV) Adjusted¹ Adjusted Comparable listed companies Renewable generation: Infigen Energy Australia 538 906 906 7.4x Tilt Renewables
Australia 453 884 884 8.3x TransAlta Renewables Canada 2,874 3,694 3,695 10.4x Identification of comparable assets Boralex Canada 1,356 3,470 3,489 10.6x Innergex Renewable Energy Canada 1,283 3,872 3,906 13.5x Obtaining the market value of those
assets Alterra Power Canada 239 627 645 11.8x Conversion of market value into standardized ratios Pattern Energy USA 2,157 5,031 6,005 12.6x TerraForm Power USA 1,254 6,027 5,748 12.4x Valuation Multiples TerraForm Global USA 548 1,430 1,318 9.2x
8point3 USA 437 1,741 1,634 13.6x Saeta Yield Spain 929 2,628 2,628 9.5x Application of valuation multiples to the asset under analysis Median 10.6x Average 10.8x Generation Chile: AES Gener Chile 2,994 7,174 7,262 8.6x Colbún Chile 4,246
5,572 5,623 8.3x EV/EBITDA Engie Chile Chile 2,259 3,040 3,028 6.8x Median 8.3x Enterprise Value (EV) Average 7.9x (-) Net Financial Debt Distribution (-) Equity Bridge” adjustments Aguas Andinas Chile 3,870 5,334 5,529 10.5x (-) Minority
interest EEB Colombia 6,277 8,373 8,444 9.4x Equity Value (E) Median 10.0x Average 10.0x 1 Minority interest adjustment to market price consisting of subtracting from the Enterprise Value by the the accounting book value minority of the
interest company plus minority interest adjusted by market capitalization divided Source: S&P Capital IQ at October 24, 2017
E-34
Appendices Appendix III: Other Relevant Transactions
E-35
Appendix III: Other Relevant Transactions Recent transactions from renewable energy subsidiaries acquired by
their diversified energy parent companies On November 17, 2015, Enel and Enel Green Power SpA (EGP), the latter controlled at the time by Enel with a 68.3% shareholding, announced the full integration of EGP into Enel
through a capital increase in Enel to be subscribed by the shareholders of EGP with shares of EGP Enel Green Power acquisition by Enel The transaction meant a capital increase of about USD 3.3 billion in Enel, equivalent
to 2.4% of its ownership that was subscribed in EGP shares by its minority shareholders On April 1, 2016, following the closing of the transaction, EGP was delisted from the Milan and Madrid stock
exchanges On March 8, 2011, already holding 80% of Iberdrola Renovables’ share capital, Iberdrola announced that it planned to acquire the remaining shares it didn’t already own of its subsidiary in a merger
through absorption Renovables Acquisition by Iberdrola of Iberdrola The transaction amounting to approximately EUR 2.5bn was carried out through the distribution of an extraordinary dividend of Iberdrola Renovable for the
equivalent of 40% of the amount, plus an exchange in shares of both companies for the remainder Iberdrola executed a share repurchase plan for approximately 4.3% ownership in the company in order to offer these shares to the
minority shareholders of Iberdrola Renovables On April 8, 2011, Electricité de France (“EDF”) made an offer to acquire the remaining 50% of its subsidiary EDF Energies Nouvelles for Acquisition of EDF
Energies EUR 1.4bn through a combination of EDF cash and shares Nouvelles by EDF the The transaction offer considered a price per share of EDF Energies Nouvelles of EUR 40, a 9% premium from the day
before the announcement of The transaction was completed on June 23, 2011 and considered paying 56% of the Price in cash and 44% in EDF shares Parent Company Iberdrola EDF Enel Iberdrola EDF
Energies Enel Green Average Median Renewable Subsidiary Renovables Nouvelles Power Announcement Date
08-03-2011
08-04-2011
17-11-2015 Transaction
Date
08-07-2011
23-06-2011
31-03-2016 %
Acquired by parent company % 20.0% 50.0% 31.7% Transaction amount EUR bn 2.5 1.4 3.0 2.3 2.5 Relevant
information Transaction amount USD bn 3.6 2.0 3.4 3.0 3.4 Type of acquisition/merger shares and cash1 shares and cash shares EV/EBITDALTM on the day of the
transaction Unit times 12.3x 15.6x 10.8x 12.9x 12.3x Parent Company times 7.8x 5.1x 6.1x 6.3x 6.1x Source: S&P Capital IQ, Company Reports 1 The
transaction included the distribution of an extraordinary dividend for EUR1.2bn on the part of Iberdrola Renovables days before the close of the transaction. The price per share implied in the offer considered for the premium calculations considered
an adjustment for this amount
E-36
ANNEX F
OPINION OF ECONSULT RS CAPITAL S.p.A., ADDITIONAL INDEPENDENT EVALUATOR
OF ENEL CHILE
This Annex F is a free
English translation of the original Spanish language version, which reflects the substantive content of the original Spanish language document, but may not be a word-for-word translation. In the event of any discrepancy with the English translation,
the original Spanish language document will prevail.
Project Elqui – Final Report
Independent Valuator Enel Chile S.A. November 3, 2017 F-1
Disclaimer (1/2) Econsult RS Capital SpA
("Econsult”) was hired by the Committee of Directors of Enel Chile S.A. ("ECH”) to provide an independent assessment under the terms of article 147 of Law No. 18,046, on Corporations, in connection with the proposed merger of ECH with
Enel Green Power Latinoamerica (“EGPL”) and the tender offer for up to 100% of Enel Generación Chile S.A. (“EGC”) that will be considered successful if 75% of the shares are tendered (the “Transaction”) as
defined in the agreement entered into by ECH and Econsult dated as of September 20, 2017 (the “Agreement”). In providing its services, Econsult considered that the Transaction is subject to “going-private” regulations in the
United States. ECH, EGPL and EGC shall collectively be referred to as the “Companies”. This report (the “Report”) is restricted to the issues covered by the Agreement regarding the Transaction, in accordance with article 147
of Law No. 18,046. The Report does not have the scope of an audit process and has assumed as correct, true, complete and sufficient all the information provided by the Companies, as well as other publicly available information. Additionally, we note
that the above description of the Transaction, as well as any other descriptions contained in the Report, do not seek to reproduce all the details as described in the documents pertaining to the Transaction. In case of doubts or questions in
relation to the Transaction, we encourage you to address the Companies in order to obtain such documents or raise all relevant questions to the Committee of Directors of ECH. 1. This Report has been prepared solely for the use and benefit of the
Directors’ Committee of the Board of Directors of ECH and its shareholders within the context of the Transaction as set forth in the Agreement, and should not be used in any other context or for other purposes not described herein, or relied
upon by any person to whom this Report is not expressly addressed. This Report shall only be disclosed to third parties in accordance with the terms and conditions set forth in the Agreement and in article 147 of Law N° 18,046. This Report,
including its analysis and conclusions, do not constitute, and shall not be construed as a recommendation or indication as to how to proceed in relation to any decision to be adopted regarding the Transaction. We assume no responsibility in relation
to any resolution of the Committee of Directors or the shareholders of ECH or any other entity in relation to the Transaction, or any decision adopted by any person in this matter. We encourage you to independently analyze the risks and benefits of
the Transaction considering all the information available. The record date for this Report is November 3, 2017 ("Reference Date"). 2. In preparing this Report we have: (i) used, as authorized by the management of ECH, the financial statements of the
Companies, but not of affiliated entities, as necessary in order to prepare this Report; (ii) used other information related to the Companies, including financial projections, delivered and prepared by the Companies; (iii) conducted discussions with
members of the Directors’ Committee of the Board of Directors and management of the Companies regarding the business and prospects of the Companies; (iv) requested information about business plans of the Companies, duly provided by their
respective Boards of Directors, including revenue growth, costs, general and administrative expenses and investment plans and expansion or maintenance; and (v) taken into account other public information, financial studies, analysis, economic and
market reports that we consider relevant, in order to, to the extent applicable, analyze the consistency of the information received from the Companies ((i) through (v), collectively, the "Information"). The Information was obtained from sources we
believe to be reliable and based on assumptions that we consider reasonable; however, we have not independently verified the Information and are not responsible for its accuracy, correctness, completeness or sufficiency. Any estimates or projections
herein presented were obtained from public sources and from the management of the Companies, and there is no guarantee as to whether these estimates and projections will materialize. We do not assume any responsibility for these estimates and
projections, or the way in which they were obtained. We are not responsible for conducting and have not conducted an independent verification of the Information. 3. As part of our work, we have assumed that the Information is true, accurate,
sufficient and complete and that all information that might be relevant in the context of our work has been made available to us. We do not make any representation or warranty, expressly or implicitly, as to any information used to prepare this
Report. Econsult did not undertake any independent verification with respect to the Information and is not able to certify its accuracy, correctness, completeness and sufficiency. ECH takes full and exclusive responsibility for the Information
provided by the Companies. If any of the related assumptions does not occur or if the Information proves to be incorrect, incomplete, inaccurate or insufficient, the conclusions of this Report may change substantially. According to the foregoing,
Econsult cannot accept and shall not accept any responsibility for such accuracy or completeness. With respect to the portion of the Information related to future events provided to us, we have assumed that such Information reflects the best
estimates of the management of the Companies as currently available regarding the Companies’ future performance, despite this we have not developed any verification of such projections; we do have analyzed the reasonableness of the assumptions
that have been made explicit to us, and applied sensitivities on the projections received for our analysis 4. We undertake no responsibility for conducting independent investigations as to any Information or to independently verify any assets or
liabilities (contingent or otherwise) related to the Transaction. Accordingly, in respect of liabilities and contingencies affecting the Companies, we assumed that the figures included in the financial statements of the Companies are accurate,
complete and that they reasonable reflect their amount and likelihood. We do not consider the possibility of eventual inaccuracies, or the potential effects of any judicial or administrative proceedings (civil, environmental, criminal, tax, labor,
social security etc.), even if unknown or undeclared, pending or threatened, in the value of the assets and shares issued by the Companies. We have not been asked to conduct (and we have not conducted) any kind of due diligence or physical
inspection of the properties or facilities of the Companies or their respective subsidiaries or related companies. Also, we did not evaluate the solvency or fair value of the Companies, considering the laws relating to bankruptcy, insolvency or
similar matters. 5. We do not undertake any responsibility related to: (i) the verification of the regularity of the business carried out, or contracts entered into, by the Companies; (ii) issues resulting from the relationship of the Companies with
any third party, including the economic and financial conditions of any contract, business or any other form of economic or commercial relationship between the Companies, and any third party, whether in the past or future; and (iii) the maintenance
of current business conditions and existing contracts of the Companies, with any third party. We emphasize that the conclusions of this Report assume the full validity, effectiveness and enforceability of all contracts entered into by the Companies,
with third parties, and their respective financial flows. If such contracts or businesses are re-negotiated, discontinued, terminated or in any way fail to generate results for the Companies, all or part of the conclusions described herein may, and
probably will, differ materially from the actual results achieved by the F-2
Disclaimer (2/2) Companies. We assume
that the Companies obtained legal assistance in order to confirm the validity, effectiveness and enforceability of such contracts and audit process, including due diligence, aspects for which we are not liable. In that regard we expressly declare
that we cannot confirm or provide any assurance that any and all contract entered into by the Companies are valid, effective vis-à-vis third parties, binding and enforceable, and we will accept no responsibility in that matter. In case you have
concerns on the validity, effectiveness or enforceability of any agreement entered into or that is applicable to the Companies, we encourage you to address the management of said Companies to obtain the necessary confirmation on these matters. 6.
Part of our analysis was prepared based on commonly used valuation methodologies as described in item 8, and assumed ECH’s macroeconomic scenario based in market consensus, which may change substantially in the future. Since the analysis and
figures herein contained or that served as a basis for this Report are based on forecasts of future results, they are not necessarily indicative of the real and future financial results of the Companies, which may be significantly more or less
favorable than those suggested in the Report. Moreover, considering that these analyses are intrinsically subject to uncertainties, based on various events and factors beyond our control and the control of the Companies, we assume no responsibility
in case the results of the Companies differ substantially from the results presented in this Report in the future. There is no guarantee that the future results of the Companies will correspond to the financial projections used as a basis for our
analysis (which were provided to us by the management of ECH), and that the differences between the projections used for purposes of this Report and the financial results of the Companies, may not be material. The future results of the Companies can
also be affected by economic and market conditions. 7. The preparation of a financial analysis is a complex process involving several decisions as to the most appropriate and relevant methods of financial analysis and the application of such methods
to the particular circumstances, and therefore the analysis described in this Report should be considered as a whole and not analyzed partially. To reach the conclusions presented in this Report, we conducted a quantitative and qualitative approach
to the analysis and factors considered by us. We reached a final conclusion based on the results of the analysis, considered as a whole, and have not reached any conclusion based on or related to any of the factors or methods of our analysis
considered in isolation. Thus, the selection of parts of our analysis and specific factors without considering the entire analysis and conclusions may lead to an incomplete and incorrect understanding of the processes used in our analysis and
conclusions. 8. This Report indicates projections at our discretion, of the resulting value derived from the application of different methodologies, as we deemed appropriate, all of which are widely used in financial valuations, and do not evaluate
any other aspect or implication of the Transaction or any contract, arrangement or understanding entered into in relation to the Transaction. Additionally, this Report is not and should not be used as (i) an opinion on the fairness of the
Transaction (fairness opinion); or (ii) an investment recommendation or financial advice on any aspect of the Transaction. The results presented in this Report refer exclusively to the Transaction and do not apply to any other decision or
transaction, present or future, relating to any of the Companies, the economic group to which they belong or the industry in which they operate. The Report does not constitute a judgment, opinion or recommendation to the Committee of Directors of
ECH, its board of directors, ECH, its officers, shareholders or any third party in relation to the convenience and opportunity of the Transaction as it is not intended to support any investment decision but rather only provided for informational
purposes. 9. We are acting as independent valuator for the Transaction, as appointed by the Committee of Directors of ECH, and will receive certain fees to be paid by ECH. However, these fees are not in any way contingent to the completion of the
Transaction. ECH has agreed to indemnify us as well as certain persons for certain losses arising out of or in connection with this Report. 10. Our Report is based on information made available to us up to and until the Reference Date, taking into
account market, economic and other conditions as presented and assessed up to the Reference Date. Although future events and other developments may affect the conclusions presented in this Report, we have no obligation to update, revise, rectify or
revoke this Report, in whole or in part, as a result of any subsequent developments or for any other reason. 11. We may have in the past, from time to time, rendered investment banking services and other financial services to the Companies, for
which we were paid, and may in the future provide such services to the Companies and, for which we expect to be compensated. In the normal course of our business we may acquire, hold or sell, on our behalf or on behalf of our clients, shares, debt
instruments and other securities and financial instruments (including loans and other obligations) of the Companies, as well as provide investment banking and other financial services to such Companies or their majority or minority stockholders. 12.
This Report is not a valuation report or appraisal in any legal sense and should not be used to justify any issuance price or to fulfill or comply with any legal or regulatory requirements applicable to the Companies, their respective subsidiaries
and related companies or to the Transaction except as set forth under article 147 of Law No. 18,046. Additionally, this Report may not be used for any purpose other than the Transaction and should not be used by the Companies or their respective
shareholders, directors or officers in any other context except as expressly provided for in the Agreement. 13. We also note that we are not an accounting firm and did not provide accounting or audit services in relation to the Transaction.
Additionally, we do not provide, and have not provided, legal, tax or regulatory services regarding this Report or the Transaction. 14. The financial calculations of this Report contain some rounding and therefore their results may not always be
absolutely accurate. 15. This Report is presented in both English and Spanish languages, both of which shall constitute the same presentation; provided however, that in case of doubt as to the proper interpretation or construction of the Report, the
Spanish text shall prevail. F-3
Table of Contents I Transaction
Description 5 II Scope of Engagement and General Considerations 9 III Understanding of Enel Green Power Latin America 14 IV Strategic Rationale 18 V Valuation Analysis 20 VI Analysis of the Transaction Terms 24 VII Conclusions 33 F-4
I. Transaction Description F-5
Transaction Description Introduction On
July 3, 2017, the Board of Directors (“BoD”) of Enel Chile S.A. (the “Company”, “Enel Chile” or “ECH”) sent a letter to Enel S.p.A. (“Enel”) proposing a restructuring plan (the
“Transaction”) that considers: A public tender offer over Enel Generación Chile S.A. (“EGC” or “Enel Generación”) for up to 100% of its shares (the “Tender Offer”). The Tender Offer will be
equivalent to a mixed offer payable with cash and shares of Enel Chile(1) and would be subject to reaching at least 75% of the total shares of Enel Generación A merger between Enel Chile and Enel Green Power Latin America S.A.(2)
(“EGPL” or “EGP Latin America”) (the “Merger”) On August 25, 2017, Enel sent its response to Enel Chile’s Board of Directors indicating that: The Transaction seems aligned with strategic interests of Enel
and provided a preliminary favorable opinion, subject to further analysis The acceptance of the Transaction will be subject to certain minimum conditions On the same day, the Enel Chile’s Board of Directors approved to initiate the works and
analysis for the implementation of the Transaction under the related party transaction regulations (in Spanish procedimiento de operación entre partes relacionadas) established in the Chilean Corporation’s Law Minimum Conditions for
Acceptance of the Transaction Transaction has to be executed at market terms, recognizing the growth potential of renewable energies in Chile Transaction has to be EPS accretive for Enel Chile’s shareholders Enel must retain a share ownership
similar to the current one in Enel Chile after the completion of the Transaction, without losing, at any time, its condition of controlling shareholder and within the ownership concentration limit of 65% established in the Company’s bylaws
Enel Generación should remove from its bylaws the ownership restrictions established in the Title XII of DL 3,500 of 1980 Summary of Enel’s Conditions Transaction Background (1) On October 26, 2017 it was published a Material Fact
(“Hecho Esencial”), informing that ECH’s Board resolved that the Tender Offer will be payable exclusively in cash, but that the offer will contemplate among its terms and conditions, that a portion of proceeds received by each EGC
shareholder must be used to subscribe shares of Enel Chile to be issued in connection with a capital increase. (2) EGPL changed from a Limitada company to a Sociedad Anónima with a total of 827,205,371 shares. F-6
Transaction Description Main Transaction
Steps Enel Chile Enel Generación 60.62% Enel Distribución 59.98% 99.09% EGP Latin America EGP Chile 100% 100% Key Execution Steps Enel Chile Enel Generación 60.62% Enel Distribución ~75% - 100% 99.09% EGP Latin America EGP Chile
100% 100% Enel Chile Enel Generación 60.62% Enel Distribución 99.09% EGP Chile 100% Tender Offer 75% - 100% Current Ownership Structure Tender Offer 1 Merger Between Enel Chile and EGP Latin America 2 ~ ~ Source: Enel Chile F-7
Transaction Description Transaction
Execution Timetable Tender Offer ECH’s capital increase : Extraordinary General Meeting (“EGM”) of ECH approves the issuance of the required shares for the subscription of EGC’s shareholders that tendered its shares Beginning
of the Tender Offer: ECH launches the Tender Offer, subject to the approval of the removal of concentration limit established in EGC’s bylaws EGC’s bylaws: EGM of EGC approves the removal of the concentration limit of 65%. This bylaws
amendment requires an approval of at least 75% of all outstanding shares Ending of the Tender Offer and capital increase subscription: Verification of minimum conditions, acceptance of the offer, notice of results, payment and subscription of new
issuance shares of ECH Key Execution Milestones 1 Merger Between Enel Chile and EGP Latin America EGM’s merger approval: EGM of ECH approves the Merger subject to the success of the Tender Offer Effectiveness of the Merger: Verification of the
conditions for the Tender Offer and completion of the Merger Withdrawal right: Withdrawal right to be potentially exercised by shareholders of ECH as a result of the Merger. As of the date of this Report, the Company has not define the limits of
acceptable execution of withdrawal rights 2 Tentative Calendar Independent valuators and financial appraisers preliminary reports based on financial statements as of June 30th, 2017 Independent valuators and financial appraisers preliminary reports
based on financial statements as of June 30th, 2017 Oct 26 Nov 3 Nov 9 Nov 10 Dic 20 1S 2018 Independent valuators and financial appraisers final reports based on financial statements as of September 30th, 2017 Independent valuators and financial
appraisers final reports based on financial statements as of September 30th, 2017 Board of Directors Committee issues reports & Board members issue individual opinions Board of Directors Committee issues reports & Board members issue
individual opinions Board of Directors approves final terms of the Transaction and calls a EGM for capital increase and merger Board of Directors calls EGM for bylaws amendment EGM approves capital increase and merger EGC EGM approves change to
bylaws Completion of the Transaction 40 days Enel Generación Enel Chile ~ Enel Generacioón Chile Enel Chile F-8
II. Scope of Engagement and General
Considerations F-9
Request from the Board of
Directors’ Committee of Enel Chile The Company hired Econsult to act as independent valuator according to the article 147 of the Chilean Corporations Law (Ley n° 18.046 de Sociedades Anónimas) to support Board of Directors’
Committee of ECH on the analysis of the Transaction In accordance with this role, Econsult was requested to prepare a report (the “Report”) that should contain, among others, the following: A description of the main terms and conditions
of the Transaction Analysis of the strategic rationale and potential impacts on value of the Transaction, in order to determine if it contributes to the corporate interest of the Company Valuation of Enel Chile, Enel Generación and EGP Latin
America in the context of the Transaction Assessment on the exchange ratio for the Merger Assessment on the terms and conditions for the Tender Offer considering that: It contributes to the corporate interest of ECH It is in line with minimum
conditions set by Enel in the letter sent on August 25, 2017 Scope of Engagement and General Considerations Scope of the Independent Valuator Activities Excluded from the Scope of Work Analysis of pros and cons of alternative execution structures of
the Transaction Analysis of technical, legal, commercial or other feasibility studies of the execution of the Transaction Independent investigation or verification of the information provided to us by the Company (including, without limitation, data
from third party sources) Econsult does not provide any legal, tax or accounting advice and its role has been limited exclusively to the role of independent valuator F-10
Summary of the Main Information
Considered As of the date of this Report, Econsult has entered into a non disclosure agreement and an engagement letter (the “Agreement”) that has granted access to a Virtual Data Room (“VDR”) which included, among others,
the following information: Management presentations of Enel Chile, Enel Generación, Enel Distribución and Enel Green Power Latin America Financial statements of the companies involved in the Transaction Equity research reports for Enel
Chile and Enel Generación Latest reports of credit rating agencies for Enel Chile Detailed ownership structure of Enel Chile and Enel Green Power Latin America Debt profile of current debt with financial institutions and with Enel Finance
International Financial projections for each company involved in the Transaction. This projections consisted in: Aggregated projections for each company for the period 2018-2022 (the “Business Plan”) Operational breakdown from revenues
to gross margin (the “PxQ Projections”) for each company from 2018 until 2045 Publicly available information about each of the companies, its industry and its peers Review of the due diligence reports of EGPL provided by Carey y Cía
(legal), PwC (taxes) and DNV GL (technical) Scope of Engagement and General Considerations Information Considered and Summary of Main Activities Summary of Main Activities Attendance to the management presentations that took place on September 26,
2017, where the management of each company presented: (i) a general description of its business and main assets; (ii) recent industry and market trends; and (iii) latest approved financial projections Meetings and conference calls with management of
the companies and its advisors to review the Transaction, discuss assumptions used for the Business Plans and the PxQ Projections Detailed analysis of the information received and active interaction with management of the Company through the Q&A
channel included in the VDR F-11
Main Assumptions Considered for the
Analysis The Transaction complies with the Chilean law and does not breach any norm in any applicable jurisdiction The Merger will not generate significant synergies that could have an impact on the results and conclusions of this Report The
Transaction will not imply significant execution expenses or costs that may affect the conclusions of this Report EGPL does not have contingencies that could significantly affect the results and conclusions included on this Report Prior to the
execution of the Merger, EGPL will divest (at fair market prices) the following non-Chilean entities: (i) 0.1% of Proyectos y Soluciones Renovables S.A.C.; (ii) 0.0000043% of EGP Brasil Desenvolvimiento Ltda.; (iii) 0.000000021% of EGP Brasil
Participacoes Ltda.; (iv) 0.000161% of Enelpower do Brasil Ltda.; (v) 2.0% of EGP Guatemala S.A.; (vi) 0.1% EnelGreenPower Ecuador S.A. (under dissolution); (vii) 0.000000125% Enel Green Power Mexico S. de R.L. de C.V.; (viii) 5.0% of Enel Green
Power Argentina S.A.; (ix) 0.00000026% of Enel Green Power Perú S.A.; and (x) 0.000015% of Energética Monzón S.A.C. All related party transactions of EGPL that will continue after the completion of the Transaction, are duly included
in each of the Business Plans under market terms and conditions and according to the policies required for transactions of this type. The main related party transactions that are expected to continue are: (i) Power purchase agreements between EGC
and EGPL; (ii) Credit facility between Enel Green Power del Sur SpA (subsidiary of EGPL) and Enel Financial International B.V. (“EFI”); and (iii) the service agreement provided by Enel Green Power SpA to ECH The financial projections
considered in the Business Plan represents the most updated view of the Company. Even more, if any of the projects are awarded PPA’s in the short term, these contracts will not have a material effect on the financial projection considered in
the Business Plan. The valuation of EGPL may vary in case the awarding of PPAs and CODs are different from those considered in our analysis The Transaction would not result in negative accounting or tax effects that could impact the Companies
results and/or any of its subsidiaries The Transaction does not generate regulatory, environmental or anti trust effects for the Companies and/or any of its subsidiaries The Transaction does not affect any agreements with third parties or
counterparties of the Companies and/or any of its subsidiaries The Transaction does not affect or breach any debt financing agreements of ECH, EGC, EDC, EGPL and/or its subsidiaries, originating material effects on the results of any of such
companies, including events of default, cross-default or cross-acceleration, and/or increases on financial expenses The Transaction would not trigger a down grade to non investment grade of ECH by Moody´s, Standard & Poor´s or Fitch
Ratings The Company will set a minimum threshold for the exercise of withdrawal rights related to the Merger to comply with the minimum required conditions set up by Enel to approve the Transaction Scope of Engagement and General Considerations
General Considerations F-12
Scope of Engagement and General
Considerations Report Structure Transaction Pillars Valuation of ECH, EGC and EGP Latin America 1 Debt capacity of ECH 2 Exchange ratio between ECH and EGC 3 Definition of Transaction Terms Exchange ratios between EGPL – ECH and EGC - ECH A
Tender offer price for EGC B Capital Increase – Tender Offer Ratio C Enel’s Minimum Conditions Valuation of EGPL reflecting market terms for renewable energies EPS accretive for Enel Chile Retain a stake in ECH similar to current levels
Stake in Enel Generación > 75% (post bylaw amendments) I Strategic Rationale Consolidation of a leading Chilean power player Optimization of the capital structure Reduction of holding discount Increase in ECH’s secondary trading
volumes II Analysis of the Results Holding discount of ECH 4 F-13
III. Understanding of Enel Green Power
Latin America F-14
99.99% EGP Chile Understanding of Enel
Green Power Latin America Enel Green Power Latin America General View EGPL is the largest renewable player in Chile, with an installed capacity that triples the closest competitor EGPL has an aggressive growth strategy and has been able to
practically doubled its installed capacity each year until 2016 Currently, it has reached 1,195 MW of installed capacity with 18 plants in operation All of its operating plants have PPA’s, having a minimal exposure to spot prices EGPL has a
diversified pipeline that could add at least 1,137 MW of additional generation capacity A significant part of the project pipeline has synergies with the plants under operation EGPL - Assets Summary Wind Solar Hydro Geo(1) Total Installed Capacity
(MW) 564 492 92 48 1,195 Number of Plants 7 8 2 1 18 Generation(2) (TWh) 1,054 813 302 0 2,171 Eléctrica Panguipulli Almeyda Solar Parque Eólico Taltal Parque Talinay Oriente Valle de los Vientos EGP del Sur Geotermia del Norte Pullinque
Pilamaiquén Solar Wind Geo Hydro EGP LatAm Enel Simplified Ownership Structure 99.95% 100% 99.99% 100% 99.99% 99.99% 84.59% 61.37% 99.99% 99.99% Market Share (by Installed Capacity) Chile’s largest operator with 30% of the installed
capacity of renewable energy Companies Installed Capacity (MW) Enel Green Power 1,195 SunEdison 390 Acciona 241 LAP 239 Pattern 219 Others 1,699 Total 3,983 EGP Chile EGP LatAm Enel Enel Green Power SunEdison Acciona LAP Pattern Others Enel Green
Power (EGP) is a wholly owned subsidiary of Enel, dedicated to the development and management of renewable power generation worldwide. EGP has global presence with a total generation capacity of 38,000 MW. In Chile, EGP operates through Enel Green
Power Latin America. Source: Enel Group, EGPL and Coordinador Eléctrico Nacional (CEN). (1) Cerro Pabellón began operations in March of 2017. (2) Power generation according to CEN (2016). F-15
Understanding of Enel Green Power
Latin America Summary of Main Assets (1/2) Wind Valle de los Vientos Taltal Talinay Oriente Talinay Poniente Renaico Los Buenos Aires Pullinque Pilmaiquén Hydro Operational Figures Installed Capacity: 90 MW Annual Generation: 219 GWh COD(1):
December 2013 Direct and Indirect Ownership Installed Capacity: 99 MW Annual Generation: 309 GWh COD(1): February 2015 Installed Capacity: 90 MW Annual Generation: 213 GWh COD(1): October 2012 Installed Capacity: 61 MW Annual Generation: 170 GWh
COD(1):March 2015 Enel Green Power Chile 60.91% Enel Green Power Spa(2) 34.57% Simest 4.52% Installed Capacity: 88 MW Annual Generation: 280 GWh COD(1): September 2016 Installed Capacity: 24 MW Annual Generation: 86 GWh COD(1): April 2016 Sierra
Gorda Este Installed Capacity: 112 MW Annual Generation:298 GWh COD(1): December 2016 Enel Green Power Chile 99.99% EGPL 0.01% Installed Capacity: 51 MW Annual Generation: 199 GWh COD(1): 1964 Installed Capacity: 41 MW Annual Generation: 226 GWh
COD(1): 1944 Enel Green Power Chile 99.99% EGPL 0.01% Enel Green Power Chile 99.99% EGPL 0.01% Enel Green Power Chile 99.99% EGPL 0.01% Enel Green Power Chile 99.99% EGPL 0.01% Enel Green Power Chile 99.99% EGPL 0.01% Enel Green Power Chile 99.99%
EGPL 0.01% Enel Green Power Chile 99.99% EGPL 0.01% Source: EGPL. (1) COD: Commercial Operation Date. (2) This stake is not part of the Transaction. F-16
Understanding of Enel Green Power
Latin America Summary of Main Assets (2/2) Solar Lalackama I Lalackama II Finis Terrae Pampa Norte Chañares Diego de Almagro La Silla Carrera Pinto Cerro Pabellón Cifras Operacionales Installed Capacity: 60 MW Annual Generation: 159 GWh
COD(1): January 2015 Propiedad Geo Installed Capacity: 18 MW Annual Generation: 52 GWh COD(1): September 2015 Installed Capacity: 160 MW Annual Generation: 411 GWh COD(1): April 2017 Installed Capacity: 79 MW Annual Generation: 208 GWh COD(1):
October 2016 Installed Capacity: 40 MW Annual Generation: 94 GWh COD(1): May 2015 Installed Capacity: 36 MW Annual Generation: 81 GWh COD(1): December 2014 Installed Capacity: 1.7 MW Annual Generation: 4.7 GWh COD(1): April 2016 Installed Capacity:
97 MW Annual Generation: 258 GWh COD(1): November 2016 Installed Capacity: 48 MW Annual Generation: 345 GWh COD(1): April 2017 Enel Green Power Chile 99.99% EGPL 0.01% Enel Green Power Chile 99.99% EGPL 0.01% Enel Green Power Chile 100.00% Enel
Green Power Chile 99.99% EGPL 0.01% Enel Green Power Chile 84.59% ENAP(2) 15.41% Enel Green Power Chile 99.99% EGPL 0.01% Enel Green Power Chile 99.99% EGPL 0.01% Enel Green Power Chile 99.99% EGPL 0.01% Enel Green Power Chile 99.99% EGPL 0.01%
Operational Figures Direct and Indirect Ownership Source: EGPL. (1) COD: Commercial Operation Date. (2) Empresa Nacional del Petróleo. F-17
IV. Strategic Rationale
F-18
Strategic Rationale Main Transaction
Expected Benefits Consolidation of the Leading Chilean Power and Utility Player Enhanced equity story for Enel Chile, first Chilean player with leadership presence in: (i) power distribution; (ii) conventional power generation; and (iii) renewable
power generation business Access to the largest renewable asset portfolio in Chile, with a concrete investment pipeline Improved growth perspectives for ECH Full alignment between Enel and ECH’s interests Transaction allows EGC’s
minority shareholders to participate in a fully integrated and diversified power/utility company Consistent with global industry trends of combining conventional and renewable energy companies (Enel – Enel Green Power 2016; EDF – EDF
Nouvelles 2011) Optimization of ECH’s Capital Structure ECH, EGC and EDC currently have a sub-optimal capital structure ECH is almost debt free (on a unconsolidated basis) with a significant cash balance Enel Distribución Chile S.A.
(“EDC”) has as only relevant debt, an intercompany account payable with ECH EGC has low debt levels in relation to its peers Merger with EGPL and the cash consideration of the Tender Offer would increase net debt levels up to 2.0-2.5
times EBITDA 2017E, without adverse effects over its credit ratings that could trigger a downgrade to non investment grade, as informed by the Company’s management Improved capital structure would have a positive impact over the
Company’s return over equity Reduction of Holding Discount ECH’s holding discount is substantially lower than the former Enersis’ holding discount The Transaction could reduce the holding discount of ECH due to the mix of the
following factors: Reduced or minimal liquidity of EGC’s share post Tender Offer No access to invest directly in the EGPL and extremely limited access for investments in EDC è incentive to invest in ECH Increase in ECH’s Share
Trading Volume The stock payment of the Tender Offer would increase ECH’s free float by adding part of EGC’s minority shareholders stake ECH’s weightings in main equity indexes (IPSA, MSCI) may increase, improving its liquidity due
to possible portfolio adjustments from investors Potential increase in value of ECH due to lower holding discount should have a positive impact in the stock liquidity 1 3 4 2 F-19
V. Valuation Analysis F-20
Valuation Analysis Overview of
Valuation Methodology Methodology Description Observations Applicability DCF Intrinsic value approach based on forecasted cash flows Macroeconomic assumptions and operational estimates based in the Business Plan and PxQ Projections provided for each
company Each “part” is calculated based on its firm value adjusted by net debt, minority interests and the applicable percentage over the equity value The Company provided an “Equity Bridge” that adjusts each applicable net
debt with certain additional assets and liabilities that given its nature it should be considered as financial debt or cash equivalent Value is heavily sensitive to energy prices and cost assumptions Near-term cash flows have greater impact on value
Limited flexibility for sensitivity analysis All companies Market Value Both ECH and EGC’s shares have acceptable levels of liquidity EDC’s shares has minimal levels of secondary trading No public references of value for EGPL’s
shares Share prices after announcement may be affected by speculation related to the Transaction ECH, EGC and EDC Trading Comparables Public company multiples applied to each company 2017E metrics Multiples of EBITDA tend to be the most relevant
Important to select comparable with similar business dynamics We considered an average EV/EBITDA for each business segment and applied a +/- 0.5x variation for determining valuation ranges Good sample of local comps for ECH No pure comparables
available for EDC Lack of local comps for EGPL, global sample considered All companies Research Analyst Target Prices Value estimates made by equity research analysts of local or international investment banks or stockbrokers Intends to replicate
the intrinsic value of the companies, based only on public information Analysts’ recommendations may be affected by the Transaction announcement ECH and EGC have active coverage from analysts No direct coverage for EDC, not applicable for EGPL
ECH and EGC Precedent Transactions Transaction multiples applied to ratios of each company Multiples of EBITDA tend to be the most relevant In general includes change of control premium Many transactions of renewables are done at high multiples
given significant component of new projects (greenfield) We considered an average EV/EBITDA for each business segment and applied a +/- 0.5x variation for determining valuation ranges Lack of good pure comparable transactions for ECH, EGC and EDC
Global sample of renewable deals provides a good reference of the appetite for renewable energies EGPL Econsult has conducted a sum-of-the-parts valuation of each of the companies involved in the Transaction. In order to estimate the value of each
one, the discounted cash flow (“DCF”) methodology was considered as the most appropriate valuation tool for the definition of the Transaction terms. In order to have additional value references, we have also considered other four
valuation methodologies. F-21
Valuation Analysis Main Assumptions
New Projects EGC: Assumes that Project Los Cóndores would be fully operational within the Projection Period EGPL: Assumes differentiated execution probabilities depending on its PPA awarding horizon. Projects were classified in: (i) Certain
(Campo del Sol – 338 MW); (ii) Short term (5 projects, 383 MW capacity); and (iii) Medium term (5 projects, 414 MW) Generation Terminal Value Long term free cash flow (LFCF) perpetuity growing with long term US inflation LFCF calculation
considers a long term projection of gross margin (2023 – 2045). Long term maintenance and reposition CAPEX considering expected life and required reinvestments for each asset Distribution Terminal Value NOPAT perpetuity growing with long term
Chilean inflation Additional long term CAPEX calculated assuming a return on new invested capital (RONIC) equal to the local currency adjusted WACC Holding Terminal Value Free cash flow perpetuity growing with long term US inflation Calculation
based on 2022 holding costs projection Holding Discount Considers a 10% holding discount for ECH Holding discount is consistent with last twelve months holding discount averages (pre Transaction announcement) Equity Adjustments The following
adjustments were considered: Net debt as provided on each company financial statements Additional adjustments included in the Equity Bridge provided for each company DCF based value for each of the minority interests Valuation Date September 30,
2017 Currency ECH, EGC and EDC: Projections prepared in nominal Chilean pesos. For DCF calculations, projections were converted into US$ dollars EGPL: Projections prepared in nominal US$ dollars Projection Period ECH, EGC and EDC: 5.25 years (last
quarter 2017 – 2022) EGPL: 9.25 years (last quarter 2017 – 2026) Macro Assumptions Inflation, exchange rates and other macroeconomics assumptions until 2022 were provided by the Company Local and US long term inflations were assumed to
be equal to the 2022 estimate Long term exchange rates were estimated using PPP WACC(1) Generation: 7.4% in nominal US$ dollars. Same betas, capital structure and debt cost for conventional and renewable Distribution: 7.0% in nominal US$ dollars
ECH: 7.3% in nominal US$ dollars. Calculated as the weighted average between EGC - EDC Taxes 25.5% for 2017 27.0% for 2018 onwards As informed by the Company, the Transaction would not have any negative tax implications (1) Main parameters: (i) Risk
free rate: 10 year US Treasury bond last 30 day average - 2.3%; (ii) Country risk premium: calculated using 10 year Chilean CDS average – 1.1%; (iii) Market risk premium based on estimate of Aswath Damodaran – 6.2%; (iv) Unlevered betas
based on sample of selected comparable companies and using a 5 year regression. Generation Beta = 0.7 and Distribution Beta = 0.67; (v) Leverage (D/E) ratios based on sample of comparable companies. Generation = 0.33 and Distribution = 0.54; and
(vi) pre tax cost of debt equal to 4.2%. 1 2 3 4 5 6 7 8 9 10 11 12 F-22
Note: All market values were converted
into US$ dollars using an exchange rate of CLP/US$ 660, consistent with DCF macro assumptions. Valuation Analysis Valuation Summary DCF midpoint valuation for EGC and ECH (adjusted by holding discount) have an implicit premium over its pre
announcement share prices of 15.5% and 18.1%, respectively. DCF valuation of EGPL is below the value references provided by precedent transactions. Methodology Equity Value (US$ m) EV/EBITDA 17E DCF Midpoint Premium/(Discount) Midpoint US$ m EGC DCF
WACC: 7.4% ± 0.25% Market Value(1) CLP 405 - 543 Trading Comparables(2) EV/ EBITDA 17E: [8.1x – 9.1x] Analyst target prices(3) CLP 480 - 625 EDC DCF WACC: 7.0% ± 0.5% Market Value(1) CLP 1,180 – 1,400 Trading Comparables(2) EV/
EBITDA 17E: [10.4x – 11.4x] ECH DCF(4) WACC: 7.3% ± 0.25% Market Value(1) CLP 59 - 76 Trading Comparables(2) EV/ EBITDA 17E EGC & EDC Analyst Target Prices(3) CLP 75 - 89 EGPL DCF WACC: 7.4% ± 0.25%(5) Trading Comparables(2) EV/
EBITDA 17E: [11.5x – 12.5x] Precedent Transactions(6) EV/ EBITDA 17E: [13.0x – 14.0x] Pre transaction announcement 52-week high and low Selected sample of companies EGC: Colbun, AES Gener and E-CL EDC: Aguas Andinas EGPL: ERG SpA, EDP
Renovaveis, Dong Energy and Saeta Yield Latest recommendations of: Santander, JP Morgan, BICE, MBI, Credicorp, Scotia Capital, Larrain Vial, Renta 4 and Morgan Stanley DCF considers a 10% discount holding Range also considers sensitivity on project
completion probability Selected precedent transactions of global renewals and Chilean hydro deals Latest stock price pre announcement 10.1x – 11.0x 8.0x – 10.2x 8.1x – 9.1x 9.2x – 11.4x 8.8x – 9.4x 7.6x – 8.8x
10.4x – 11.4x 10.0x – 10.8x 7.0x – 8.7x 8.5x – 9.4x 8.6x – 10.0x 11.9x – 12.8x 11.5x – 12.5x 13.0x – 14.0x -- 15.5% 27.4% 0.8% -- 16.0% (17.9%) -- 18.1% 5.8% (0.4%) -- 4.5% (13.3%) 7,015 6,076(7) 5,505
6,958 2,527 2,179(7) 3,077 6,148 5,206(7) 5,813 6,173 1,696 1,623 1,956 F-23
VI. Analysis of Transaction Terms
F-24
Analysis of Transaction Terms
Recommendation of Transaction Terms According to the selected methodology, the Transaction would favor the corporate interest as long as: (i) the exchange ratio of EGPL and ECH’s shares is between 14.23x and 17.05x; (ii) the exchange ratio
between EGC and ECH’s shares is between 6.60x and 7.08x; and (iii) EGC tender offer price is in the range of CLP 537 – 595 per share. Recommended Range of Transaction Terms Based on the Selected Methodology ECH: 49,092,772,762
outstanding shares; EGC: 8,201,754,580 outstanding shares; EGPL: 827,205,371 outstanding shares. Exchange CLP/US$ 660 consistent with macro assumptions included in the DCF analysis. Pre Announcement Price on August 25, 2017 was CLP 489. Tender Offer
Price and Exchange Ratio 1 Merger Exchange Ratio 2 Tender Offer price and exchange ratios consistent with ECH’s corporate interest Valuation scenarios ECH EGC Exchange Ratio (EGC/ECH) Equity Value (US$ m) Share Price (CLP) (1) Equity Value
(US$ m) Share Price (CLP) (1) Premium over pre announcement price(4) Holding Discount 7.5% Base Case Holding Discount 10.0% Holding Discount 12.5% Low range 5,892 $79 6,674 $537 9.8% 6.60x 6.78x 6.97x Midpoint 6,148 $83 7,015 $565 15.5% 6.64x 6.83x
7.02x High range 6,428 $86 7,390 $595 21.6% 6.70x 6.88x 7.08x Valuation scenarios EGPL Exchange Ratio (EGPL / ECH) Holding Discount 7.5% Base Case Holding Discount 10% Holding Discount 12.5% Equity Value (US$ m) Share Price (CLP) (1) ECH Low Range
ECH Midpoint ECH High Range ECH Low Range ECH Midpoint ECH High Range ECH Low Range ECH Midpoint ECH High Range Low range 1,584 $1,264 15.53x 14.88x 14.23x 15.96x 15.30x 14.63x 16.42x 15.73x 15.05x Midpoint 1,696 $1,353 16.62x 15.93x 15.23x 17.08x
16.37x 15.66x 17.57x 16.84x 16.10x High range 1,796 $1,433 17.60x 16.87x 16.13x 18.09x 17.33x 16.58x 18.61x 17.83x 17.05x F-25
Analysis of Transaction Terms Tender
Offer Exchange Ratio and Holding Discount Analysis EGC/ECH Exchange Ratio Comparison with Other Valuation Methodologies EGC/ECH Exchange Ratio Evolution LTM(1) Aug 25, 2016 – Aug 25, 2017 The resulting exchange ratio between EGC and ECH shares
is consistent with the last twelve months average (pre announcement) and seems convenient to EGC’s shareholders with respect to the same ratio calculated using other valuation methodologies. Higher exchange ratios are more favorable to
EGC’s shareholders The exchange ratio implied in our midpoint valuation has a 1.4% discount with respect to the market average, however considers a premium over other valuation methodologies (1) Last twelve months pre Transaction announcement.
(2) Holding Discount = ECH market cap / ECH’s net asset value (NAV) - 1. NAV = (EGC’s market cap x 60.0%) + (EDC’s market cap x 99.1%) – (ECH’s unconsolidated net debt) – (last twelve months ECH’s holding
costs x market ECH’s EV/EBITDA multiple LTM). (1.4%) 1.4 % 21.0 % Exchange Ratio at DCF Midpoint 6.8x Premium/(Discount) vs Average Discount Holding Evolution LTM(1) (2) Aug 25, 2016 – Aug 25, 2017 Period Average 3 Months 7.0x 6 Months
7.0x 9 Months 6.9x 12 Months 6.9x Average: 6.9x Period Average Last 3 Months 9.4% Last 6 Months 8.0% Last 9 Months 8.5% Last 12 Months 10.3% Aug.16 Oct.16 Dic.16 Feb.17 Abr.17 Jun. 17 Aug.17 Aug.16 Oct.16 Dic.16 Feb.17 Abr.17 Jun.17 Aug.17 Average
08/16 – 02/17: 12.5% F-26
EGC Valuation Range Low Mid High
US$ m % US$ m % US$ m % Max. Tender Offer Value 2,336 100% 2,455 100% 2,587 100% Net Cash Payment 1,580 67.6% 1,580 64.4% 1,580 61.1% Proceeds Capital Increase 756 32.4% 875 35.6% 1,007 38.9% Recommended Net Cash Payment Range 60.0% - 65.0%
US$ m Net Debt 2017 EBITDA 2017 Net Debt/EBITDA ECH Pre Merger 592 1,064 0.5x EGC 925 816 1.1x EGPL 1,088 239 4.5x ECH Post Merger 1,680 1,304 1.3x EGC Valuation Range Low Mid High Tender Offer Price per Share CLP 537 565 595 Total Shares of
EGC # m 8,202 8,202 8,202 EGC’s Free Float % 35.0 35.0 35.0 Maximum Tender Offer Value (1) US$ m 2,336 2,455 2,587 Analysis of Transaction Terms Definition of Capital Increase – Tender Offer Ratio Post Merger Additional Debt Capacity
Analysis In order to maximize the EPS post Transaction, we have assumed that ECH will maximize its debt capacity without affecting its credit rating. According to the Company, the credit rating agencies would consider acceptable for investment grade
rating debt levels resulting in Net Debt / EBITDA in the range of the 2.0 – 2.5 times. Post Merger Proforma Financial Figures 2017E Maximum Additional Debt Capacity Calculation Methodology for the Capital Increase Tender Offer Ratio Maximum
Tender Offer Amount @95% stake in EGC Capital Increase – Tender Offer Ratio Main assumptions: (i) ECH would maximize net cash payments; (ii) ECH would not exceed debt levels over 2.5x EBITDA; (iii) Tender Offer success should not exceed 95%
stake in EGC(3) è Size of the Capital Increase has to be determined considering the maximum probable scenario (1) Exchange CLP/US$ 660 consistent with macro assumptions included in the DCF analysis. (2) In addition of Net Debt/EBITDA ratio,
rating agencies will look at other ratios such as interest coverage and leverage, among others. Proforma 2017E interest coverage with the new maximum possible additional debt would reach 7.8X. (3) Assumption consistent with historical levels of
dividends not collected by EGC shareholders A A B B Target Net Debt / EBITDA Ratio(2) 2.5x US$ m Net Debt 2017 EBITDA 2017 Net Debt/EBITDA Additional Debt 1,580 1,304 1.2x Maximum ECH Post Merger Debt 3,260 1.,04 2.5x Decrease in the maximum
additional debt respect to the preliminary report, due to lower EBITDA estimates for 2017 year end F-27 Econsult Capital
Analysis of Transaction Terms Analysis
of Possible Transaction Results – EGPL Low Range Valuation Transaction Sensitivity based on Tender Offer Results – ECH Base Case with 10% Holding Discount EPS impact calculated with the 5 year average (EGC’s share price) /
(ECH’s share price) adjusted by the percentage of payment in ECH shares Red numbers represent a breach of the minimum conditions set by Enel 65% net cash / 35% stock Exchange ratios: EGC / ECH = 6.83x; Adjusted EGC / ECH(2) = 2.39x; EGPL / ECH
= 15.30x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (0.16%) 65.6% 1.81x 77.9% 0.69% 65.0% 1.91x 87.5% 3.46% 63.2% 2.25x 95.0% 5.51% 61.8% 2.51x 100% 6.83% 60.9% 2.69x ECH Midpoint Valuation B 60% net cash /
40% stock Exchange ratios: EGC / ECH = 6.83x; Adjusted EGC / ECH(2) = 2.73x; EGPL / ECH = 15.30x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (0.61%) 65.1% 1.77x 77.3% 0.00% 64.6% 1.85x 87.5% 2.63% 62.5% 2.18x
95.0% 4.45% 60.9% 2.42x 100% 5.62% 60.0% 2.58x 65% net cash / 35% stock Exchange ratios: EGC / ECH = 6.78x; Adjusted EGC / ECH(2) = 2.37x; EGPL / ECH = 15.96x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0%
(0.85%) 65.9% 1.79x 79.5% 0.53% 65.0% 1.94x 87.5% 2.90% 63.5% 2.21x 95.0% 5.02% 62.2% 2.45x 100% 6.38% 61.3% 2.62x ECH Low Valuation Range A 60% net cash / 40% stock Exchange ratios: EGC / ECH = 6.78x; Adjusted EGC / ECH(2) = 2.71x; EGPL / ECH =
15.96x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (1.29%) 65.5% 1.75x 79.7% 0.00% 64.4% 1.89x 87.5% 2.07% 62.8% 2.13x 95.0% 3.96% 61.3% 2.37x 100% 5.17% 60.3% 2.52x 65% net cash / 35% stock Exchange ratios:
EGC / ECH = 6.88x; Adjusted EGC / ECH(2) = 2.41x; EGPL / ECH = 14.63x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% 0.52% 65.2% 1.84x 76.2% 0.87% 65.0% 1.89x 87.5% 4.00% 62.8% 2.30x 95.0% 5.97% 61.5% 2.58x 100%
7.24% 60.6% 2.76x ECH High Valuation Range C 60% net cash / 40% stock Exchange ratios: EGC / ECH = 6.88x; Adjusted EGC / ECH(2) = 2.75x; EGPL / ECH = 14.63x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 74.7% 0.00%
64.9% 1.79x 75.0% 0.07% 64.8% 1.80x 87.5% 3.17% 62.1% 2.23x 95.0% 4.91% 60.6% 2.48x 100% 6.03% 59.6% 2.65x Minimum conditions breakeven scenario Active restriction F-28
Analysis of Transaction Terms Analysis
of Possible Transaction Results – EGPL Midpoint Valuation Transaction Sensitivity based on Tender Offer Results - ECH Base Case with 10% Holding Discount EPS impact calculated with the 5 year average (EGC’s share price) / (ECH’s
share price) adjusted by the percentage of payment in ECH shares Red numbers represent a breach of the minimum conditions set by Enel 65% net cash / 35% stock Exchange ratios: EGC / ECH = 6.83x; Adjusted EGC / ECH(2) = 2.39x; EGPL / ECH = 16.37x
Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (1.52%) 66.0% 1.81x 80.0% 0.05% 65.0% 2.00x 87.5% 2.11% 63.7% 2.25x 95.0% 4.16% 62.3% 2.51x 100% 5.48% 61.4% 2.69x ECH Midpoint Valuation B 60% net cash / 40% stock
Exchange ratios: EGC / ECH = 6.83x; Adjusted EGC / ECH(2) = 2.73x; EGPL / ECH = 16.37x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (1.95%) 65.6% 1.77x 82.4% 0.00% 64.0% 2.01x 87.5% 1.31% 62.9% 2.18x 95.0%
3.14% 61.4% 2.42x 100% 4.31% 60.5% 2.58x 65% net cash / 35% stock Exchange ratios: EGC / ECH = 6.78x; Adjusted EGC / ECH(2) = 2.37x; EGPL / ECH = 17.08x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (2.24%)
66.4% 1.79% 82.4% 0.00% 64.9% 2.03x 87.5% 1.50% 64.0% 2.21x 95.0% 3.63% 62.7% 2.45x 100% 4.99% 61.8% 2.62x ECH Low Valuation Range A 60% net cash / 40% stock Exchange ratios: EGC / ECH = 6.78x; Adjusted EGC / ECH(2) = 2.71x; EGPL / ECH = 17.08x
Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (2.67%) 65.9% 1.75x 84.8% 0.00% 63.8% 2.05x 87.5% 0.71% 63.3% 2.13x 95.0% 2.61% 61.8% 2.37x 100% 3.82% 60.9% 2.52x 65% net cash / 35% stock Exchange ratios: EGC /
ECH = 6.88x; Adjusted EGC / ECH(2) = 2.41x; EGPL / ECH = 15.66x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (0.79%) 65.7% 1.84x 78.5% 0.22% 65.0% 1.97x 87.5% 2.70% 63.3% 2.30x 95.0% 4.67% 61.9% 2.58x 100%
5.94% 61.1% 2.76x ECH High Valuation Range C 60% net cash / 40% stock Exchange ratios: EGC / ECH = 6.88x; Adjusted EGC / ECH(2) = 2.75x; EGPL / ECH = 15.66x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (1.23%)
65.3% 1.80x 79.8% 0.00% 64.2% 1.96x 87.5% 1.89% 62.6% 2.23x 95.0% 3.64% 61.1% 2.48x 100% 4.76% 60.1% 2.65x Minimum conditions breakeven scenario Active restriction OUT OF THE RECOMENDED RANGE F-29
Analysis of Transaction Terms Analysis
of Possible Transaction Results – EGPL High Range Valuation Transaction Sensitivity based on Tender Offer Results - ECH Base Case with 10% Holding Discount EPS impact calculated with the 5 year average (EGC’s share price) / (ECH’s
share price) adjusted by the percentage of payment in ECH shares Red numbers represent a breach of the minimum conditions set by Enel 65% net cash / 35% stock Exchange ratios: EGC / ECH = 6.83x; Adjusted EGC / ECH(2) = 2.39x; EGPL / ECH = 17.33x
Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (2.70%) 66.4% 1.81x 84.2% 0.00% 64.7% 2.14x 87.5% 0.92% 64.1% 2.25x 95.0% 2.98% 62.7% 2.51x 100% 4.30% 61.9% 2.69x ECH Midpoint Valuation B 60% net cash / 40% stock
Exchange ratios: EGC / ECH = 6.83x; Adjusted EGC / ECH(2) = 2.73x; EGPL / ECH = 17.33x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (3.12%) 66.0% 1.77x 86.9% 0.00% 63.5% 2.16x 87.5% 0.14% 63.4% 2.18x 95.0%
1.98% 61.9% 2.42x 100% 3.16% 60.9% 2.58x 65% net cash / 35% stock Exchange ratios: EGC / ECH = 6.78x; Adjusted EGC / ECH(2) = 2.37x; EGPL / ECH = 18.09x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (3.46%)
66.8% 1.79x 86.5% 0.00% 64.6% 2.17x 87.5% 0.29% 64.4% 2.21x 95.0% 2.41% 63.1% 2.45x 100% 3.77% 62.2% 2.62x ECH Low Valuation Range A 60% net cash / 40% stock Exchange ratios: EGC / ECH = 6.78x; Adjusted EGC / ECH(2) = 2.71x; EGPL / ECH = 18.09x
Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (3.87%) 66.4% 1.75x 87.5% (0.49%) 63.7% 2.13x 89.4% 0.00% 63.3% 2.19x 95.0% 1.42% 62.2% 2.37x 100% 2.64% 61.3% 2.52x 65% net cash / 35% stock Exchange ratios: EGC /
ECH = 6.88x; Adjusted EGC / ECH(2) = 2.41x; EGPL / ECH = 16.58x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (1.95%) 66.1% 1.84x 81.9% 0.00% 64.8% 2.10x 87.5% 1.55% 63.7% 2.30x 95.0% 3.52% 62.4% 2.58x 100%
4.79% 61.5% 2.76x ECH High Valuation Range C 60% net cash / 40% stock Exchange ratios: EGC / ECH = 6.88x; Adjusted EGC / ECH(2) = 2.75x; EGPL / ECH = 16.58x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (2.37%)
65.7% 1.80x 84.4% 0.00% 63.6% 2.12x 87.5% 0.76% 63.0% 2.23x 95.0% 2.52% 61.5% 2.48x 100% 3.65% 60.5% 2.65x Minimum conditions breakeven scenario Active restriction F-30
65% net cash / 35% stock Exchange
ratios: EGC / ECH = 6.70x; Adjusted EGC / ECH(2) = 2.34x; EGPL / ECH = 16.13x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (1.27%) 66.0% 1.84x 80.2% 0.26% 65.0% 2.03x 87.5% 2.32% 63.6% 2.30x 95.0% 4.36% 62.3%
2.58x 100% 5.67% 61.5% 2.76x 60% net cash / 40% stock Exchange ratios: EGC / ECH = 6.70x; Adjusted EGC / ECH(2) = 2.68x; EGPL / ECH = 16.13x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (1.68%) 65.6% 1.80x
81.4% (0.00%) 64.2% 2.02x 87.5% 1.55% 62.9% 2.23x 95.0% 3.38% 61.5% 2.48x 100% 4.54% 60.5% 2.65x 65% net cash / 35% stock Exchange ratios: EGC / ECH = 6.70x; Adjusted EGC / ECH(2) = 2.34x; EGPL / ECH = 15.23x Final ECH stake in EGC EPS impact(1)
Final Enel Stake Net Debt / EBITDA 2017E 75.0% (0.13%) 65.6% 1.84x 78.1% 0.78% 65.0% 1.96x 87.5% 3.46% 63.2% 2.30X 95.0% 5.49% 61.9% 2.58x 100% 6.80% 61.1% 2.76x 60% net cash / 40% stock Exchange ratios: EGC / ECH = 6.70x; Adjusted EGC / ECH(2) =
2.68x; EGPL / ECH = 15.23x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (0.56%) 65.2% 1.80x 77.1% 0.00% 64.7% 1.87x 87.5% 2.67% 62.5% 2.23x 95.0% 4.48% 61.1% 2.48x 100% 5.64% 60.1% 2.65x 65% net cash / 35%
stock Exchange ratios: EGC / ECH = 6.70x; Adjusted EGC / ECH(2) = 2.34x; EGPL / ECH = 14.23x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% 1.16% 65.1% 1.84x 75.8% 1.40% 65.0% 1.87x 87.5% 4.75% 62.8% 2.30x 95.0%
6.78% 61.4% 2.58x 100% 8.09% 60.6% 2.76x 60% net cash / 40% stock Exchange ratios: EGC / ECH = 6.70x; Adjusted EGC / ECH(2) = 2.68x; EGPL / ECH = 14.23x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 73.8% 0.40% 65.0%
1.76x 75.0% 0.72% 64.7% 1.80x 87.5% 3.94% 62.1% 2.23x 95.0% 5.74% 60.6% 2.48x 100% 6.90% 59.6% 2.65x Analysis of Transaction Terms Analysis of Possible Transaction Results – ECH Valuation Sensitivity (1/2) Transaction Sensitivity basen on
Tender Offer Results – ECH High Range with 7.5% Holding Discount EGPL Midpoint Valuation B EGPL Low Valuation Range A EGPL High Valuation Range C EPS impact calculated with the 5 year average (EGC’s share price) / (ECH’s share
price) adjusted by the percentage of payment in ECH shares Red numbers represent a breach of the minimum conditions set by Enel Minimum conditions breakeven scenario Active restriction F-31
65% net cash / 35% stock Exchange
ratios: EGC / ECH = 7.08x; Adjusted EGC / ECH(2) = 2.48x; EGPL / ECH = 17.05x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (2.65%) 66.2% 1.84x 84.7% 0.00% 64.3% 2.20x 87.5% 0.74% 63.8% 2.30x 95.0% 2.65% 62.4%
2.58x 100% 3.89% 61.5% 2.76x 60% net cash / 40% stock Exchange ratios: EGC / ECH = 7.08x; Adjusted EGC / ECH(2) = 2.83x; EGPL / ECH = 17.05x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (3.08%) 65.8% 1.80x
87.5% (0.06%) 63.0% 2.23x 87.8% 0.00% 62.9% 2.23x 95.0% 1.63% 61.5% 2.48x 100% 2.72% 60.5% 2.65x 65% net cash / 35% stock Exchange ratios: EGC / ECH = 7.08x; Adjusted EGC / ECH(2) = 2.48x; EGPL / ECH = 16.10x Final ECH stake in EGC EPS impact(1)
Final Enel Stake Net Debt / EBITDA 2017E 75.0% (1.48%) 65.8% 1.84x 80.4% 0.00% 64.7% 2.04x 87.5% 1.90% 63.3% 2.30X 95.0% 3.81% 62.0% 2.58x 100% 5.04% 61.1% 2.76x 60% net cash / 40% stock Exchange ratios: EGC / ECH = 7.08x; Adjusted EGC / ECH(2) =
2.83x; EGPL / ECH = 16.10x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (1.93%) 65.4% 1.80x 82.9% 0.00% 63.6% 2.07x 87.5% 1.08% 62.6% 2.23x 95.0% 2.77% 61.1% 2.48x 100% 3.84% 60.1% 2.65x 65% net cash / 35%
stock Exchange ratios: EGC / ECH = 7.08x; Adjusted EGC / ECH(2) = 2.48x; EGPL / ECH = 15.05x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0% (0.15%) 65.3% 1.84x 76.7% 0.35% 65.0% 1.91x 87.5% 3.23% 62.9% 2.30x
95.0% 5.14% 61.5% 2.58x 100% 6.36% 60.6% 2.76x 60% net cash / 40% stock Exchange ratios: EGC / ECH = 7.08x; Adjusted EGC / ECH(2) = 2.83x; EGPL / ECH = 15.05x Final ECH stake in EGC EPS impact(1) Final Enel Stake Net Debt / EBITDA 2017E 75.0%
(0.61%) 64.9% 1.80x 77.5% 0.00% 64.3% 1.88x 87.5% 2.38% 62.1% 2.23x 95.0% 4.05% 60.6% 2.48x 100% 5.12% 59.6% 2.65x Analysis of Transaction Terms EGPL Midpoint Valuation B EGPL Low Valuation Range A EGPL High Valuation Range C Transaction Sensitivity
basen on Tender Offer Results – ECH High Range with 12.5% Holding Discount Analysis of Possible Transaction Results – ECH Valuation Sensitivity (2/2) EPS impact calculated with the 5 year average (EGC’s share price) / (ECH’s
share price) adjusted by the percentage of payment in ECH shares Red numbers represent a breach of the minimum conditions set by Enel Minimum conditions breakeven scenario Active restriction F-32
VII. Conclusions F-33
Conclusions (1/2) Econsult has
prepared this Report in its capacity as independent valuator hired by the Board of Directors’ Committee of ECH to evaluate the merits and benefits of the Transaction for the corporate interest of ECH Econsult considers that a joint execution
of: (i) a merger with EGPL; and (ii) a tender offer over the shares of EGC would be beneficial for the Company, considering both the strategic rationale of the transactions as well as the potential positive impacts on ECH From an strategic stand
point, the Transaction could allow to: Consolidate ECH as the leading player in Chilean power and utility sector, under a structure where the interests are fully aligned with the controlling shareholder; Improve ECH's competitive positioning and
investment thesis; incorporating assets of renewable generation for 1,195 MW and an attractive portfolio of new projects; Optimize ECH’s capital structure as a result of the additional debt related with the execution of the Transaction; Reduce
ECH holding discount to the extent that a relevant part of EGC’s shares are acquired; Increase secondary trading volumes of ECH’s shares due to: (i) increase on its free float; (ii) positive impact in its weight in the different relevant
equity indexes; and (iii) positioning as the best power and utility entity to invest in Chile F-34
Conclusions (2/2) It is important to
highlight that given that the Transaction will be payable with a combination of cash and stock, no significant changes on ECH’s credit ratings that could trigger a downgrade to non investment grade are expected The analysis performed included
a valuation for each of the companies and sensitivity of the applicable holding discount. Based on these valuations the exchange ratios between EGPL/ECH and EGC/ECH were defined In particular, Econsult considers that the exchange ratio between the
shares of EGPL and ECH should be in the range of 14.23x - 17.05x, in order to be beneficial for the corporate interest of the Company Econsult also considers that in order for the Transaction to contribute to the corporate interest, the value per
share of EGC for the Tender Offer should be between CLP 537-595 per share and the exchange ratio between EGC and ECH shares should be in the range of 6.60x - 7.08x These valuations represent a premium between 9.8% and 21.6% over EGC’s share
closing price on the day of the announcement of the Transaction The proposed exchange ratios are consistent with the historical average of the last twelve months prior to the announcement of the Transaction In order to minimize dilution and maximize
earnings per share of ECH, it is convenient for the Company to maximize the net cash payment according to its additional debt capacity Based on the analysis performed, it is recommended that the net cash payment to be between 60% and 65% of the
total consideration The minimum conditions established by Enel are fulfilled in the vast majority of possible scenarios within the terms of Transaction proposed by Econsult If Enel wishes to comply with the minimum conditions set out in all possible
Transactions scenarios, it should consider adjusting some of these minimum conditions. F-35
F-36
ANNEX G
REPORT OF OSCAR MOLINA, INDEPENDENT APPRAISER OF ENEL CHILE
This Annex G is a free English translation of the original Spanish language version, which reflects the substantive content of the original Spanish
language document, but may not be a word-for-word translation. In the event of any discrepancy with the English translation, the original Spanish language document will prevail.
The pro forma and historical consolidated statements of financial position of Enel Chile S.A., Enel Generación Chile S.A. and Enel Green Power Latin
América S.A., as of September 30, 2017 that are contained in, or referred to, in the report of Oscar Molina, dated November 3, 2017, have not been examined or audited in accordance with either the standards of the American Institute
of Certified Public Accountants (AICPA) or the standards of the U.S. Public Company Accounting Oversight Board (PCAOB). These pro forma and historical consolidated statements of financial position are considered unaudited for SEC purposes.
Santiago, November 3
rd
, 2017
Messrs. Directors and Shareholders,
Enel Chile S.A.
The Board of Directors of Enel Chile S.A. (“Enel Chile” or the “Company”), pursuant to the disclosures made to the Superintendence of
Securities and Insurance (the “SVS”) in its Significant Event N° 018/2017, dated August 30
th
, 2017, and in the context of the corporate reorganization described in the Significant
Event N° 015/2017 (the “Reorganization”), which refers, among other aspects, to the merger between Enel Chile and Enel Green Power Latin America Limitada (“EGPL”) (the “Merger”), has appointed me as an independent
expert (the “Expert”), to issue an expert report (the “Expert Report”) on the estimated equity value of Enel Chile and EGPL (the “Companies”) and the exchange ratio of the corresponding shares or corporate equity (the
“Exchange Ratio”).
As is detailed in the abovementioned Significant Event, the Reorganization envisages, in addition to the Merger, a public
tender offer to purchase shares in Enel Generación Chile S.A. (the “OPA”). According to the task assigned by the Company and considering that neither the terms and conditions nor the results of the OPA are known as of this date,
it is important to highlight that this Expert Report does not consider or address the effects that the OPA could have in Enel Chile’s valuation nor in the Exchange Ratio.
Therefore, based on what was requested from me and established in the Service Agreement that Enel Chile and myself signed on September 12
th
, 2017, I hereby issue the following report.
This Expert Report is issued to serve as information that the Board of Directors
of the Company will make available to the shareholders of Enel Chile who are required to make a decision in connection with the Merger, all within the context of the Reorganization. The foregoing is pursuant to the requirements of article 156 of the
“Reglamento de Sociedades Anónimas” (the “Regulation”).
In the analysis and evaluation process, we used both confidential information
provided by the Company through its executives and information obtained from private databases to which Bansud Capital has access. We additionally considered information obtained from written and electronic media publicly available on the internet.
The information on the Companies was available through a virtual data room in Intralinks Inc. (the “Data Room”), including, among others:
|
|
•
|
|
Historical financial statements for the Companies and their main subsidiaries.
|
|
|
•
|
|
Presentations drafted by the Company’s management regarding Enel Generación Chile (“EGC”), Enel Distribución Chile (“EDC”), Enel Chile and EGPL.
|
|
|
•
|
|
Financial projections for the 2017-2022 period for EGC and its subsidiaries, EDC, Enel Chile and EGPL, including, among others, balances, income statements, expansion and maintenance expenditures and the main working
capital accounts.
|
|
|
•
|
|
Projections of the main operational variables of EGC, EDC and EGPL, including, among others, prices and quantities for their main revenue sources. In the case of EGC and EGPL, said projections cover the period between
2017-2045.
|
|
|
•
|
|
Estimates of the investments that EGC, EDC, Enel Chile and EGPL are expected to perform in the medium and long term.
|
1
|
|
•
|
|
Audited financial statements as of September 30
th
, 2017 for EGC, EDC, Enel Chile and EGPL.
|
|
|
•
|
|
Legal DD Report issued by Carey.
|
|
|
•
|
|
Technical DD Report issued by DNV GL.
|
Meetings were also held with the management of EGC, EDC, Enel Chile and
EGPL, and an instance for queries and responses was electronically provided via the Data Room.
Additionally, we had access to proprietary and public
information, including:
|
|
•
|
|
Statistical information, market prices, investment bank reports and information of comparable companies obtained from Bloomberg.
|
|
|
•
|
|
Operational information obtained from the webpage of the “Coordinador Eléctrico Nacional”.
|
|
|
•
|
|
General news obtained in the web.
|
As it was previously mentioned, this Expert Report was exclusively drafted over the
basis of the information provided by Enel Chile and EGPL, as well as publicly available information.
No independent verification has been conducted
regarding the provided information nor of the public information used in the analyses and conclusions of this report. Therefore, the Expert Report does not issue nor grant any representation or guarantee, of any kind, regarding the truthfulness or
precision of said information and, consequently, the Expert does not assume any liability whatsoever for any errors or omissions that could exist in the information that was provided or that it may have accessed, nor the analyses and conclusions
directly or indirectly resulting from such errors or omissions.
Likewise, no verification of the terms and conditions of the power purchase agreements
(“PPA”) has been conducted, nor a technical revision of the Companies’ assets. In the case of PPAs and in accordance with the terms set forth in the preceding paragraph, we have relied in the report provided by Carey.
The analyses and/or conclusions contained in this Expert Report are valid as of its date and are only useful for the purpose for which they have been
requested. Therefore, no liability of any kind is hereby assumed for any damage that could be generated as a result of using this Report with a purpose other than the foregoing.
The Expert Report does not constitute a recommendation for the approval of the Merger.
|
4.
|
USE OF THE EXPERT REPORT
|
This Expert Report is issued in compliance with the provisions of article
No. 156 of the Regulation. Therefore, it is hereby authorized that this report:
|
|
a)
|
Serves as ground for the recommendations that the Company’s directors issue or may issue with regards to the Merger and the Exchange Ratio, and
|
|
|
b)
|
Is made available to the Company’s shareholders through the means that its Board of Directors may decide in connection to the call of the Extraordinary Shareholders Meeting that is to address the Reorganization
and, moreover, is incorporated in the documentation that the Company shall provide to the U.S. Securities and Exchange Commission (“SEC”), provided that such is necessary in accordance with the regulations applicable in this regard.
|
2
|
5.
|
METHODOLOGY USED TO DETERMINE THE EXCHANGE RATIO OF THE MERGING COMPANIES
|
The applied methodology
consisted in:
|
|
a)
|
Reviewing the business plans of the Companies and their main subsidiaries.
|
|
|
b)
|
Validating the information with historical results and main future development premises expressed by each administration.
|
|
|
c)
|
Making inquiries regarding aspects in which there were doubts and, depending on the received responses, adjusting the projections.
|
|
|
d)
|
Valuing Enel Chile and EGPL through a
sum-of-the-parts
analysis, making separate valuations for
each company in a standalone basis as well as for their main subsidiaries using the Discounted Cash Flows (“DCF”) methodology.
|
|
|
e)
|
Corroborating the results obtained through DCF with trading and transaction multiples of comparable companies.
|
|
|
f)
|
Calculating each company’s equity value, subtracting the net financial debt and other adjustments as of September 30
th
, 2017, including estimates of dividends to
be distributed in January 2018, before the Merger.
|
Exhibit A provides greater detail of the conducted analysis.
|
6.
|
ESTIMATE OF THE VALUE AND EXCHANGE RATIO OF THE MERGING COMPANIES
|
|
6.1
|
Estimation of Value as of September 30
th
, 2017
|
In
accordance to what was stated at the beginning of this document, the estimation of Enel Chile’s value that is presented in this Expert Report does not consider in any way the OPA that would be performed as part of the Reorganization.
It is also necessary to highlight that in order to maintain consistent valuation criteria for both companies, the inclusion of a holding discount
1
was not considered.
|
|
|
|
|
|
|
|
|
|
|
($, Chilean pesos)
|
|
Enel Chile
2
|
|
|
EGPL
|
|
|
Value of Equity as of September 30
th
, 2017
3
|
|
|
4,457,950,000,000
|
|
|
|
1,006,223,000,000
|
|
|
Total N° of Shares
|
|
|
49,092,772,762
|
|
|
|
827,205,371
|
|
|
Price per Share
|
|
|
90.8
|
|
|
|
1,216.4
|
|
As indicated by the Company, the valuation of EGPL assumes that, as of the time of the Merger, its only asset will be the 100%
ownership of Enel Green Power Chile.
Exhibit A explains in further detail the valuation of both companies.
|
1
|
Difference between the sum of the intrinsic value of each subsidiary of a conglomerate and the market capitalization of said conglomerate (or holding) of companies.
|
|
2
|
Enel Chile’s valuation considers the effect of dividend distribution in EGC and Enel Chile in January 2018, before the Merger, estimated in US$64 million and US$58 million respectively.
|
|
3
|
Figures in Chilean Pesos, as per the observed exchange rate as of September 30
th
, 2017.
|
3
Considering the equity value for Enel Chile and EGPL previously discussed, for the
purposes of the Merger Enel Chile shall perform a capital increase as per the following specifications:
|
|
|
|
|
|
|
|
|
Amount of Capital Increase for
Merger
3
:
|
|
$
|
1,006,223,000,000
|
|
|
Price per share to be
issued
3
|
|
$
|
90.8
|
|
|
N° of Enel Chile shares to be issued
|
|
|
11,080,940,138
|
|
|
Total number of Enel Chile shares
after the Merger
|
|
|
60,173,712,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N° of Shares
|
|
|
Exchange Ratio
(Enel Chile / EGPL)
|
|
|
EGPL
|
|
|
827,205,371
|
|
|
|
13.4x
|
|
|
7.
|
PROFORMA BALANCE SHEET OF THE ABSORBING COMPANY
|
The following proforma balance sheet, prepared based on
the information drafted by Enel Chile’s management and reviewed by EY Audit SpA, represents the absorbing company (i.e., Enel Chile), presenting in a simplified manner the main asset, liability and equity accounts of the Companies, with any
adjustments required.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(thousands of Chilean Pesos)
|
|
Enel Chile
(Sep/30/2017)
|
|
|
EGPL
(Sep/30/2017)
|
|
|
Adjustments
|
|
|
Enel Chile
post-Merger
(Proforma)
|
|
|
Current Assets
|
|
|
856,738,886
|
|
|
|
134,911,988
|
|
|
|
(16,350,370
|
)
|
|
|
975,300,504
|
|
|
Non-Current
Assets
|
|
|
4,597,540,759
|
|
|
|
1,515,499,681
|
|
|
|
18,519,108
|
|
|
|
6,131,559,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
5,454,279,645
|
|
|
|
1,650,411,669
|
|
|
|
2,168,738
|
|
|
|
7,106,860,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
570,117,870
|
|
|
|
146,882,745
|
|
|
|
(16,350,370
|
)
|
|
|
700,650,245
|
|
|
Non-Current
Liabilities
|
|
|
1,135,969,658
|
|
|
|
756,272,394
|
|
|
|
—
|
|
|
|
1,892,242,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
1,706,087,528
|
|
|
|
903,155,139
|
|
|
|
(16,350,370
|
)
|
|
|
2,592,892,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued Capital
|
|
|
2,229,108,975
|
|
|
|
527,698,886
|
|
|
|
478,524,114
|
|
|
|
3,235,331,975
|
|
|
Accumulated Earnings
|
|
|
1,754,976,619
|
|
|
|
123,506,438
|
|
|
|
(123,506,438
|
)
|
|
|
1,754,976,619
|
|
|
Other Reserves
|
|
|
(1,017,014,701
|
)
|
|
|
992,619
|
|
|
|
(336,498,568
|
)
|
|
|
(1,352,520,650
|
)
|
|
Equity attributable to the owners of the controller
|
|
|
2,967,070,893
|
|
|
|
652,197,943
|
|
|
|
18,519,108
|
|
|
|
3,637,787,944
|
|
|
Non-controlling
stakes
|
|
|
781,121,224
|
|
|
|
95,058,587
|
|
|
|
—
|
|
|
|
876,179,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity
|
|
|
3,748,192,117
|
|
|
|
747,256,530
|
|
|
|
18,519,108
|
|
|
|
4,513,967,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
|
5,454,279,645
|
|
|
|
1,650,411,669
|
|
|
|
2,168,738
|
|
|
|
7,106,860,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The adjustments performed were the following:
|
|
a)
|
Current Assets / Current Liabilities
: Elimination of accounts receivable and payable with related parties, and intercompany balances between EGPL and Enel Chile (and subsidiaries) for Ch$16,350,370,000
|
|
|
b)
|
Non-Current
Assets
: Adjustments in goodwill for Ch$18,519,108,000 due to the excess value of the net assets of EGPL acquired by Enel and which were accounted for in Enel
(“Push down” adjustments). After the Merger, said goodwill must be reflected in the new controller’s balance sheet (Enel Chile)
|
We understand that, if the Reorganization is approved, EGPL would transfer its equity interests in corporations with operations outside Chile
through purchase agreements. The effect of these transfers has not been considered given that it is estimated to be
non-material
4
|
|
•
|
|
Elimination of EGPL’s Issued Capital for Ch$527,698,886,000
|
|
|
•
|
|
Capital Increase in Enel Chile in exchange for EGPL’s equity, for a sum of Ch$1,006,223,000,000, defined based on Enel Chile’s price per share (Ch$90.8) and the number of Enel Chile shares to be issued
(11,080,940,138)
|
|
|
ii)
|
Accumulated Earnings
:
|
|
|
•
|
|
Elimination of EGPL’s Accumulated Earnings, for Ch$123,506,438,000
|
|
|
•
|
|
Although it is estimated that in January 2018, before the Merger, EGC and Enel Chile will distribute dividends, the effects of these dividends has not been included in the Proforma Balance Sheet because at the date of
this Expert Report, they have not been officially declared
|
|
|
•
|
|
Net effect of elimination of EGPL’s equity accounts, for Ch$651,205,324,000
|
|
|
•
|
|
Push Down
Adjustments
in Other Reserves, for Ch$18,519,108,000
|
|
|
•
|
|
Effect of the capital increase in Enel Chile in exchange for EGPL’s equity, for (Ch$1,006,223,000,000)
|
|
|
•
|
|
The effect of the sale of EGPL’s equity interests outside Chile was not included, as it is estimated to be
non-material
|
|
8.
|
STATEMENT BY THE EXPERT
|
Pursuant to articles N° 156 and 168 of the Regulation, I hereby declare:
|
|
a)
|
That I am independent from Enel Chile and EGPL, as well as from the business group to which both companies belong; and
|
|
|
b)
|
That I am responsible for the assessments contained in this Expert Report, as per the terms and conditions indicated herein.
|
Oscar Fernando Molina Henríquez
National Identification
Card
No. 9.618.608-8
5
Exhibit A: Economic Valuation and
Exchange Ratio ELQUI Operation November 3rd, 2017 G-1
Scope of Work According to what was
informed to the Expert by Enel Chile S.A. (“Enel Chile” or the “Company”) and what was informed in the Significant Event dated August 25, 2017, Enel Chile decided to initiate the analysis of a potential corporate
reorganization (the “Reorganization”) to incorporate, through a merger by absorption with Enel Green Power Latin América Limitada (“EGPL”), the non-conventional renewable energy generation assets that the latter
possesses in Chile (the “Merger”). This Merger would be conditioned to the success of a Public Tender Offer (“OPA”, for its initials in Spanish) that Enel Chile shall conduct simultaneously to acquire up to 100% of the shares
issued by its subsidiary Enel Generación Chile S.A. (“EGC”) owned by its minority shareholders. The condition to declare the success of the OPA shall be that Enel Chile reaches a percentage that exceeds 75% of EGC’s ownership.
In accordance with the applicable legislation on corporations, merger operations must be approved by the Shareholders Meetings of each of the participating companies. Therefore, for the purposes of proceeding to the materialization of the Merger,
and in consideration to the provisions of article 156 of the Regulation on Corporations and General Provision No. 30 of the Securities and Insurances Superintendence (the “SVS”), Enel Chile’s Board appointed Oscar Fernando Molina
Henríquez, a Chilean national, married, industrial civil engineer, national ID No. 9.618.608-8, as independent expert (the “Expert”), so that he may issue a report on the value of the companies participating in the Merger, and the
exchange ratio of the corresponding shares or corporate equity (the “Expert Report”). The valuation work conducted by the Expert, that serves as grounds for the estimation of the exchange ratio presented, has been conducted over the
basis of information received from the Company. To conduct this task, the Expert has used and trusted in the information received from or on behalf of Enel Chile, as well as publicly available information. The Expert, aided by the advisory firm
Bansud Capital, has not conducted an independent investigation or verification of the information received, therefore, neither the Expert nor Bansud Capital assume any liability regarding the confirmation of the integrity and authenticity of
information provided by the Company, nor the publicly available information used in the analysis and conclusions of the Expert Report. Therefore, neither the Expert nor Bansud Capital assume any liability for errors or omissions that could exist in
the information received, or the analysis and conclusions that directly or indirectly emanate from such errors. The Expert Report, along with its exhibit, is simultaneously submitted in two formats: an original in Spanish and a copy in English. The
Spanish version shall prevail for all purposes. G-2
General Limitations This Expert
Report was drafted for the exclusive use of Enel Chile`s Board of Directors and shareholders, as part of the analysis of the potential Merger and, therefore, it must be exclusively used within such context, discarding its use for other purposes. The
Expert Report does not constitute an explicit or tacit recommendation to Enel Chile`s Board of Directors regarding the convenience of reaching a decision concerning the Merger and/or the Reorganization. No obligation or liability is assumed in the
drafting of this Expert Report in connection to the eventual results or consequences of the Reorganization or the failure to perform it. For the purposes of conducting this analysis and the subsequent conclusions contained in this Expert Report, we
have considered information that was provided in writing by the Company through its corresponding managers, as well as publicly available information, without conducting an independent verification of such information, its authenticity, integrity,
accuracy, consistency or precision. Regarding the estimates, projections or forecasts, we have supposed and trusted that such have been issued in good faith and in a reasonable manner, based on assumptions that reflect the best available estimates
and judgment by each company`s management, in relation to the results expected in the future. In the drafting of the Expert Report, we have not assumed any obligation or commitment whatsoever to provide legal, accounting or tax advisory services,
nor to conduct a due diligence of the companies subjected to the Merger. Therefore, none of the contents of this Expert Report are to be considered, used or interpreted as legal, accounting or tax advise and any part of its contents that directly or
indirectly reference legal, accounting or tax-related aspects must be deemed as a review of general aspects that we have considered necessary or relevant in order to support the analysis. As was requested by Enel Chile, this Expert Report includes:
(i) the estimated equity value of Enel Chile and EGPL, which shall eventually merge, and, (ii) the estimate of the corresponding Exchange Ratio of the shares that will be conducted in accordance with the Merger. According to the task assigned by the
Company and considering that neither the terms and conditions nor the results of the OPA are known as of this date, it is important to highlight that this Expert Report does not consider or address the effects that the OPA could have in Enel
Chile’s valuation nor in the Exchange Ratio. Finally, we stress that we have not been requested, nor have we conducted an advisory of any kind regarding the design, choice and structure of the operations that comprise the Reorganization, nor
the terms or conditions of any other aspect of the same, nor were we requested to render services different to the drafting of this Expert Report. G-3
Background Information and Applied
Procedures In the analysis and evaluation process, we used both private confidential information provided by the Company through its executives and information obtained from private databases to which Bansud Capital has access. We additionally
considered information obtained from written and electronic media publicly available on the internet. The information on the Companies was available through a virtual data room in Intralinks Inc. (the “Data Room”), including, among
others: •Historical financial statements for the Companies and their main subsidiaries. •Presentations drafted by the Company’s management regarding Enel Generación Chile (“EGC”), Enel Distribución Chile
(“EDC”), Enel Chile and EGPL. •Financial projections for the 2017-2022 period for EGC and subsidiaries, EDC, Enel Chile y EGPL, including balances, income statements, expansion and maintenance investments and the main working
capital accounts, among others. •Projections of the main operational variables of EGC, EDC and EGPL, including prices and quantities that comprise their main revenue, among others. In the case of EGC and EGPL, said projections cover the period
between 2017-2045. •Estimates of the investments that EGC, EDC, Enel Chile and EGPL are expected to perform in the medium and long term. •Audited financial statements as of September 30, 2017 for EGC, EDC, Enel Chile and EGPL.
•Legal DD Report issued by Carey. • Technical DD Report issued by DNV GL. Meetings were also held with the management of EGC, EDC, Enel Chile and EGPL, and an instance for queries and responses was electronically provided by the Data
Room. Additionally, we had access to proprietary and public information, including: •Statistical information, market prices, investment bank reports and information of comparable companies obtained from Bloomberg. •Operational
information obtained from the webpage of the “Coordinador Eléctrico Nacional”. •General news obtained in the web. G-4
6 C 5 4 3 2 A Table of Contents
Executive Summary6 Description of the Potential Transaction 8 Valuation Methodology 13 Enel Chile and EGPL Valuation19 Enel Chile – EGPL Exchange Ratio 23 Proforma Balance Sheet of the Merged Company as of September 30, 201726 Beta
Calculation29 Trading Multiples 33 Transaction Multiples37 1 APPENDIXES B G-5
1. Executive Summary G-6
Executive Summary Enel Chile has
proposed to perform a corporate reorganization that includes a merger with EGPL, which would allow the incorporation of the renewable energy generation assets that the latter possesses in Chile. The merger would be conditioned to the declaration of
success of the OPA to acquire up to 100% of EGC’s shares As part of the analysis process of the potential merger between Enel Chile and EGPL, the Company’s Board of Directors appointed Oscar Fernando Molina Henríquez as independent
expert to issue an Expert Report regarding the value of the merging entities and the exchange ratio of the shares or corresponding corporate equity In order to value the entities that would be merged, a sum-of-the-parts analysis was conducted,
performing separated valuations for each of the companies at a standalone level, as well as for their main subsidiaries. The main valuation methodology used was Discounted Cash Flow, the result of which was confirmed with a valuation based on
trading multiples of comparable companies and transaction multiples According to the results of the conducted analysis, the economic value of Enel Chile’s equity is in the range between US$6,700 million and US$7,300 million (1), while the
value of EGPL’s equity is in the range between US$1,480 million and US$1,680 million It is relevant to highlight that the aforementioned valuation range for Enel Chile does not include a holding discount(2) As consequence of the valuations
obtained for Enel Chile and EGPL’s equity, the exchange ratio in the merger, in the base case, would be 13.4x Enel Chile shares per EGPL share Additionally, a sensitivity analysis for the exchange ratio was performed, considering variations in
Enel Chile’s valuation due to the inclusion of a holding discount and variations in EGPL’s valuation, resulting in a range between 12.5x and 15.8x Enel Chile shares per EGPL share 1. Executive Summary (1) Considers distribution of
dividends in EGC and Enel Chile of US$64 million and US$58 million respectively in January 2018, before the Merger (2) Difference between the sum of the intrinsic value of each subsidiary of a conglomerate (or holding) and the market capitalization
of said conglomerate of companies G-7
2. Description of the Potential
Transaction G-8
Proposed Corporate Reorganization
Enel Chile has proposed to its controlling shareholder, Enel SpA, to conduct a corporate reorganization, whereby Enel Chile – by way of a merger by absorption with EGPL – can takeover the assets pertaining to the generation of
non-conventional renewable energy (“ERNC,” for its initials in Spanish), owned by the latter in Chile The proposed Merger would be subject to the declaration of success of a Public Tender Offer (“OPA”) to be submitted by Enel
Chile, for the acquisition of up to 100% of EGC’s shares. The OPA would be subject to: (i) Enel Chile achieving a stake in EGC that exceeds 75%; and (ii) the approval of an amendment of the corporate bylaws of EGC, in such a manner that the
latter is no longer subject to the provisions of Title XII of DL 3,500 of year 1980 and the shareholding concentration limits set forth by said Decree Through a letter sent to Enel Chile on August 25, 2017, Enel SpA, the controlling shareholder of
Enel Chile, declared that in order to gain its support, the corporate reorganization would additionally have to fulfill the following conditions: The transaction would have to be executed within market terms An increase in Enel Chile`s earnings per
share must be obtained At the end of the process, Enel SpA must retain a stake in Enel Chile similar to its current ownership, without losing its controlling status within the limits of maximum shareholding concentration of 65% set forth by the
bylaws 2. Description of the Potential Transaction G-9
Simplified Diagram of the Proposed
Reorganization Current structure STRUCTURE AFTER CORPORATE REORGANIZATION Enel (Italy) Enel Chile Enel Generación Chile (EGC) Enel Distribución Chile (EDC) Enel Green Power Chile (EGPC) Enel (Italy) Enel Chile Enel Generación Chile
(EGC) Enel Distribución Chile (EDC) Enel Green Power Chile (EGPC) Enel Green Power Latin America (EGPL) 99.99% 59.98% 99.0906% 99.90% >75% 99.0906% 99.90% 60.62% ~ 60-65% 2. Description of the Potential Transaction G-10
Enel Chile and Enel Green Power
Latin America Corporate Structure Enel Chile Enel Generación Chile S.A. Enel Distribución Chile S.A. GasAtacama Chile S.A. Pehuenche S.A. Central Eólica Canela S.A. EGPL Enel Green Power Chile Ltda. (EGPC) Geotermia del Norte S.A.
97.3701% 2.6299% 99.0906% 59.98% 75.00% 92.65% Enel S.p.A. (Italy) 60.62%1 (1) Indirect ownership through corporate entities Enel Latinoamérica S.A. and Enel Iberoamérica S.R.L. Parque Eólico Talinay Oriente S.A. 61.37% 84.59%
99.99109% 99.90% Enel Green Power S.p.A. 34.57% 100% 2. Description of the Potential Transaction G-11
Main Operational Characteristics
by Company Generation Main Technologies Capacity ‘16 (MW) Generation ‘16 (GWh/year) Plant Factor ‘16 Long-term Capacity (MW) Long-term Generation (GWh/year) Long-term Plant Factor EGC (standalone) Hydroelectric, Gas, Coal 3,737
10,579 32% 3,887 13,461 39% Pehuenche Hydroelectric 699 2,365 39% 699 3,525 58% Gas Atacama Hydroelectric, Gas, Coal 1,838 4,893 30% 1,838 2,531 15% Canela Wind 78 110 16% 0 0 0% EGPL (consolidated) Wind, Solar, Geothermal, Hydroelectric 1,148 2,169
22% 2,332 6,286 31% distribution N° Clients Concession Area (km2) Energy Distributed ‘16 (TWh) Energy Distributed ‘17 (TWh) Infrastructure High Voltage Lines (km) Medium / Low Voltage Lines (km) EDC 1,850,000 2,105 15.9 16.2 361
16,682 2. Description of the Potential Transaction G-12
3. Valuation Methodology
G-13
Used Methodology In light of the
characteristics of the available information, a sum-of-the-parts analysis was conducted in order to value Enel Chile and EGPL, developing separate valuations for each one of the Companies on a standalone basis and for their main subsidiaries The
main methodology that was used was the Discounted Cash Flow (“DCF”) method, the results of which were verified with a valuation by multiples of comparable companies and transactions 3. Valuation Methodology METHODOLOGIES Discounted Cash
Flow (DCF) Consists in determining the value of each company by estimating the future cash flows, and then discounting them at an appropriate rate depending on their risk DCF is a dynamic method, which considers the companies as cash flow generating
agents Trading Multiples Valuation of each company based on financial and operational multiples of other companies publicly listed in stock exchanges (in Chile and/or abroad) which have similar characteristics It provides a reference of the market
appreciation of the price ranges at which each company could be traded. Its limitation is the definition of the sample of comparable companies, as well as the selection of the most relevant ratios (multiples) Transaction Multiples Valuation of each
company based on financial and operational multiples derived from transactions of comparable companies Valuation reference from the perspective of a strategic investor. The limitations of this method are the universe of comparable transactions and
the availability of information, in view of the private nature of many of these operations G-14
Valuation via DCF For each one of
the companies operational and financial projections were developed, based on their respective business plans and estimations of future performance. Using the projections provided by each administration, underlying hypotheses, and certain adjustments
conducted by Bansud Capital based on its experience, annual Free Cash Flows (1) were projected for each company`s forecast period The operational and financial projections allowed the estimation of Free Cash Flows, which were discounted using a rate
(“Discount Rate”) that represents their underlying risks, so as to express them in terms of present value In order to determine the Discount Rate, the Weighted Average Cost of Capital (“WACC”) method was used. The Discount
Rate considers an appropriate capital structure in the long-term, the cost of long-term debt, and the cost of capital taking into account the risk profile of the investment The essential elements that should be taken into consideration when using
this method are: Operation and financial projections (sales volumes, margins, investment plans, efficiencies, and economies of scale) Discount Rate Projection period and estimation of residual value (or terminal value) DCF is the most used
methodology for valuing ongoing operations (1)Free Cash Flow equals Revenues minus Costs and Operational Expenses (excluding Depreciation and Amortization), minus Taxes, minus CAPEX, and minus changes in Working Capital. 3. Valuation Methodology
G-15
Projection Period and Long Term
Growth A six-year projection term was defined (2017-2022) for Enel Chile (standalone) and EDC However, for EGC and EGPL, due to the existence of a long-term power purchase agreement (“PPA”) between them (i.e., average 3.0 TWh/year during
the 2018-2043 period), it was necessary to extend the projection term for these companies and their subsidiaries until 2044, so as to better reflect the impact of said contract in the cash flow generation As it was necessary to extend the projection
period, it was also required to model the growth potential, including new projects which – despite being in early development stages – allow for the expression of a reasonable growth of cash flows in the long term The main long-term
growth assumptions were the following: 3. Valuation Methodology EGC’s development strategy does not envisage relevant growth projects, except for Los Condores power plant (under construction) The main initiatives under analysis correspond to
desalination plants associated to combined cycle power plants In light of energy price perspectives, it is highly unlikely that said power plants can operate in a stable manner; thus, said projects are, at this point in time, unfeasible EDC’s
long-term growth is linked to: (i) the growth in energy consumption; (ii) the expansion of the Smart Grid; and (iii) the penetration of new value-added services It is assumed that EDC’s strong market position will allow the penetration of the
new value-added services, with a high probability (75%) of success The business plan assumes the development of 10 new ERNC generation projects, all subject to the condition of obtaining long-term PPAs Two groups of investments of 5 projects each
were modeled and were assigned a probability of development of 100% (1) and 50%. Their cash flows were valued with a discount rate 1% higher than WACC EGC EDC EGPL (1)According to the results of the 2017/01 energy supply tender by CNE, published in
November 02, 2017 G-16
The Discount Rate (WACC) was
calculated using the following formula: where, Ke = Cost of Equity; Kd = Cost of Debt; D = Debt Market value ; E = Market capitalization, and t= Income tax rate The calculation of the Cost of Equity was derived via the CAPM method (Capital
Asset Pricing Model), using the following formula: where, = risk-free rate; = Beta coefficient; and = expected rate of return of the market portfolio The risk-free rate used corresponds to the yield of the bond in US$ of the Republic of Chile, 3.86%
2047 The return of the market portfolio was estimated as of 6.0% risk premium, as per industry standards The factor was obtained by the analysis of the covariance of the stock price of comparable companies against the S&P 500, for a maximum
period of 10 years and adjusted by the respective leverage and tax rate The terminal value reflects the value of the expected free cash flows of each company, beyond the explicitly projected period Bansud Capital`s model assumes a traditional
perpetuity formula, over the basis of a “normalized” free cash flow for the terminal year (i.e., the first year after the explicitly projected period) Additionally, the implicit EV/EBITDA exit multiple of the Terminal Value obtained from
the perpetuity calculation was also calculated Discount Rate and Terminal Value DISCOUNT RATE TERMINAL VALUE 3. Valuation Methodology G-17
Discount Rate (WACC) Calculation
Source: Bloomberg as of October 23, 2017. Enel Chile’s cost of debt and leverage was used for EGC and EDC, because the financing strategy is carried out in a consolidated manner Given the limited number of comparable Distribution companies,
and considering the relative risks between the Generation and Distribution businesses, the Beta for EDC was adjusted so that it doesn’t exceed the beta of EGC Even though comparable companies exist in the Generation – Renewable Energies
subsector, when clearing the sample of illiquid shares and companies with limited trading record, the sample, in our opinion, is not representative 3. Valuation Methodology WACC (US$), nominal EGC (1) EDC (1) EC EGPL US Risk-free Rate (US Treasury
30 years) 2.89% 2.89% 2.89% 2.89% Spread over US Treasury 0.87% 0.87% 0.87% 0.87% Chile Risk-free Rate (rf) 3.76% 3.76% 3.76% 3.76% Unlevered Beta (βU) 0.57 0.57(2) 0.57 0.57(3) Levered Beta (βL) 0.67 0.67 0.67 0.75 Market Risk Premium
6.00% 6.00% 6.00% 6.00% Cost of Equity (Ke) 7.80% 7.80% 7.80% 8.25% Corporate Spread (over rf) 1.00% 1.00% 1.00% 2.00% Cost of Debt (Kd) (pre-tax) 4.76% 4.76% 4.76% 5.76% Corporate Tax Rate () 27.00% 27.00% 27.00% 27.00% Cost of Debt (after tax)
3.47% 3.47% 3.47% 4.20% D / (D + E) 20% 20% 20% 30% WACC (US$) 6.93% 6.93% 6.93% 7.03% WACC (US$), nominal EGC (1) EDC (1) EC EGPL US Risk-free Rate (US Treasury 30 years) 2.89% 2.89% 2.89% 2.89% Spread over US Treasury 0.87% 0.87% 0.87% 0.87% Chile
Risk-free Rate (rf) 3.76% 3.76% 3.76% 3.76% Unlevered Beta (βU) 0.57 0.57(2) 0.57 0.57(3) Levered Beta (βL) 0.67 0.67 0.67 0.75 Market Risk Premium 6.00% 6.00% 6.00% 6.00% Cost of Equity (Ke) 7.80% 7.80% 7.80% 8.25% Corporate Spread (over
rf) 1.00% 1.00% 1.00% 2.00% Cost of Debt (Kd) (pre-tax) 4.76% 4.76% 4.76% 5.76% 27.00% 27.00% 27.00% 27.00% Cost of Debt (after tax) 3.47% 3.47% 3.47% 4.20% D / (D + E) 20% 20% 20% 30% WACC (US$) 6.93% 6.93% 6.93% 7.03% G-18
4. Enel Chile and EGPL Valuation
G-19
DCF Valuation Summary Company WACC
Perpetuity Enterprise Value (EV) (US$ m) Terminal Value NFD and Other Adjustments(1) (less) (US$ m) Equity Value (US$ m) % EV Exit Multiple (EV/EBITDA) EGC (Standalone) 6.93% 2.70% 5,430 16% 10.8x 1,481 3,949 Pehuenche 6.93% 2.30% 2,553 21% 12.1x 97
2,457 GasAtacama(2) 6.93% 2.30% 818 29% 8.5x (224) 1,041 Canela(3) 6.93% 2.30% 38 0% n.a. 148 (110) EDC 6.93% 3.00% 2,910 84% 8.8x 207 2,703 Enel Chile (Standalone) 6.93% 3.00% (360) n.a. n.a. (416) 57 EGPL (Consolidated) 7.03% (+ 1% projects) 3.00%
2,855 13% 8.5x 1,270 1,585 4. Enel Chile and EGPL Valuation Other adjustments includes derivatives, provisions, payable/receivable dividends, among others. For EGC and Enel Chile, as was agreed in Shareholders Meetings held in April 2017 and
considering that the Merger, if it were to happen, would occur after January 2018, an adjustment is included for interim dividends of US$64 million and US$58 million respectively. For EGPL, an adjustment is included for minority interests in
Geotérmica del Norte and Talinay Oriente Given Central Atacama’s low plant factor and long-term spot price forecasts, it is assumed that it does not operate from 2018 onwards and that no new investments are realized to maintain or extend
its useful life Given Canela Wind Park’s low plant factor and long-term spot price forecasts, it is assumed that when Canela reaches the end of its useful life no investments are realized to refurbish it G-20
EGC (US$ m) Sum-of-the-Parts (DCF
Valuations) Enel Chile (US$ m) EGPL (US$ m) Note: Ch$● share price in chilean pesos, converted at observed exchange rate at September 30, 2017 4. Enel Chile and EGPL Valuation Ch$556 Ch$91.2 Ch$1,221 G-21
DCF Valuation (with holding
discount) Target Price (Market Analysts(2)) EV / EBITDA ‘17E (Transaction Multiples) EV / EBITDA ‘18E (Trading Multiples) DCF Valuation EV / EBITDA ‘18E (Trading Multiples) DCF Valuation EV / EBITDA ‘17E (Transaction
Multiples) Economic Valuation Summary In our opinion, Enel Chile’s equity value is in the range between US$6,700 y US$7,300 million. In order to standardize the valuation criteria with EGPL, this value doesn’t consider a holding
discount(3). EGPL’s equity value is in the range between US$1,480 and US$1,680 million ESTIMATION OF ECONOMIC VALUE OF EQUITY (US$ MILLION) EGPL Enel Chile : Market Capitalization as of November 02, 2017 Includes analyst reports published
between August 28, 2017 and October 31, 2017 Holding discount refers to the difference between the intrinsic value of a holding’s subsidiaries and the market capitalization of the holding’s own equity 1,480 1,680 6.1x 8.1x 6.4x 11.3x
Ch$1,139 Share Price Share Price Ch$1,293 4. Enel Chile and EGPL Valuation 7,300 6.6x 9.5x 6.4x 11.3x 10% 0% Discount Ch$82.0 6,700 Ch$86.9 Ch$94.7 5,723 (1) Ch$86.6 Ch$91.2 5% G-22
5.Enel Chile – EGPL Exchange
Ratio G-23
Exchange Ratio Calculation
Considering the equity value range for Enel Chile and EGPL previously discussed, the following range for the Exchange Ratio of their shares was estimated It is important to highlight that this Exchange Ratio range doesn’t consider the effects
that the OPA could have in Enel Chile’s valuation 5. Enel Chile – EGPL Exchange Ratio Valuation Range doesn’t consider a holding discount Enel Chile N° of Shares 49,092,772,762 Valuation Range(1) Low Mid High
Equity Value (US$ m) 6,700 7,000 7,300 Equity Value (Ch$ m) 4,266,895 4,457,950 4,649,005 Value per Share (Ch$) 86.9 90.8 94.7 EGPL N° of Shares 827,205,371 Valuation Range Low Mid High Equity Value (US$ m) 1,480 1,580 1,680 Equity
Value (Ch$ m) 942,538 1,006,223 1,069,908 Value per Share (Ch$) 1,139 1,216 1,293 Enel Chile / EGPL MERGER Valuation Range EGPL Low / Enel Chile High Mid EGPL High / Enel Chile Low Equity Value (US$ m) 8,780 8,580 8,380 Equity Value
(Ch$ m) 5,591,543 5,464,173 5,336,803 Value per Enel Chile Share (Ch$) 94.7 90.8 86.9 Capital Increase (Ch$m) 942,538 1,006,223 1,069,908 Enel Chile Shares to be issued 9,953,055,300 11,080,940,138 12,309,829,588 Total Enel Chile Shares
Post-Merger 59,045,828,062 60,173,712,900 61,402,602,350 Exchange Ratio (Enel Chile shares / EGPL share) 12.0x 13.4x 14.9x G-24
Exchange Ratio Sensitivity
Analysis The base case for calculation of the Exchange Ratio doesn’t consider a holding discount in Enel Chile’s valuation. Despite this, and as a sensitivity analysis, the following table displays the variation of the Exchange Ratio
when different holding discounts are applied to Enel Chile’s equity value, versus different valuations for EGPL within the aforementioned valuation range 5. Enel Chile – EGPL Exchange Ratio Holding Discount (Enel Chile) Enel Chile (Ch$ /
share) EGPL Equity Value Range (US$m) 1,480 1,580 1,680 Base Case 0% 90.8 12.5x 13.4x 14.2x 2.5% 88.5 12.9x 13.7x 14.6x 5.0% 86.3 13.2x 14.1x 15.0x 7.5% 84.0 13.6x 14.5x 15.4x 10.0% 81.7 13.9x 14.9x 15.8x G-25
6. Proforma Balance Sheet of
Merged Company at September 30, 2017 G-26
Proforma Balance Sheet Enel Chile
– EGPL Merger (thousands of Chilean pesos) Enel Chile (Sep/30/2017) EGPL (Sep/30/2017) Adjustments(1) Enel Chile post Merger (Proforma) Current Assets 856,738,886 134,911,988 (16,350,370) 975,300,504 Non Current Assets
4,597,540,759 1,515,499,681 18,519,108 6,131,559,548 Total Assets 5,454,279,645 1,650,411,669 2,168,738 7,106,860,052 Current Liabilities 570,117,870 146,882,745 (16,350,370) 700,650,245 Non Current Liabilities
1,135,969,658 756,272,394 - 1,892,242,052 Total Liabilities 1,706,087,528 903,155,139 (16,350,370) 2,592,892,297 Issued Share Capital 2,229,108,975 527,698,886 478,524,114 3,235,331,975 Accumulated Earnings
1,754,976,619 123,506,438 (123,506,438) 1,754,976,619 Other Reserves (1,017,014,701) 992,619 (336,498,568) (1,352,520,650) Equity Attributable to Owners of the Parent Company 2,967,070,893 652,197,943 18,519,108 3,637,787,944 Non-controlling
Interests 781,121,224 95,058,587 - 876,179,811 Total Equity 3,748,192,117 747,256,530 18,519,108 4,513,967,755 Total Liabilities and Equity 5,454,279,645 1,650,411,669 2,168,738 7,106,860,052 Please find details on
adjustments made to financial statements in the next page Proforma Balance Sheet prepared based on information provided by Enel Chile and revised by EY Audit SpA 6. Proforma Balance Sheet of Merged Company at September 30, 2017 G-27
Adjustments Current Assets /
Current Liabilities: Elimination of accounts receivable and payable with related parties, and intercompany balances between EGPL and Enel Chile (and subsidiaries) for Ch$16,350,370,000 Non Current Assets: Adjustments in goodwill for
Ch$18,519,108,000 due to the excess value of the net assets of EGPL acquired by Enel and which were accounted for in Enel (“Push down” adjustments). After the Merger, said goodwill must be reflected in the new controller’s balance
sheet (Enel Chile) We understand that, if the Reorganization is approved, EGPL would transfer its equity interests in corporations with operations outside Chile through purchase agreements. The effect of these transfers has not been considered,
given that it is estimated to be non-material Equity Accounts Issued Capital Elimination of EGPL’s Issued Capital for Ch$527,698,886,000 Capital Increase in Enel Chile in exchange for EGPL’s equity, for a sum of Ch$1,006,223,000,000,
defined based on Enel Chile’s price per share (Ch$90.8) and the number of shares to be issued (11,080,940,138) Accumulated Earnings: Elimination of EGPL’s Accumulated Earnings, for Ch$123,506,438,000 Other Reserves: Net effect of
elimination of EGPL’s equity accounts, for Ch$651,205,324,000 Push Down Adjustments in Other Reserves, for Ch$18,519,108,000 Effect of the capital increase in Enel Chile in exchange for EGPL’s equity, for (Ch$ 1,006,223,000,000) The
effect of the sale of EGPL’s equity interests outside Chile was not included, as it is estimated to be non-material 6. Proforma Balance Sheet of Merged Company at September 30, 2017 Note: Although it is considered that, before the Merger
occurs, EGC and Enel Chile will distribute interim dividends, the effects of said dividends have not been included in the Proforma Balance Sheet because their declaration and payment will occur after the date of this Expert Report G-28
Appendix A. Beta Calculation
G-29
Beta Calculation (β):
Integrated Companies ADTV: Average Daily Traded Volume Source: Bloomberg, October 24, 2017 Appendix A. Beta Calculation Name Country ADTV (1) (LTM) Mkt Cap Net Financial Debt NFD / Mkt Cap bL Tax Rate bU (US$m) (US$m) (US$m)
(S&P 500) Enel Américas Latam 7.7 12,181 1,513 12.4% 0.83 25.5% 0.76 Eletrobras Brazil 10.7 9,706 11,948 123.1% 1.10 34.0% 0.61 CPFL Brazil 11.6 8,581 4,879 56.9% 0.93 34.0% 0.68 CEMIG Brazil 20.6 3,145 4,037 128.4% 1.00 34.0%
0.54 AES Corp U.S.A. 59.0 7,256 18,360 253.0% 1.24 40.0% 0.49 Con Edison U.S.A. 119.7 26,570 15,052 56.6% 0.40 40.0% 0.30 Duke Energy U.S.A. 223.6 61,583 49,990 81.2% 0.48 40.0% 0.32 PPL
Corp U.S.A. 123.5 25,816 18,908 73.2% 0.58 40.0% 0.40 ENDESA Spain 45.5 23,627 4,837 20.5% 0.84 25.0% 0.73 Enel SpA Italy 165.6 62,133 45,342 73.0% 0.94 24.0% 0.60 Median 0.89 0.57 G-30
Beta Calculation (β):
Generation Companies Appendix A. Beta Calculation Name Country ADTV (1) (LTM) Mkt Cap Net Financial Debt NFD / Mkt Cap bL Tax Rate bU (US$m) (US$m) (US$m) (S&P 500) Colbún Chile 2.3 4,255 1,039 24.4% 0.68
25.5% 0.57 AES Gener Chile 1.6 2,944 3,241 110.1% 0.84 25.5% 0.46 Engie Chile Chile 1.6 2,197 467 21.2% 0.78 25.5% 0.67 AES Tiete Brazil 5.7 1,602 267 16.7% 0.92 34.0% 0.83 CESP Brazil 8.6 1,338 20 1.5% 1.06 34.0% 1.05 Engie Brasil Brazil 9.9 7,268
391 5.4% 0.90 34.0% 0.86 Enel Gen. Perú Peru 3.3 2,081 (57) -2.8% 0.25 29.5% 0.26 Capital Power Canada 9.1 2,083 1,062 51.0% 0.72 26.5% 0.52 Transalta Canada 6.5 1,769 3,016 170.5%
0.90 26.5% 0.40 CALPINE U.S.A. 79.0 5,381 11,761 218.6% 1.31 40.0% 0.57 NRG Energy U.S.A 113.0 7,946 17,255 217.1% 1.17 40.0% 0.51 Median 0.90 0.57 ADTV: Average Daily Traded Volume Source: Bloomberg,
October 24, 2017 G-31
Beta Calculation (β):
Distribution Companies Appendix A. Beta Calculation Name Country ADTV (1) (LTM) Mkt Cap Net Financial Debt NFD / Mkt Cap bL Tax Rate bU (US$m) (US$m) (US$m) (S&P 500) Equatorial Brazil 20.6 3,718 546 14.7% 0.81
34.0% 0.74 Energisa Brazil 4.9 2,888 1,506 52.2% 0.54 34.0% 0.40 Coelce Brazil 0.3 1,274 279 21.9% 0.78 34.0% 0.69 LIGHT Brazil 7.6 1,181 1,924 162.9% 1.02 34.0% 0.49 Eletropaulo Brazil 6.4 774 677 87.4% 1.08 34.0% 0.69 Edelnor Peru 2.2 1,143 365
31.9% 0.26 29.5% 0.21 Median 0.80 0.59 ADTV: Average Daily Traded Volume Source: Bloomberg, October 24, 2017 G-32
Appendix B. Trading Multiples
G-33
Trading Multiples: Integrated
Companies Appendix B. Trading Multiples Name Country Mkt Cap NFD(1) EV(2) CAGR EBITDA EV / EBITDA P / E US$m US$m US$m 2016-2018 2016 2017 2018 2016 2017 2018 Enel Américas
Latam 12.,181 1,513 15,372 15% 6.3x 5.4x 4.8x 21.5x 18.7x 13.6x Eletrobras Brazil 9,706 11,948 21,611 (34%) 2.9x 8.9x 6.8x 9.8x 11.5x 6.8x CPFL Brazil 8,581 4,879 14,198 16% 12.9x 10.5x 9.5x
33.0x 22.7x 17.8x CEMIG Brazil 3,145 4,037 7,183 20% 8.5x 6.7x 5.8x 32.6x 9.5x 6.1x Duke Energy U.S.A.
61,583 49,990 111,581 6% 12.1x 11.5x 10.7x 28.6x 19.4x 18.0x Con Edison U.S.A. 26,570 15,052 41,630 5% 11.0x 10.4x 10.0x 21.3x 21.1x 20.0x PPL Corp U.S.A. 25,816 18,908 44,724 2%
11.0x 11.5x 10.6x 13.6x 17.3x 15.8x AES Corp U.S.A. 7,256 18,360 29,304 9% 8.6x 7.9x 7.2x nm 10.8x 9.0x ENDESA Spain 23,627 4,837 28,608 4% 7.5x 7.2x 7.0x 15.1x 15.0x 14.1x Enel SpA
Italy 62,133 45,342 126,218 7% 7.5x 6.8x 6.6x 21.8x 14.6x 12.9x Median 6% 8.6x 8.9x 7.2x 21.6x 15.0x 14.1x Maximum 20% 12.9x 11.5x 10.7x 33.0x 22.7x 20.0x Minimum (34%)
2.9x 6.7x 5.8x 9.8x 9.5x 6.1x NFD: Financial Debt minus Cash and Equivalents EV: Enterprise Value = Mkt Cap plus NFD and Minority Interests Source: Bloomberg, October 24, 2017 G-34
Trading Multiples: Generation
Companies Name Country Mkt Cap NFD(1) EV(2) CAGR EBITDA EV / EBITDA P / E US$m US$m US$m 2016-2018 2016 2017 2018 2016 2017 2018 Colbún Chile 4,255 1,039 5,507
6% 9.2x 8.6x 8.2x 21.1x 17.5x 16.2x AES Gener Chile 2,944 3,241 6,317 6% 8.2x 8.0x 7.3x 11.3x 12.9x 11.2x Engie Chile Chile 2,197 467 2,747 19% 11.2x 9.8x 7.9x 8.6x 25.5x 18.6x
AES Tiete Brazil 1,602 267 1,869 28% 8.0x 6.4x 4.9x 15.5x 12.6x 9.6x CESP Brazil 1,338 20 1,358
3% 7.4x 9.4x 6.9x 15.2x 39.7x 17.1x Engie Brasil Brazil 7,268 391 7,660 16% 8.7x 6.8x 6.4x 16.3x 12.3x 12.9x Enel Gen. Perú Peru 2,081 (57) 2,045 nd 9.1x nd nd 28.7x nd nd
Capital Power Canada 2,083 1,062 3,679 32% 12.1x 7.9x 6.9x 24.8x 19.0x 17.0x Transalta Canada 1,769 3,016 6,342 (3%) 7.4x 7.7x 7.8x 13.9x nm 77.7x NRG Energy U.S.A. 7,946 17,255 27,652
(1%) 10.3x 10.9x 10.4x nm 70.6x 13.8x CALPINE U.S.A. 5,381 11,761 17,213 7% 9.8x 9.4x 8.7x 58.5x 101.4x 17.8x Median 6% 9.1x 8.3x 7.6x 15.9x 19.0x 16.6x Maximum 32%
12.1x 10.9x 10.4x 58.5x 101.4x 77.7x Minimum (3%) 7.4x 6.4x 4.9x 8.6x 12.3x 9.6x NFD: Financial Debt minus Cash and Equivalents EV: Enterprise Value = Mkt Cap plus NFD and Minority Interests Source: Bloomberg,
October 24, 2017 Appendix B. Trading Multiples G-35
Trading Multiples: Distribution
Companies Name Country Mkt Cap NFD(1) EV(2) CAGR EBITDA EV / EBITDA P / E US$m US$m US$m 2016-2018 2016 2017 2018 2016 2017 2018 Equatorial Brazil 3,718 546 4,525
16% 11.4x 10.1x 8.5x 18.1x 18.1x 14.3x Energisa Brazil 2,888 1,506 4,730 16% 9.0x 7.6x 6.6x 64.7x 20.3x 13.9x Coelce Brazil 1,274 279 1,553 nd 7.4x nd nd 11.2x nd nd LIGHT
Brazil 1,181 1,924 3,105 32% 8.0x 5.7x 4.6x nm 13.1x 5.5x Eletropaulo Brazil 774 677 1,451 33% 6.8x 4.2x 3.9x 128.2x 18.3x 9.9x Edelnor Peru 1,143 365 1,508 1% 7.2x 7.3x 7.1x
12.5x 12.5x 12.4x Median 16% 7.7x 7.3x 6.6x 18.1x 18.1x 12.4x Maximum 33% 11.4x 10.1x 8.5x 128.2x 20.3x 14.3x Minimum 1% 6.8x 4.2x 3.9x 11.2x 12.5x 5.5x Appendix B. Trading
Multiples NFD: Financial Debt minus Cash and Equivalents EV: Enterprise Value = Mkt Cap plus NFD and Minority Interests Source: Bloomberg, October 24, 2017 G-36
Appendix C. Transaction Multiples
G-37
Transaction Multiples: Generation
/ Integrated Announcement Target Country Buyer Transaction Value EV (1) EV / Sales EV / EBITDA P / E Date Target US$ m US$ m LTM LTM LTM (1) jul-16 CPFL Brazil China State Grid 1,800 12,943 2.5x 11.0x 22.4x (2) jan-16
Isagen Colombia Brookfield Renewable 2,200 4,883 4.7x 11.3x 34.9x (3) dec-15 Fénix Power Peru Colbún 171 786 3.7x 5.5x nm (4) feb-15 Pilmaiquén Chile Statkraft 182 407 11.9x 16.4x 63.9x (5) apr-14 Generandes Peru Enersis 413 1,723
3.2x 5.8x 6.3x (6) mar-14 GasAtacama Chile Endesa 309 453 nd 4.0x 9.0x (7) mar-14 Guacolda Chile AES Gener 728 1,913 3.5x 11.8x 18.9x (8) jun-13 Brasil PCH Brazil CEMIG 301 912 5.9x 6.4x 20.3x (9) dec-12 Ibener Chile Duke Energy Corp 415 415 6.0x
10.4x 13.7x Median 4.2x 10.4x 19.6x Maximum 11.9x 16.4x 63.9x Minimum 2.5x 4.0x 6.3x Appendix C. Transaction Multiples EV: Enterprise Value Source: Bloomberg, Press information G-38
Transaction Multiples: Generation
/ Integrated (cont.) (1) China State Grid acquired 23% of CPFL, an integrated company that generates and distributes electricity through Brazil (2) Brookfield Renewable Partners acquired 57% of Isagen, a company that owns hydroelectric and
thermoelectric power plants in Colombia (3) Colbún acquired 100% of Fénix Power, a company that owns a thermoelectric power plant in Peru (4) Statkraft acquired 75% of Empresa Eléctrica Pilmaiquén, a company that owns
hydroelectric power plants in the south of Chile (5) Enersis (now Enel Americas) acquired 39% of Generandes, a company that owns thermoelectric power plants in Peru (6) Endesa (now Enel Generación) acquired the 50% remaining of GasAtacama from
the investment fund Southern Cross. GasAtacama owns thermoelectric power plants in the north of Chile (7) AES Gener acquired the 50% remaining of Empresa Eléctrica Guacolda from their partners Copec and Ultraterra. Empresa Eléctrica
Guacolda owns a thermoelectric power plant in Chile (8) Cia Energética de Minas Gerais (CEMIG) acquired 49% of Brasil Pequenas Centrais Hidreletricas (PCH), a company that owns several small hydroelectric power plants in Brazil (9) Duke Energy
acquired 100% of IBENER, a company that owns hydroelectric power plants in Chile Appendix C. Transaction Multiples G-39
Transaction Multiples:
Distribution Announcement Target Country Buyer Transaction Value EV (1) EV / Sales EV / EBITDA P / E Date Target US$ m US$ m LTM LTM LTM (1) nov-16 CELG Distribuçao Brazil Enel SpA 647 1,247 0.8x 10.1x nd (2)
jun-16 AES Sul Brazil CPFL 490 772 0.9x 11.4x nm (3) feb-15 Cosern Brazil Neoenergía 36 746 1.1x 5.2x 6.0x (4) feb-15 Coelba Brazil Neoenergía 179 3,386 1.4x 6.7x 10.8x (5) oct-14 CGE Chile Gas Natural Fenosa 3,308 6,649 1.5x 8.4x 11.7x
(6) jan-14 Coelce Brazil Endesa 645 1,913 1.4x 10.2x 21.5x Median 1.2x 9.3x 11.2x Maximum 1.5x 11.4x 21.5x Minimum 0.8x 5.2x 6.0x Appendix C. Transaction Multiples EV: Enterprise Value Source: Bloomberg, Press information
G-40
(1) Enel acquired 100% of CELG-D,
a company which distributes electricity to more than 2 million customers in the state of Goias, Brazil (2) CPFL acquired 100% of AES Sul a company which distributes electricity to more than 1.5 million customers in the state of Rio Grande do Sul,
Brazil (3) Neoenergía acquired 7% of Companhia Energetica Do Rio Grande Norte (COSERN), a company which distributes electricity to more than 1 million customers in the state of Rio Grande do Norte, Brazil (4) Neoenergía acquired 8.5% of
Companhia de Electricidade do Estado da Bahia (COELBA), a company which distributes electricity to more than 5 million customers in the state of Bahia, Brazil (5) Gas Natural Fenosa acquired 100% of CGE, a company that distributes electricity to
more than 2.7 million customers and natural gas to more than 0.6 million customers in Chile (6) Endesa (now Enel Américas) acquired 41% of Companhia Energetica do Ceara (COELCE). COELCE distributes electricity to more than 3.7 million customers
in the state of Ceara, Brazil Appendix C. Transaction Multiples Transaction Multiples: Distribution (cont.) G-41
G-42
ANNEX H
REPORT OF FELIPE SCHMIDT, INDEPENDENT APPRAISER OF ENEL CHILE
This Annex H is a free English translation of the original Spanish language version, which reflects the substantive content of the original Spanish
language document, but may not be a word-for-word translation. In the event of any discrepancy with the English translation, the original Spanish language document will prevail.
The pro forma and historical consolidated statements of financial position of Enel Chile S.A., Enel Generación Chile S.A. and Enel Green Power Latin
América S.A., as of September 30, 2017 that are contained in, or referred to, in the report of Felipe Schmidt, dated November 3, 2017, have not been examined or audited in accordance with either the standards of the American
Institute of Certified Public Accountants (AICPA) or the standards of the U.S. Public Company Accounting Oversight Board (PCAOB). These pro forma and historical consolidated statements of financial position are considered unaudited for SEC purposes.
[Courtesy Translation]
Santiago, November 03, 2017
Mrs.
Board Members and Shareholders
Enel Green Power
Latinoamérica S.A.
Dear Sirs:
The members of the Board of Enel Green Power Latinoamérica S.A. (hereinafter “
Enel Green Power
”,
“
EGPLA
” or the “
Company
”), unanimously, have designated me as independent expert for the issuance of an expert report on the estimated value of the following companies Enel Green Power and Enel Chile
S.A. (“
Enel Chile
”) (hereinafter Enel Green Power and Enel Chile, the “
Entities
” or the “
Companies
”), Entities which are planned to merge (hereinafter the
“
Merger
”), and an estimation of the exchange ratio of the correspondent shares (hereinafter the “
Exchange Ratio
”), in the event the Merger is materialized, in accordance to the applicable regulations
(hereinafter the “
Expert Report
”).
The possibility of performing the Merger has been communicated by Enel Chile
to the Chilean Superintendence of Insurance and Securities (hereinafter the “
SVS
”) by the correspondent Essential Fact dated August 25, 2017.
As indicated and in accordance to what has been set forth in the Service Provision Agreement signed between Enel Green Power and the
subscribed (the “
Expert
”), dated October 17, 2017 (hereinafter the “
Service Agreement
”), I am issuing my Expert Report, in the following terms:
1.- Expert Report Objective and Content.
1.1.-
Objective.
This Expert Report has been engaged in order to be one of the documents the Board of Directors of the Company will make available to the shareholders of Enel Green Power who will have to decide on the Merger, in conformity to the
“Reglamento de Sociedades Anónimas” (hereinafter the “
Regulation
”).
1.2.- Content.
This Expert Report
contains a report on the value of the Entities, the exchange ratio of the correspondent shares, and a
pro forma
balance sheet representing the absorbent entity (Enel Chile), presenting the assets, liabilities and shareholders equity accounts
of the Entities.
2.- Available information for the issuance of the Expert Report.
2.1.-
Please be aware this Expert Report has been prepared, exclusively, based on the information provided by the Company and in available public
information, so the Expert signing this report has not performed any independent investigation or check of the information received.
The information
received is financial, corporate and legal, and we understand corresponds –at least- to such information normally a business builds as part of its habitual management control and financial management process.
2.2.-
In the same way, I have access to the same type of information of Enel Chile, including information of its subsidiaries Enel Generación
Chile S.A. (“
Enel Generación
”) and Enel Distribución Chile S.A. (“
Enel Distribución
”), provided by those entities, and the Expert signing this report has not performed any
independent investigation or check of the information received.
2.3.-
The information considered for the issuance of the Expert Report is the
following:
|
|
(i)
|
Historical financial statements;
|
|
|
(ii)
|
Consolidated interim financial statements as of September 30, 2017, audited by EY Audit SpA;
|
H-1
[Courtesy Translation]
|
|
(iii)
|
Attestation Report issued by EY Audit SpA on the
pro forma
financial statements prepared by Enel Chile’s management as of June 30, 2017;
|
|
|
(v)
|
Financial projections for the 2018 – 2022 period, including balance sheets, profit & loss statements, expansion and maintenance investments, and main working capital accounts, among others;
|
|
|
(vi)
|
Main operational variables projected, including prices and amounts, of the main revenues, among others;
|
|
|
(vii)
|
In the case of EGPLA, considering it has an important project portfolio, in different development stages, we also received extended projections up to 2026, including sales, operational costs, expansion and maintenance
investments, in order to standardize its flows to facilitate the Terminal Value calculation, as well as information of its most relevant projects, of short and medium term;
|
|
|
(viii)
|
Useful life estimations of the different plants and their respective replacement values;
|
|
|
(ix)
|
For the electric generation companies, Enel Chile and EGPLA, we received a breakdown of gross margin, including energy prices estimations, generated/sold quantities, and the direct costs associated to the purchase/sale
of energy;
|
|
|
(x)
|
Net financial debt and other adjustments (
Equity Bridges
) of the evaluated businesses as of September 30, 2017;
|
|
|
(xi)
|
Presentations of the generation and distribution businesses;
|
|
|
(xii)
|
Presentations of the involved relevant companies, including Enel Chile, Enel Generación, Enel Distribución, and EGPLA, on September 26, 2017;
|
|
|
(xiii)
|
Corporate chart with the share participation in the operative companies;
|
|
|
(xiv)
|
Review of due diligence reports, opting for the utilization of the values presented by the entities in their respective Equity Bridges, given its better understanding of the real contingencies faced by the entities.
|
|
|
(xv)
|
Macro-economic assumptions over which the management based for the preparation of the financial and operational projections, and investment banks consensus;
|
|
|
(xvi)
|
Several conference calls were held with the entities’ managers in order to clear various doubts, including a review of the expected impact that the November 2 power auction may have on the Entities business
plans, ratifying that there is no material impact on the valuations, other than the confirmation of the award of PPAs for EGPLA’s project portfolio;
|
|
|
(xvii)
|
Other information considered relevant for this report, including a wide list of questions and the answers exchanged with the Entities’ management.
|
2.4.-
Part of the information considered is or may be based on future facts, which are part of the expectations or projections of the Companies and/or
their management. These future events may or may not occur, so part of the conclusions of this Expert Report may suffer alterations.
3.-
Responsibility.
3.1.-
Considering the Expert has not made independent verifications of the information provided by the management of the
Entities, neither of the public information used in the analysis and conclusions of the Expert Report; the Expert does not assume any responsibility for mistakes or omissions that may exist in the information provided or to the information the
Expert has access to, neither of the impact of such mistakes or omissions may have in the analysis and conclusions that may come, directly or indirectly, of such information.
H-2
[Courtesy Translation]
3.2.-
Furthermore, the results and comments included in this Expert Report are subject to the
considerations and assumptions included as reference in Annex No. 1 “Considerations and Assumptions”, annexed herein.
4.- Use of the
Expert Report.
This Expert Report is issued, exclusively, to be used as the report required by article No. 156 of the Regulation, for the Merger.
Thus, the Expert Report is allowed to:
|
|
(i)
|
be used as base of the recommendations the Board Members or the Board of the Company give or may give on the Merger and/or the Exchange Ratio;
|
|
|
(ii)
|
be made available to the shareholders of the Company, by the means the Board or the management determines, including its publication in the web pages of the Company; and
|
|
|
(iii)
|
be made available to the shareholders of Enel Chile, by the means the Board or the management of the Company determine, including its publication in the web pages of Enel Chile and/or by means of it its inclusion, as
annex, to the F-4 form to be registered in the Securities and Exchange Commission of the United States of America, due to the execution of the operation.
|
5.- Methodology used.
The methodology used for the
issuance of this Expert Report and its conclusions consist in:
|
|
(i)
|
analysis of the available information previously described;
|
|
|
(ii)
|
requests for meetings with the management in order to cover specific matters and to confirm concepts;
|
|
|
(iii)
|
written questions sent, together with the revision of the respective answers;
|
|
|
(iv)
|
valuation method selection (discounted cash flow method –DCF- primarily, and relying on the analysis of comparable listed companies multiples and transaction multiples involving similar companies solely for
reference purposes), where it was defined that the best way to value each of the Entities was through a sum-of-the-parts methodology;
|
|
|
(v)
|
individual DCF models preparation, analysis of comparable listed companies and transactions multiples;
|
|
|
(vi)
|
detailed calculation of the discount rates (“
WACC
”) applicable to the different companies in different business segments, for the DCF models, including the detailed calculation of the respective
Betas that are part of the WACCs;
|
|
|
(vii)
|
Enterprise value and equity value calculation, after deduction of the net financial debt and other adjustments explained in Annex No. 3, sensitizing the key value drivers;
|
|
|
(viii)
|
calculation of the relative contribution of the equity value of each of the Entities, in accordance to the respective informed share participation;
|
|
|
(ix)
|
calculation of the Exchange Ratio resulting of the relative equity values consideration, in relation to the number of existing shares and the respective shareholders, and the need of issuing new shares for the capital
increase resulting of the eventual Merger;
|
|
|
(x)
|
preparation of this Expert Report and its annexes.
|
More details of the used methodology may be consulted in
Annex No. 3 “Economic Valuation and Exchange Ratio Report”, annexed to this Expert Report.
H-3
[Courtesy Translation]
6.- Estimated shareholders equity value of the Entities to be merged.
The estimated value of the Entities resulting from the Expert Report is:
|
|
|
|
|
|
|
|
|
|
|
|
|
Enel Chile
$
|
|
|
EGPLA
$
|
|
|
Expert’s value as of 30.09.2017
|
|
|
4,520,982,030,749
|
|
|
|
1,154,201,142,801
|
|
Note:
Amounts in Chilean Pesos, considering the observed US dollar as of October 2, 2017 (CLP/USD 637.93).
More details of the estimated value of the
Entities may be consulted in Annex No. 3 “Economic Valuation and Exchange Ratio Report”, annexed to this Expert’s Report.
7.-
Estimated Exchange Ratio of the shares of the Entities and number of shares to be issued.
The estimated Exchange Ratio of the shares of the Entities
(shares of Enel Chile for shares of Enel Green Power) and shares to be issued from the Expert Report is:
|
|
|
|
|
|
|
|
|
|
|
CALCULATION BASED ON VALUATION AS OF SEPTEMBER 30,
2017
CAPITAL INCREASE CALCULATION
|
|
$
|
|
|
%
|
|
|
Enel Chile Valuation
|
|
|
4,520,982,030,749
|
|
|
|
79.66
|
%
|
|
EGPLA Valuation
|
|
|
1,154,201,142,801
|
|
|
|
20.34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
MERGED SHAREHOLDERS EQUITY VALUE
|
|
|
5,675,183,173,550
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL INCREASE
|
|
|
1,154,201,142,801
|
|
|
|
|
|
|
|
|
|
CALCULATION OF NO. OF SHARES TO BE ISSUED BY ENEL CHILE
|
|
|
|
|
|
|
Post merger shares
|
|
|
61,626,097,168
|
|
|
|
|
|
|
Shares to be issued
|
|
|
12,533,324,406
|
|
|
|
|
|
|
|
|
|
|
EXCHANGE RATIO
|
|
Shares No.
|
|
|
Exchange ratio
Enel
Chile/Exchanged
share
|
|
|
Existing Enel Chile shareholders
|
|
|
49,092,772,762
|
|
|
|
|
|
|
Existing EGPLA shareholders
|
|
|
12,533,324,406
|
|
|
|
15.15
|
|
|
Total shares
|
|
|
61,626,097,168
|
|
|
|
|
|
Note:
Amounts in Chilean Pesos, considering the observed US dollar as of October 2, 2017 (CLP/USD 637.93).
The Exchange Ratio of the shares of the
Entities and the number of shares to be issued is derived from the determination and sensitivity process explained in more detail in Annex No. 3 “Economic Valuation and Exchange Ratio Report”, annexed to this Expert Report
H-4
[Courtesy Translation]
8.-
Pro forma
General Balance Sheet after merger.
The following
pro forma
balance sheet represents the absorbing entity (Enel Chile), presenting the assets, liabilities and shareholders equity accounts
of the Entities, with their respective adjustments and balances merged, representing the new entity.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
|
|
Enel Chile
Consolidated
Historical
M$
|
|
|
EGPLA
Combined
M$
|
|
|
Merger
Proforma
Adjustments
M$
|
|
|
Enel Chile
Proforma
Merged
M$
|
|
|
Total current assets
|
|
|
856,738,886
|
|
|
|
134,911,988
|
|
|
|
(16,350,370
|
)
|
|
|
975,300,504
|
|
|
Total non-current assets
|
|
|
4,597,540,759
|
|
|
|
1,534,018,789
|
|
|
|
—
|
|
|
|
6,131,559,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
5,454,279,645
|
|
|
|
1,668,930,777
|
|
|
|
(16,350,370
|
)
|
|
|
7,106,860,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
570,117,870
|
|
|
|
146,882,745
|
|
|
|
(16,350,370
|
)
|
|
|
700,650,245
|
|
|
Total non-current liabilities
|
|
|
1,135,969,658
|
|
|
|
756,272,394
|
|
|
|
—
|
|
|
|
1,892,242,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
1,706,087,528
|
|
|
|
903,155,139
|
|
|
|
(16,350,370
|
)
|
|
|
2,592,892,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued Capital
|
|
|
2,229,108,975
|
|
|
|
527,698,886
|
|
|
|
143,018,165
|
|
|
|
2,899,826,026
|
|
|
Retained earnings
|
|
|
1,754,976,619
|
|
|
|
123,506,438
|
|
|
|
(123,506,438
|
)
|
|
|
1,754,976,619
|
|
|
Other reserves
|
|
|
(1,017,014,701
|
)
|
|
|
19,511,727
|
|
|
|
(19,511,727
|
)
|
|
|
(1,017,014,701
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to controlling shareholders
|
|
|
2,967,070,893
|
|
|
|
670,717,051
|
|
|
|
—
|
|
|
|
3,637,787,944
|
|
|
Non-controlling shareholdings
|
|
|
781,121,224
|
|
|
|
95,058,587
|
|
|
|
—
|
|
|
|
876,179,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS EQUITY
|
|
|
3,748,192,117
|
|
|
|
765,775,638
|
|
|
|
—
|
|
|
|
4,513,967,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
|
|
|
5,454,279,645
|
|
|
|
1,668,930,777
|
|
|
|
(16,350,370
|
)
|
|
|
7,106,860,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger adjustments consider the following effects:
|
|
(1)
|
Current Assets
: correspond to the elimination of the related party account receivables among Enel Chile S.A. and its subsidiaries and Enel Green Power and its subsidiaries for M$16,350,370.
|
|
|
(2)
|
Current Liabilities
: correspond to the elimination of the related party account payables among Enel Chile S.A. and its subsidiaries and Enel Green Power and its subsidiaries for M$16,350,370.
|
|
|
(3)
|
Issued capital
: corresponds to the net effect of the elimination of the issued capital of Enel Green Power Latinoamérica S.A. (EGPLA) and the capital increase to be produced in Enel Chile S.A. as a result
of the merger.
|
|
|
|
|
|
|
|
It is detailed as follows:
|
|
|
M$
|
|
|
EGPLA issued capital elimination
|
|
|
(527,698,886
|
)
|
|
Enel Chile S.A. capital increase
|
|
|
670,717,051
|
|
|
|
|
|
|
|
|
Total
|
|
|
143,018,165
|
|
|
|
(4)
|
Retained earnings
: correspond to the elimination of the retained earnings in EGPLA, which will be part of the capital increase in Enel Chile S.A. for M$ 123,506,438.
|
H-5
[Courtesy Translation]
|
|
(5)
|
Other reserves
: correspond to the elimination of the accumulated reserves in EGPLA plus the adjustment recognition due to the “push down” of the capital gain registered by its headquarter, resulting
from the acquisition of its subsidiary Empresa Eléctrica Panguipulli S.A.
|
|
|
|
|
|
|
|
Detailed in:
|
|
|
M$
|
|
|
Other reserves EGPLA
|
|
|
(992,619
|
)
|
|
Push down capital gain Panguipulli
|
|
|
(18,519,108
|
)
|
|
|
|
|
|
|
|
Total
|
|
|
(19,511,727
|
)
|
More details of the estimated
pro forma
general balance sheets after merger, may be consulted in Annex No. 3
“Economic Valuation and Exchange Ratio Report”, annexed to this Expert Report.
9.- Expert’s Declaration.
In accordance to articles No. 156 and No. 168 of the Regulation, the Expert declares:
|
|
(i)
|
To be independent from the Entities and from the business group the Entities belong to, from their external auditors and from the consultants or advisors of the Merger;
|
|
|
(ii)
|
Not being related to the Entities, in the terms described by article 100 of Law No. 18,045 on Securities Market; and
|
|
|
(iii)
|
He becomes responsible of the estimations contained in this Expert Report, in accordance to the terms and conditions set forth herein as well as in the Service Agreement.
|
Luis Felipe Schmidt Gabler
C.N.I. Nº 10.375.688-K
IN SANTIAGO,
TODAY, SIGNED IN FRONT OF ME, MR. LUIS FELIPE SCHMIDT GABLER, C.N.I. N° 10.375.688-K. SANTIAGO NOVEMBER 3, 2017.-
H-6
[Courtesy Translation]
Annex No. 1
CONSIDERATIONS AND ASSUMPTIONS
The
analysis, comments, indications and conclusions of this Expert Report are subject to the following considerations and assumptions:
1.-
This Expert
Report was prepared, exclusively, based on the information provided by the Entities and in available public information.
The Expert has not made
independent verification of the information provided, neither of the public information used in the analysis and conclusions of the Expert Report; thus the Expert does not issues nor grants any guaranty, representation or insurance of any kind on
the truthfulness or precision of such information.
In consequence, the Expert does not assumes neither will assume any responsibility for direct or
indirect damages related to any incomplete, inaccurate, erroneous, untrustworthy or untimely information provided to him by the Entities.
2.-
This
Expert Report is bounded to the request made, contained in the Service Agreement.
Thus, this Expert Report does not include any other matter, information
or antecedent that may be relevant or necessary for the proper evaluation of this Expert Report.
3.-
Part of the information considered in the
Expert Report is or may be based in future facts, which are part of the expectations or projections of the Entities and/or their management. These future events may or may not occur, so part of the conclusions of this Expert Report can be altered in
the future, alterations that are not and will not be the Expert responsibility.
4.-
The Expert does not express any opinion neither does assure:
|
|
(i)
|
The financial statements of the Entities;
|
|
|
(ii)
|
The operational or internal controls of the Entities;
|
|
|
(iii)
|
The final result of the public offering for the acquisition of shares of Enel Generación by Enel Chile, neither of the final terms and conditions in which such operation may finally be performed; nor
|
|
|
(iv)
|
The present or future value of the entity resulting from the Merger;
|
5.-
This Expert Report does not
constitute:
|
|
(i)
|
a recommendation on the approval of the Merger nor of the Exchange Ratio;
|
|
|
(ii)
|
a financial feasibility revision of the Merger or of the future business of the merged entity;
|
|
|
(iv)
|
a fairness opinion of the Entities nor of the Merger;
|
|
|
(v)
|
an investment advice;
|
|
|
(vi)
|
a due diligence of the Entities;
|
|
|
(vii)
|
a recommendation of granting financing;
|
|
|
(ix)
|
a strategic valuation or advice on the Merger.
|
H-7
[Courtesy Translation]
6.-
This Expert Report, and the analysis, opinions, comments and/or conclusions contained herein are
valid as of the date of the Expert Report; and are only valid for the purpose for which the Expert Report has been engaged.
7.-
This Expert
Report, as well as the analysis, opinions, comments and/or conclusions contained herein may only be used for the purpose for which the Expert Report has been engaged; and cannot be used for any other purpose, save as expressly indicated in the
Expert Report, by the Company, any of the Entities, their respective board members, shareholders, managers and/or employees.
8.-
The Expert will
not be responsible, in any way, of any decision, of any nature, that may be make after the revision of the Expert Report.
Any and all decisions, as well
as any implementation and/or execution made by virtue of the Expert Report, will be the exclusive responsibility of the Company, any of the Entities, their respective board members, shareholders, managers and/or employees.
9.-
The Expert mentions that the value concept used, expressly or implicitly, in this Expert Report is referred only to the Merger and cannot be
applied, necessarily, to a sale price or any other type of transaction that may be performed after the Merger, which depend of other considerations outside the scope of this Expert Report.
10.-
Notwithstanding in accordance to the Service Agreement this Expert Report will become the Company’s property; this Expert Report may not be
published, distributed, nor grant a right of use or a right to query it by the Company, neither any of the Entities, outside the terms indicated in the Service Agreement and this Expert Report.
In consequence, the Expert is released from any and all liability that the use, consultation or improper reading of the Expert Report made by third parties
not authorized to do so.
11-
The Expert has assumed the fixed and current assets, properties, participations or interests in any company or
business are free from any encumbrances, limitations or obligations.
The Expert has not independently determined if any fixed or current asset, property,
participation or interest in any company or business is subject to any encumbrance, limitation or obligation, nor has included the implications or effects of such encumbrances, limitations or obligations in the Expert Report.
12.-
This Expert Report shall be read and understood in its integrity. Read or select only specific parts of the Expert Report may induct to errors or
to miss interpretations, which will not be the Expert’s responsibility.
13.-
This Expert Report has been prepared with exclusive objective of
being one of the documents that the Board of Directors of the Company will make available to the shareholders of Enel Green Power who shall pronounce on the Merger.
14.-
It is recommended that any person or entity which wants to use this Expert Report as base to adopt any decision, on the Merger or on the Exchange
Ratio, to perform such additional validations or comparisons from other sources which deem necessary and relevant, assuming its own responsibility of basing its decision only in the reading of the Expert Report.
H-8
[Courtesy Translation]
Annex No. 2
Methodology used for the determination
of the
Pro forma
Balance Sheet of Enel Chile
The
pro forma
balance sheet of the continuing entity included in this Expert Report, presents an addition of the assets, liabilities and shareholders
equity accounts of the entities to be merged and has been prepared based on the consolidated financial statements of Enel Chile S.A. and subsidiaries and Enel Green Power Latinoamérica S.A. as of September 30, 2017, prepared for special
purposes and audited by EY Audit SpA.
In the consolidation of the
pro forma
balance sheet of the surviving entity, “Enel Chile S.A.”,
the assets and liabilities to be contributed have been accounted in the values registered in the accounting of the absorbed entity.
For purposes of my
review, I have considered:
|
|
•
|
|
Consolidation spreadsheet of the general balance sheet of Enel Chile S.A. and Enel Green Power Latinoamérica S.A. as of September 30, 2017, provided by the management of Enel Chile S.A. that are attached in
Appendix 1, of Annex No. 3, in which the pro forma balance sheet of the absorbing entity as of September 30, 2017, is shown.
|
|
|
•
|
|
Attestation Report issued by EY Audit SpA dated September 28, 2017, referred to the consolidated intermediate pro forma balance sheet of Enel Chile S.A. and subsidiaries as of June 30, 2017.
|
|
|
•
|
|
In order to implement the mentioned Merger, Enel Chile S.A., as surviving entity and as counterpart of the incorporation of the assets and liabilities of Enel Green Power Latinoamérica S.A., will deliver to the
shareholders of the absorbed entity, shares of its own emission, via a capital increase in the absorbing entity.
|
|
|
•
|
|
The property of Enel Chile S.A. as well as the property of Enel Green Power Latinoamérica S.A. is concentrated, mostly, in Enel SpA, in a 60.6% and a 100%, respectively.
|
|
|
•
|
|
In the case of the minority shareholders of Enel Chile S.A., its equity position should be duly safeguarded since, because of the Merger, the shareholders of Enel Green Power Latinoamérica S.A. will receive, in
domain, shares of Enel Chile S.A. in exchange of their original shares.
|
|
|
•
|
|
Because of the Merger to be performed, the assets and liabilities of Enel Green Power Latinoamérica S.A., that will be forming the shareholders equity of Enel Chile S.A., shall be registered through a capital
increase.
|
|
|
•
|
|
In accordance to the documentation provided to me, there is no knowledge of any other situation that, to the best of my knowledge, should be informed to the shareholders for the proper consideration of the Merger
proposition.
|
The procedures performed to the
pro forma
balance sheet consisted, mainly, in:
|
|
(a)
|
Check that the amounts of assets, liabilities and shareholders equity of the entities participating in the merger, as of September 30, 2017, described in Appendix 1 of Annex No. 3 match with the amounts
registered in the interim financial statements audited by EY Audit SpA.
|
|
|
(b)
|
Add, line by line, the assets and liabilities of the balance sheets revised as of September 30, 2017, of the entities involved in the merger process.
|
|
|
(c)
|
Check the eliminations of the merged entities account receivables and account payables, detailed in the column “merger adjustments” in order to generate the pro forma balance sheet, shown in Appendix 1 of
Annex No. 3.
|
H-9
[Courtesy Translation]
|
|
(d)
|
Determine the increase of the capital of Enel Chile S.A., the surviving entity, corresponding to the acquisition of the assets and liabilities of Enel Green Power Latinoamérica S.A., which will result from the
merger by incorporation of the last one by the first one. Such capital increase amounts to $ 1,154,201,142,801.
|
|
|
(e)
|
Determine the exchange pro rata described in Annex No. 3.
|
H-10
Providence Capital is a member
of Corporate Finance International (CFI), a Swiss Verein, International M&A Network. www.thecfigroup.com Enel Green Power Latinoamérica S.A. Annex 3: Economic Valuation and Exchange Ratio Report November 3, 2017 H-1
Executive Summary Scope of work
General limitations Background and procedures applied Description of the transaction Description of the companies Methodology of work Companies valuations Exchange ratio of shares Merger Pro-forma Balance Statement as of September 30th, 2017
Appendix Appendix 1: Pro-forma consolidation table Table of contents H-2
Executive Summary Within the process
of the corporate reorganization of Enel Group, by which Enel Chile S.A. (“Enel Chile”) would incorporate the non-conventional renewable assets that Enel Green Power Latinoamérica S.A. (“EGPLA” or the
“Company”) has in Chile, through a merger by absorption (hereinafter both referred to as the “Companies”); EGPLA named Mr. Felipe Schmidt Gabler as the independent expert for the issuance of an expert report on the estimated
value of the merging companies and the exchange ratio of the shares of each company, among others. For the purposes of this report, Providence Capital has made use and relied on the information provided by and on behalf of EGPLA including under such
premise, meetings held with management, information exchange through Q&A process, and information publicly available, performing no independent investigation or verification of such information. 1 For the purposes of this report and the
conclusions contained herein, Providence Capital performed an assessment of the estimated value of the equity of the most relevant firms where the Companies have an ownership interest, following a sum-of-the-parts criteria to calculate the equity
values, considering the Generation (“Gx”) and Distribution (“Dx”) businesses in Chile, as well as the present value of organizational costs and net financial debt associated to the holding companies, and other elements
incorporated in the equity bridge. Company valuations were primarily performed under the Discounted Cash Flow model (DCF), and for cross reference purposes, valuations were also calculated using Trading Comparables and Transaction Comparables
methodologies. It is worth mentioning that, for purposes of the valuation and determination of the exchange ratio, the value of the companies has been considered independently and without taking into account potential effects of an eventual merger
between them or other companies of the group, as could be Enel Generación Chile (“Enel Generación”) or Enel Distribución Chile (“Enel Distribución”), neither eventual impacts of the potential public tender
offer that would take place as part of the reorganization process contemplated. Later on in this presentation, sensitivity and scenario analysis are presented, contemplating different assumptions for the variables in question, also including
different valuation scenarios both for EGPLA and Enel Chile. Following these considerations, the estimated economic value of the equity of the newly merged company (Enel Chile, as the absorbent company of EGPLA) would be within USD 8,366 million and
USD 9,426 million, based on a sensitivity analysis over our mid value point, which is equivalent to an Exchange Ratio of 15.15x. To determine the exchange ratio between Enel Chile and EGPLA, we have also performed a sensitivity analysis with
different scenarios out of the base case scenario presented in this report. These scenarios where defined sensitizing critical variables that generate relative changes in the valuation of the Companies. In some cases, these changes in variables were
conducted asymmetrically. As a result of this analysis, we estimate that the existing shareholders of EGPLA shall own between 19.1% and 21.4% of the equity of the newly merged company, generating the following exchange ratio: Between 14.02x and
16.15x shares of Enel Chile for each share of EGPLA 2 H-3
Executive summary - Estimation of the
exchange ratio The equity value of the Companies is based on the base case mid-value for each of the valued companies, calculated through a sum-of-the-parts using the DCF methodology Based on mid-values of USD 1,809 million for EGPLA and USD 7,087
million for Enel Chile, the later company would have to issue approx. 12,533 million new shares to be exchanged for EGPLA current shareholders’ shares, within the context of the merger As EGPLA’s equity capital is composed of approx. 827
million shares, the implied exchange ratio based on the calculated equity values would be of 15.15 shares of Enel Chile per each share of EGPLA This exchange ratio implies that EGPLA shareholders would held shares representing 20.34% of the equity
capital of the new company post merger Due to the large number of factors that could potentially affect the equity value ranges calculated, we have sensitized key variables in order to calculate a range for the exchange ratio, which fluctuates
between 14.02x y 16.15x. (1) Equivalent to a price per share of $92.09 Chilean Pesos, based on a FX CLP/USD of 637.93, as informed by the Chilean Central Bank on October 2, 2017, which corresponds to the observed FX for the last business day of
September 2017 H-4
Scope of work As it has been
communicated to the market as material fact or hecho esencial dated August 25, 2017, Enel Chile proposed to its controlling shareholder, Enel Group, the realization of a corporate reorganization (the “Reorganization”) whereby Enel Chile
would absorb EGPLA’s non-conventional renewable energy generation assets in Chile through a merger. The merger proposed by Enel Chile would be subject to a successful public tender offer (“PTO”) to be launched by Enel Chile to
acquire up to 100% of the issued shares of its subsidiary Enel Generación. This PTO over Enel Generacion S.A.. shares would be paid exclusively in cash and contemplates that the shareholders of Enel Chile S.A. that accept to sell their shares,
utilize part of the price in cash that they will receive as a result of the PTO to acquire first issue shares of Enel Chile, being credited to the payment of the subscription price of the latest ones, the part corresponding to the PTO price. This
PTO would be subject to the condition that Enel Chile reaches a control interest over Enel Generacion higher than 75% of its shareholders equity. The success of the PTO is also conditioned to the modification of the articles of incorporation of Enel
Generacion, so the company is not subject to the “Title XII” of the “D.L. 3,500” from 1980, as a result of the elimination of the limitations to the shareholders concentration and the additional restrictions related to such
“Title XII”. In accordance to the applicable legislation to corporations, the merger transactions, must be approved by the respective Extraordinary Shareholders Meeting of each of the companies involved. Therefore, in order to comply
with the article 99 of Corporations Law, article 156 of its Rules, and General Norm number 30 of the Chilean SEC, the SVS, the Board of a company participating in a merger agreement must appoint an independent appraiser complying with local
regulation in Chile. The independent appraiser shall then, among other, issue a valuation report of the Companies subject to being merged and the implied exchange ratio (the “Expert Report”). Considering that EGPLA could transform itself
into a closely held corporation before the merger, the norms regulating the need of an Expert Report would be required to it. Therefore, the Board of Directors of the Company appointed Mr. Felipe Schmidt Gabler, Chilean citizen, married, Bachelor in
Business and Administration, C.N.I. No. 10,375,688-K, as the independent expert (the “Expert”) for the procedure of the Reorganization, complying with the requirements of articles No.156 and No. 168, both of the Corporate Company Rules,
and with the purpose of issuing the Expert Report, which is subject in its contents to the terms established in article 156 of the Corporate Company Rules and general rule No. 30 of the SVS. The valuation work performed by the Expert, serve as a
reference to estimate the exchange ratio as presented herein and has been developed on the basis of the information provided by the Company. For purposes of this work, the Expert used and relied on the information provided by or in behalf of EGPLA,
as well as on information publicly available. The Expert, supported by the financial advisory firm Providence Capital, has made no independent investigation and verification of the information provided by the Company and of the public information
used in the analysis and conclusions of the Expert Report. In this regard, the Expert and Providence Capital assume no responsibility for any errors and omissions that may exist in the information available and for the analysis and conclusions
derived directly or indirectly from such errors. The Expert Report is simultaneously presented in two formats, an original version in Spanish and an English courtesy translation copy. H-5
Limitations of work This Report was
prepared to be used exclusively by the Board and shareholders of EGPLA, as part of their analysis of the transactions that constitute the Merger, and therefore, must be exclusively used in such context, and not to be used for other purposes. This
Report does not constitute a recommendation, express or implied, to the Board of EGPLA in connection with the convenience to make a decision about the transactions that constitute the Merger. In the preparation of this Expert Report no obligation or
responsibility is undertaken for potential results or consequences of whether the Merger takes place or not. For the purposes of the preparation of this analysis and subsequent conclusions contained in this Expert Report, information delivered in
writing and orally by the Company has been made available to us through its managers in addition to publicly available information, without independent verification of such information's truthfulness, integrity, accuracy, consistency or precision
from our side. As to the estimates, projections or forecasts, we have had to assume and trust that they have been prepared in good faith and reasonably, based on assumptions that reflect the best available estimates and judgment by management in
connection with expected future results. In the preparation of this Expert Report, we assume no obligation or commitment whatsoever for providing legal, accounting or tax advisory services, nor performing due diligence of the companies subject to
the merger or Reorganization. Therefore, nothing in this Report may be considered, used or construed as legal, accounting or tax advice, and any contents thereof that makes reference, directly or indirectly, to legal, accounting or tax matters must
be understood as a reference to general aspects that we have deemed necessary and relevant to support the analysis. As requested by EGPLA, this Expert Report includes: (i) an estimated value of the Companies that will eventually merge and, (ii) an
estimate of the exchange ratio of the correspondent shares, based on ex-ante values without considering any type of transaction or corporate restructuring in connection to the Reorganization, therefore, this Expert Report does not consider any
opinion or analysis with regards to any potential likely scenario with respect to this PTO. Finally, we hereby state that we have not been subject to request nor have provided any advisory services neither in connection with the design, choice or
structuring of the transactions that conform the Reorganization, nor regarding the terms or conditions or any other aspect of the transactions, nor have we received requests for services different from the preparation of this Report. Therefore, we
make no pronouncement in this Report nor make any pronouncement about the possibility of an alternative transaction or a different setup of the companies subject to the Reorganization which may or may not have better outcomes for the shareholders of
one or more of the companies involved. H-6
Available Information and Procedures
For purposes of analysis and evaluation, we had access to private and confidential information provided by the Company’s management and through a privately owned data base, and to public information obtained both in written or electronic means
through the internet. The information provided by the Company’s management, submitted through a virtual data room in Intralinks, included among other: Historical financial statements. Financial projections for 2018 – 2022 period,
including balance sheets and income statements, expansion and maintenance capital expenditures, and main working capital accounts, as well as the 2017 budget, among others. In the case of EGPLA, due to its relevant portfolio of projects in a wide
range of development stages, the Company also provided extended projections up to 2026, including revenues, operating costs, expansion and maintenance capex, in order to standardize cash flows and to facilitate the calculation of the terminal value,
as well as information on its most relevant short and mid term projects. Projections of business and operational drivers, including price and quantities constituting the principal revenues, among other. Estimation of operational life of the
different plants (by technology) and their respective replacement costs. For energy generation companies, including both Enel Chile and EGPLA, the Company provided projections of gross margins, including estimations of energy prices, energy
generated and sold, and direct costs related to the sale and purchase of energy up to the year 2045. Financial statements as of September 2017. Net financial debt and other adjustment items (Equity Bridges) as of September 30, 2017. Management
presentations by the relevant companies involved, including Enel Chile, Enel Generación, Enel Distribución and EGPLA (September 26, 2017). Ownership structure of the Companies for each subsidiary companies. Review of due diligence reports,
where we opted to follow the ammounts provided by the Companies on their respective Equity Bridges calculations, given their better understanding of the underlying potential contingencies faced by the Companies. Meetings and conference calls held
with the management of the Companies, including Q&A sessions: In addition to the management presentations held on September 26, 2017, we had several rounds of Q&As, shared through an Intralinks virtual data room set up by the Companies. We
held several phone calls with management to cover doubts and information requests, including a review of the expected impact that the November 2 power auction may have on the Entities business plans, ratifying that there is no material impact on the
valuations, other than the confirmation of the award of PPAs for EGPLA’s project portfolio. Information obtained from other proprietary and public sources: Statistical information, market prices, reports of Investment Banks and market
multiples obtained from Thomson Reuters and Capital IQ. Web pages of the evaluated companies and rating agencies. News in general obtained through the web. H-7
Executive Summary Scope of work
General limitations Background and procedures applied Description of the transaction Description of the companies Methodology of work Companies valuations Exchange ratio of shares Merger Pro-forma Balance Statement as of September 30th, 2017
Appendix Appendix 1: Pro-forma consolidation table Table of contents H-8
Description of the transaction As it
has been communicated to the market as material fact or hecho esencial dated August 25, 2017, Enel Chile proposed to its controlling shareholder, Enel Group, the realization of a Reorganization whereby Enel Chile would absorb EGPLA’s non-
conventional renewable energy generation assets in Chile through a merger. The merger proposed by Enel Chile would be subject to a successful PTO to be launched by Enel Chile, in the conditions previously described in this document. Enel Chile
manifested that the Reorganization will form a company with a larger market capitalization, achieving greater liquidity and providing its shareholders with access to cash flows generated from conventional sources and non-conventional renewable
sources, as well as energy distribution. Additionally, Enel Chile expects its holding discount to diminish upon achieving a larger percentage of the net income generated by Enel Generación, benefiting all shareholders of Enel Chile. The Enel
Group mentioned that the proposed Reorganization would be in line with some of its strategic objectives, such as achieving a simpler minorities’ shareholding structure in Chile, and the corresponding improved alignment of interests. For these
reasons, it provided support to the transaction, subject to the fulfillment of 4 conditions: That the transaction is performed at market terms. That the transaction increases earnings per share of Enel Chile. That the Enel Group maintains at the end
of the process a similar shareholding to the one that it currently has in Enel Chile, without loosing control at any point in time during the process, within the maximum concentration limit of 65% of Enel Chile’s shareholding. That after the
process, Enel Generación stops being regulated by Title XII of D.L. 3,500 from 1980, eliminating ownership concentration and other restrictions related to the Title XII from its by-laws. Due to the characteristics of the proposed
Reorganization, the Boards of Enel Chile and EGPLA voluntarily decided to comply with the norms established by the Corporations law of Chile, regulating related party transactions. This Expert Report has been contracted by EGPLA as part of this
process, in conformity to article 155 of the Corporations Law. Previous understanding of the situation H-9
Description of the transaction
(cont’n) Methodology for estimating relative values For purposes of issuing the Expert Report regarding the valuation and share exchange ratio for the Companies’ that would be merged, each of the businesses where the Companies have
equity interests were valuated independently following a sum-of-parts criteria, including Generation (“Gx”) and Distribution (“Dx”) businesses in Chile. The valuation methodologies used for this purposes included the
Discounted Cash Flow model (“DCF”), and Trading and Transaction Comparable models. The prevailing methodology for defining the value of the individual businesses and therefore of the Companies, was the DCF (Discounted Cash Flow), while
Comparables were used for benchmarking and crosschecking results obtained through the DCF. Subsequently, results were adjusted according to values of specific accounts not included in financial projections (non-operational assets and liabilities
with economic impact) and deductions of net financial debt (all adjustments named Equity Bridges) to obtain the economic value of the equity for each business. Finally, the values of all individual equity stakes of the businesses were summed-up
accordingly to the equity participations of the Companies. Expert Report The objective of the Expert Report is to serve as one more piece of background information that the Board of the Company will make available to EGPLA’s shareholders that
must decide regarding the merger. The Expert Report contains information on the value of the Companies ex-ante to the proposed transaction, the corresponding share exchange ratios between the Companies and a proforma Balance Sheet that is
representative of the absorbing entity. H-10
Description of the transaction
(cont’n) Brief visual description of the proposed Reorganization: Current corporate structure PTO Merger EGPLA – Enel Chile Grupo Enel Enel Chile Distribución Chile Generación Chile Chile Latinoamérica 100,0% 100,0% 60,0%
99,1% 60,6% Grupo Enel Enel Chile Generación Chile Chile Latinoamérica 100,0% 100,0% 75-100% 60,6% 99,1% PTO Grupo Enel Enel Chile Generación Chile Chile 75-100% Aproxx. 60,6% 99,1% 100% Distribución Chile Distribución Chile
Merger H-11
Executive Summary Scope of work
General limitations Background and procedures applied Description of the transaction Description of the companies Methodology of work Companies valuations Exchange ratio of shares Merger Pro-forma Balance Statement as of September 30th, 2017
Appendix Appendix 1: Pro-forma consolidation table Table of contents H-12
Enel Chile General Description
Enel Chile is an electric Chilean holding that participates in the energy generation business, as well as in distribution and transmission of electricity through it’s subsidiaries Enel Generación (60% of participation) and Enel
Distribución (99% of participation). The company is controlled by the Italian group Enel SpA, which owns 60.6% of the company. The company was formerly known as Enersis Chile S.A. and changed it’s name to Enel Chile S.A. in November 2016,
after a restructuring process. During 2016, the company totaled USD 3,160 million in revenues, of which 65% came from the generation business, while the remaining 35% came from the distribution business. Source: The company Source: The company
Shareholders EBITDA Breakdown H-13
Enel Generación Chile Enel
Generación is one of the leading companies in the Chilean electric industry, mainly engaged in the generation and commercialization of electricity. Currently, the company operates 111 power plants, directly and indirectly through it’s
subsidiaries, totaling an installed capacity of 6.3 GW throughout the country (29% of Chile’s total installed capacity). It’s diversified all across the country and in the different types of technologies (hydro, thermal, wind, coal and
others). As of December 2016, the company totaled USD 2,428 million in revenues, and recorded an EBITDA of USD 880 million. General Description Shareholders Installed capacity by technology (MW) Source: The company Source: The company
H-14
Enel Distribución Chile Enel
Distribución is the largest distribution company in Chile in terms of energy sales (represents 40% of the total distribution sales in the country), and the second largest in terms of number of clients (1.85 million in Chile). Currently, the
company has an indefinite concession with the Ministry of Energy, consisting of 2,105 km2 of total area, serving 33 municipalities of the Metropolitan Region. For the transmission and distribution of energy, it operates 361 km of high voltage lines
and 16,682 km of medium and low voltage lines. During 2016, the company presented total sales of USD 1.831 million and an EBITDA of USD 283 million. Shareholders Number of Clients (th) General Description Source: The company Source: The company
H-15
Enel Green Power
Latinoamérica S.A. EGPLA generates electricity from renewable resources. It currently operates 16 power plants with an installed capacity of 1,195 MW, diversified across the country and in different types of renewable technologies. It has 8
solar plants, 7 wind plants, 2 hydroelectric plants and 1 geothermal plant. It is the largest non conventional renewable energy generation company in Chile in terms of installed capacity, with an estimated 30% market share. Approximately 94% of
energy sales are backed by PPAs. The company’s business plan includes a pipeline of projects of 798 MW, that is currently in the process of awarding PPAs. Shareholders Installed capacity by technology (MW) General Description Source: The
company Source: The company H-16
Enel Group main assets in Chile
The tables below describe the main assets of Enel Group in Chile, indicating some relevant technical parameters for each company. Source: The company (1) (1) The installed capacity of EGPLA considers the project Campos de Sol, a solar plant with
339MW of installed capacity with a long term PPA contract between years 2021 and 2045. (2) (2) Additionally, EGPLA has a projects portfolio of 798MW of total installed capacity, that are in process of awarding PPAs, and that are not considered in
the installed capacity described in the table above. H-17
Enel Chile & EGPLA –
Summary of participations with control Source: The company The following table shows a summary of Enel Chile and EGPLA’s controlling participations H-18
Executive Summary Scope of work
General limitations Background and procedures applied Description of the transaction Description of the companies Methodology of work Companies valuations Exchange ratio of shares Merger Pro-forma Balance Statement as of September 30th, 2017
Appendix Appendix 1: Pro-forma consolidation table Table of contents H-19
Understanding the business
Forecast companies’ performance Selection of the appropriate valuation model Valuation report and exchange ratio calculation Key value drivers Company strategy Industry/segment: size, growth and profitability Company positioning within the
industry Threat of new entrants in the industry Threat of substitutes Bargaining power of buyers Bargaining power of suppliers Rivalry among existing competitors Key regulatory aspects Historical financial statement analysis Macroeconomic scenario
Key value drivers Scenario sensitivity analysis Definition of methodology for calculation of terminal values Estimate growth rates for perpetuity formulas Description of the valuation model and key assumptions Absolute valuation models: DCF Relative
valuation models: Transaction comps Trading comps Summary and valuation conclusions Business description and industry analysis Risk factor description Description of the relative values of each of the Companies Calculation of the
Exchange Ratio The valuation process H-20
DCF (most widely used) Trading
Comps Transaction Comps Multiples (referential methodology) Absolut Valuation Relative Valuations Selection of appropriate comparables for: Generation Distribution Multiples selection: Enterprise value / EBITDA (EV/EBITDA) Since the companies have
operations in different segments (Gx, Dx) and types of technologies (conventional vs. non conventional) with specific characteristics and different risk-return relations, we chose to value them using a sum-of-the-part methodology, relying on the DCF
method, and using multiples-based valuations only as a reference. For the DCF valuation, we used financial projections provided by management, as well as estimates of terminal value and discount rates that reflect the risks associated with the
projected cash flows, calculated by Providence Capital for each of the companies. To the value obtained for each business, we subtracted the net financial debt along with other adjustments, case by case, named Equity Bridges by the management, in
order to determine the equity value of each company. Finally, according to the equity interest that each company has over each business being valued, we calculate the relative value of each of the Companies following a sum-of-the-parts criteria (see
chapter 5). Cash flows to be discounted by company: EBITDA (Income) (-) Tax calculated on EBIT (-) Capex (-) Working Capital Consumption = Free Cash Flow for the Company Terminal values by company. Growth rates of terminal value cash
flows. Company discount rates (WACC). Calculation of Enterprise Values Deduction of net financial debt and other adjustments, called by the administration "Equity Bridges”. Calculation of Equity Values Valuation methodologies Valuation
H-21
Discounted Cash Flow Methodology
(“DCF”) DCF Methodology used by Providence Capital The method of discounted cash flow (DCF ) estimates the value of the business / company by adding free cash flows generated by the company discounted to present value. For the
distribution company, Enel Distribución, we used the 5-year explicit financial projections provided by management, whilst for the energy generation companies, we used a 10-year explicit projected period (except for Enel Chile Individual, for
which a 5-year explicit period was used), with the purpose of normalizing the free cash flows, capturing the normalization of margins related to the PPA contract profiles (with quantities and prices) and maturity of projects under development and to
be developed, whereas the continuing cash flows were estimated through terminal value formulas. This methodology distinguishes between operational and financial elements which add to the Enterprise Value. The operational elements are represented in
the projected operational free cash flows (excluding financial flows such as interest paid and received). Financial elements are considered in the discount rate (WACC), at which the operating free cash flows are discounted back to present value. The
WACC is obtained by multiplying the proportional share of each source of capital by their respective cost (e.g. cost of debt multiplied by the proportional share of debt in total capital). Free Cash Flow by Company or Asset Free Cash Flow (FCF) =
Income – Operational Costs (excluding Depreciation & Amortization) – Taxes – CapEx – Variations of Working Capital Terminal Value The terminal value reflects the sum of the expected free cash flows of the company beyond
the explicitly projected period Our model assumes the traditional formula of perpetuity for Gx businesses and an approach based on expected returns on new investments in those regulated industries such as Dx, subject to regulatory limits, target
growth rates and discount rates, considering that the Dx business is mainly regulated. Normalized free cash flows for the first year post explicit forecast period are used for these calculations. H-22
DCF – WACC (discount rate)
WACC parameters Cost of Equity (Ke) The company’s cost of capital reflects the opportunity cost (or profitability) for all the capital providers of the company weighted by their relative contribution to the company’s capital The cost of
capital used to calculate the net present value of the free cash flows to the firm is determined by the Weighted Average Cost of Capital (“WACC”) of the firm or project being valued. The WACC is calculated based in the following formula:
WACC(t) = Ke * E/(D+E) + Kd * D/(D+E), where: Ke = Cost of Equity Kd = After Tax Cost of Debt E = Market Value of Equity D = Value of Debt The standard model to estimate the cost of equity is the capital asset pricing model (CAPM). A basic principle
of the model is that the required rate of return for a risky asset can be broken down into two parts = Rate of return for a risk-free asset + Risk premium. Another basic principle of the model is that the total risk (measured by the variance of an
asset’s return) of a risky asset can also be split into two parts = non diversifiable risk (systematic risk) + Diversifiable risk (non systematic risk) The CAPM states that: Ke = (Rf + Cr)+ ß*(MRP), where: Ke = cost of Equity Rf = Risk
Free Rate of Return Cr = Country Risk Premium Rm = Expected rate of return of the market portfolio of risky assets MRP = Market risk premium (Rm-Rf) ß = Equity beta (levered beta) H-23
DCF – WACC (discount rate)
Risk Free Rate (Rf) The currency and duration of the risk free rate should match the currency and duration of the cash flows that are being discounted. We have used the 10-year sovereign bond of the United States to calculate the risk free rate. The
Rf used is 2.34% Country risk premium (Cr) As a proxy for country risk premium we used the EMBI of Chile of JP Morgan. The EMBI is the spread between the interest rates paid by bonds denominated in dollars, issued by underdeveloped countries, and
the US Treasury bonds, considered as “risk free”. The Cr used for Chile is 1.26%. Market risk premium (MRP) The MRP is the additional return over the risk free return required by investors before they will invest in the market portfolio.
As proxy MRP, we considered an average MRP used by international investment banks, some of which cite sources such as Morningstar and Ibbottson. The MRP used is 6.6 %. Capital structure The capital structure of each company is calculated based on
market averages observed in Gx and Dx. For EGPLA, which is a renewable energy generation company with a strong portfolio of long term contracts, both for capital structure and for beta calculation, a sample of renewables companies listed in the
Americas and Europe was observed, due to the absence of comparables listed in Chile. Cost of debt The cost of debt was estimated as the 10-year average marginal cost of borrowing in USD, observed in comparable companies in the industry, with similar
risk profile. Corporate income tax rate The nominal tax rate for capital gains in Chile for the medium and long term was used, according to the current legislation. H-24
DCF – WACC (discount rate)
Beta (ß) Beta is a measure of systematic market risk, non-diversifiable. The Beta coefficient attempts to indicate what proportion of a company's share price variation may be explained by the variation in the market portfolio. It is calculated
through a linear regression between the series of variations in the share price and the series of variations in the market portfolio (Index MSCI World) over a certain period of time, both in USD. For illiquid stocks and markets, such as the
Latin-American Stock Market, the best approach to calculate a company’s Beta is to determine a set of comparable companies in order to build an average unlevered Beta for the industry (asset Beta), that is taken as reference for the unlevered
Beta of the company under study. This Beta is then re-levered to reflect the company’s target capital structure (equity Beta). For our analysis, based on the levered Betas (obtained from Capital IQ) we calculate the unlevered Beta for
conventional Generation companies, non conventional renewable Generation and Distribution companies. Beta is composed of both operational and financial risk. In order to obtain the operational risk of the business, the unlevered beta of the business
is obtained from the sample of levered betas, according to the following formula: ß U = ß L/ (1 + (1 - Tc) * (Debt/Equity)), where: Tc = Corporate Tax Rate ß U = Unlevered beta ß L = Levered beta The average unlevered beta of the
set of comparable companies is then re-levered to the company’s target capital structure, or the group of companies under valuation, in accordance to the following formula: ß L = ß U * (1 + (1 - Tc) * (Debt/Equity)) H-25
Key value drivers Exchange rates
GDP growth rates Electricity demand growth Inflation rates Commodity prices: coal, gas, diesel Interest rates Country risk rates Regulatory framework Energy price expectations in the long-term Macroeconomic scenario Revenues Costs / Taxes CapEx /
Working Capital WACC Capacity Load factor Effective generation Other revenues Long term contracts with large energy consumers Transmission tolls Distribution tariff Tariff revisions Mix of regulated and unregulated customers Fixed costs Variable
costs Operating costs & of holding companies (overheads) Taxes Investments: Expansion Maintenance Treatment of terminal values Oscillations of accounts receivable and payable (insignificant in these industries and assets) Risk free rates Country
risk (EMBIs) Betas Market risk premium Debt costs Capital structures H-26
General conventions used in the
valuations Exchange rate projections provided by management and international investment banks consensus. GDP and inflation projections provided by management. Information obtained from public sources. To calculate terminal values, the
nominal rate of Chile was used. Valuation date Valuations and calculation of the exchange ratio as of September 30, 2017. Forecast period Explicit projections for 5 and 10 years, as were provided by the management of the companies, combined with our
own considerations, with the purpose of normalizing the cash flows. These projections are not included in this report due to their confidential nature, according to the request of the administration of the companies. Currencies The cash flows were
expressed in local nominal currency, being for all companies the local currency their functional currency, except for a some Generation companies, where the functional currency is USD. Free cash flows (FCF) were converted into USD considering the
exchange rate projections provided by management and international banks consensus. FCF were then discounted using nominal WACCs in USD. Macroeconomic assumptions Taxes H-27
Share exchange ratio Initially, we
obtain the equity value of each of the Companies (Enel Chile, EGPLA) using the sum of parts method. The equity value of Enel Chile is divided by the number of shares of Enel Chile pre transaction, obtaining the value per share of Enel Chile. The
equity value of EGPLA is then divided by the value per share of Enel Chile, obtaining the number of shares to be issued by Enel Chile to be delivered to EGPLA shareholders. The number of additional shares to be issued by Enel Chile is divided by the
number of EGPLA shares previous to the transaction. Following this, we obtain the exchange ratio, which would be the number of shares that Enel Chile should deliver to the EGPLA shareholders for each share of EGPLA. Share exchange ratio
H-28
Chile macroeconomic projections
The main macroeconomic projections were provided by management, based on forecasts provided by the team of economists of the group, whereas the exchange ratios were obtained from a consensus of different international banks, and are shown in the
table below: H-29
Executive Summary Scope of work
General limitations Background and procedures applied Description of the transaction Description of the companies Methodology of work Companies valuations Exchange ratio of shares Merger Pro-forma Balance Statement as of September 30th, 2017
Appendix Appendix 1: Pro-forma consolidation table Table of contents H-30
Summary of valuations and implied
multiples The table below summarizes the DCF valuations of Enel Chile and EGPLA through the sum-of-the-parts methodology. The table shows the mid equity values of our base cases, both for the Enterprise Values and the respective Equity Values after
deducting the Equity Bridges. The sensitivity analysis showing Low and High points is obtained as a +/- 5% variation with respect to our mid values calculated through the DCF. The last column shows the implied 2018E EV/EBITDA multiples from the
Enterprise Values obtained through the DCF methodology. H-31
Equity values of the Companies The
table below calculates the equity value attributable to each of the companies according to their equity ownership. Therefore, the total Equity Value for each of the Companies is obtained by adding up the corresponding equity values following the
sum-of-the-parts methodology. The Low - High points range corresponds to the variation of the Enterprise Values sensitized with a +/- 5% with respect to the mid values calculated and described in the previous slide. H-32
Enel Chile: most relevant
companies in terms of equity value Enel Chile equity value composition, in USD million Source: The company, Providence Capital H-33
Enel Generación Chile: most
relevant companies in terms of equity value Enel Generación equity value composition, in USD million Source: The company, Providence Capital H-34
WACC - Generación Source:
Capital IQ, Providence Capital Our DCF valuation methodology is based on the calculation of a nominal USD WACC that reflects the returns required from the different sources of capital for each asset in relation to country risk and asset’s
industry, among other factors. Our analysis assumes the use of an unlevered Beta for the conventional electricity generation companies, based on a comparable analysis of companies listed in Chile. In the case of non conventional renewable
generation, a sample of comparable companies listed in the Americas and Europe was observed, after which we decided to calculate an average between the result obtained with this last sample and the WACC of conventional generation obtained for
Chilean companies. In this manner, a WACC of 7.4% is used for the conventional generation companies, and a 7.1% WACC is used for EGPLA. H-35
WACC – Distribution The
unlevered Beta used is 0.57, which when being re-levered, results in a levered Beta of 0.71. This analysis yields a WACC of 6.9% for the electricity Distribution business Fuente: Capital IQ, Providence Capital H-36
Beta calculation In general terms,
to calculate the Beta for the energy generation and distribution businesses, we favored the use of comparable companies listed in Chile, in order to calculate an average unlevered Beta of the industry, as we believe that this approach better
reflects/captures the competitive and regulatory conditions of the Chilean market. In this manner, an unlevered Beta of 0.65 was obtained for conventional generation companies, an unlevered beta of 0.62 for non conventional renewable generation
companies, and an unlevered Beta of 0.57 for distribution companies. Fuente: Capital IQ, Providence Capital H-37
Multiples for listed companies Our
analysis takes into consideration the use of trading multiples only as a complementary referential method with respect to the values obtained by DCF. An analysis of listed companies in Chile, Peru and Colombia was performed, given the level of
similarity between these markets with regards to both regulatory matters and the risk level perceived by investors. In generation, given the existence of 3 companies listed in Chile, we used the multiples of the companies listed in Chile, whilst for
energy distribution (including some transmission assets), we worked with a sample of listed companies in Chile, Peru and Colombia, including a non-electric regulated utility company. The sample of comparable companies for the calculation of the
multiples was adjusted by liquidity criteria, type of industry, market and Equity Research analysts coverage. The multiples presented were calculated dividing the Enterprise Value of the companies in relation to the estimates of a forecast for 2018
EBITDAs from a consensus of analysts in the market, given that some companies do not present significant coverage. This analysis provides an average EV/EBITDA multiple of 8.2x for the conventional generation sector, 8.9x for the distribution sector
and 11.0x for renewable generation. Fuente: Capital IQ, Providence Capital H-38
Transaction multiples An analysis
of M&A transactions was made, where transactions in Chile, Peru and Colombia were privileged over other countries given the level o similarity between these markets with regards to both regulatory matters and the risk level perceived by
investors. Thus, the sample was cleaned to exclude the transactions from other markets. In generation, two transactions were considered in Peru (Isagen in 2016 and Generandes in 2014) and one in Chile (Guacolda in 2014) This analysis results in an
average EV/EBITDA multiple of 10.5x for the generation sector. Alternatively, applying the same analysis criteria for the distribution sector, it was decided to observe a sample of 3 transactions, which are CGE (2014) and Chilquinta (2011) in Chile,
and Luz del Sur (2011). This analysis results in an average EV/EBITDA multiple of 10.0x for the distribution sector. Fuente: Capital IQ, Providence Capital H-39
Executive Summary Scope of work
General limitations Background and procedures applied Description of the transaction Description of the companies Methodology of work Companies valuations Exchange ratio of shares Merger Pro-forma Balance Statement as of September 30th, 2017
Appendix Appendix 1: Pro-forma consolidation table Table of contents H-40
The medium point of our exchange
ratio (15.15x) is the result of the mid value estimated for the Equity Value of the Companies. Given that the Equity Value of the companies is highly dependent on a wide number of variables, we sensitized some critical variables and their impact on
the exchange ratio. Variables sensitized include, among others: Variation in the WACCs of the companies. Reduction of the projected EBITDA margin for EGPLA throughout the explicit projection and terminal value, assuming that not all the expected
cash cost reductions are achieved in relation to the operational optimization and synergies. Variation in the probability assigned to the short term and medium term projects of EGPLA. Holding discount of 5% affecting the value of Enel Chile. Others.
The minimum value (14.02x) obtained for the exchange ratio of shares is achieved with the scenario where the WACC of EGPLA equals Enel Generacion’s WACC at 7.42%, and also considering that only 50% of the short term projects of EGPLA are
materialized. On the other hand, the maximum exchange ratio value (16.15x) is obtained in the scenario where a higher probability of success is considered for the short and medium term new projects that are still not contracted (75% and 25%
respectively), and also considering a WACC for EGPLA of 7.12% instead of the 7.42% WACC of Enel Generación, to account for its long-term highly contracted portfolio of renewable energy generation assets. Exchange ratio sensitivity
H-41
Exchange ratio calculation:
sensitivity analysis H-42
Executive Summary Scope of work
General limitations Background and procedures applied Description of the transaction Description of the companies Methodology of work Companies valuations Exchange ratio of shares Merger Pro-forma Balance Statement as of September 30th, 2017
Appendix Appendix 1: Pro-forma consolidation table Table of contents H-43
Enel Chile Pro-forma Merger
Balance Sheet – September 30, 2017 The consolidated pro-forma financial information of Enel Chile S.A. has been elaborated assuming a merger with EGPLA as of September 30, 2017, and includes the accounting effects generated by such merger,
which are explained in the following analysis H-44
Enel Chile Pro-forma Merger
Balance Sheet – September 30, 2017 H-45
Executive Summary Scope of work
General limitations Background and procedures applied Description of the transaction Description of the companies Methodology of work Companies valuations Exchange ratio of shares Merger Pro-forma Balance Statement as of September 30th, 2017
Appendix Appendix 1: Pro-forma consolidation table Table of contents H-46
Pro-forma Consolidation
Spreadsheet – September 30, 2017 Note (i): See page 50 H-47
Pro-forma Consolidation
Spreadsheet – September 30, 2017 Note (i) & (ii): See page 50 H-48
The pro-forma consolidation
spreadsheet considers: Enel Chile Consolidated: Corresponds to the historical consolidated financial information of Enel Chile S.A. and its subsidiaries as of September 30, 2017 that has been audited by EY Audit SPA. Enel Green Power
Latinoamérica S.A. Consolidated: Corresponds to the historical consolidated financial information of Enel Green Power Latinoamérica S.A. and its subsidiaries as of September 30, 2017, that was audited by EY Audit SpA. “Push
Down” adjustment allocation: Corresponds to the allocation of “push down” adjustments performed when the amounts in the net assets books of the financial statements of the transferred entity, Enel Green Power Latinoamérica
S.A, differs from the amounts in the books of the consolidated financial statements of the ultimate parent company (Enel SpA). This occurs because the net assets being transferred to Enel Chile S.A. were originally acquired in a combination of
businesses by Enel SpA, adjustments that due to the application of accounting standards were not assigned to Enel Green Power Latinoamérica S.A, and were registered in the acquiring company (Enel SpA). The accounting application in a joint
control transaction require that those adjustments are reflected once Enel Chile S.A. obtains control over Enel Green Power Latinoamérica S.A. The adjustments are related to: Goodwill: Represents the excess value of the total consideration
transferred by Enel plus the amount of any non controlling interest of the identifiable assets acquired and the liabilities incurred, assessed at fair value at the date of EGPLA acquisition. Other reserves: Represents the reserve related to the
acknowledgment of the net assets at fair value in Enel SpA at the date of Enel Green Power Latinoamérica’s acquisition. Enel Green Power Latinoamérica S.A. Combined: Corresponds to Enel Green Power Latinoamérica S.A. and
subsidiaries’ historical consolidated financial information as of September 30 2017, adjusted by the allocation of the “Push Down” adjustment. Pro-forma Consolidation Spreadsheet – September 30, 2017 H-49
Merger Pro-forma adjustments:
Corresponds to the elimination of the intercompany balances between Enel Chile S.A (and subsidiaries) and Enel Green Power Latinoamérica S.A. (and subsidiaries), as of September 30, 2017. Represents the elimination of the shareholders equity
attributable to the owners of Enel Green Power Latinoamérica S.A.’s controlling company and the capital increase in Enel Chile as a result of the merger transaction proposed Issued Equity - Elimination of Enel Green Power
Latinoamérica S.A. issued capital (527.698.886) - Equity increase in Enel Chile S.A. due to the proposed merger transaction670.717.051 _______________ 143.018.165 (6) Enel Chile merged pro-forma: Corresponds to the consolidated financial
information of Enel Chile S.A. and subsidiaries as of September 30, 2017, assuming that the merger with Enel Green Power Latinoamérica S.A. took place on September 30, 2017, including the accounting effects that such merger would generate
Pro-forma Consolidation Spreadsheet – September 30, 2017 H-50
ANNEX I
PRESENTATION, DATED AUGUST 21, 2017, MADE BY BTG PACTUAL CHILE S.P.A. AND BTG PACTUAL CHILE S.A. CORREDORES DE BOLSA, THE
FINANCIAL ADVISORS TO ENEL CHILE
This Annex I is a free English translation of the original Spanish language version, which reflects the
substantive content of the original Spanish language document, but may not be a
word-for-word
translation. In the event of any discrepancy with the English translation,
the original Spanish language document will prevail.
Presentation to Enel Chile S.A. Project
Elqui STRICTLY CONFIDENTIAL For additional information, please read carefully the notice at the end of this presentation. August 21st , 2017 Annex I
BTG Pactual Team José Antonio
Rollán Senior Analyst Santiago Juan Guillermo Aguero CEO Chile Santiago Jose Ignacio Zamorano Head of Investment Banking Chile Santiago Abel García-Huidobro Analyst Santiago Supervision Execution Ignacio Guarda Vice President Santiago
Vittorio Perona Head of Power & Utilities São Paulo Equities Mauro Battisti Power & Utilities Coverage São Paulo Fernando Massú Chairman Chile Santiago Industry Coverage Matías Repetto Head of Brokerage House Chile
Santiago Hugo Rubio Equity International Trade Director Santiago Rodrigo Pérez-Mackenna Vice-Chairman Chile Santiago Enrique Corredor Head of ECM New York Fred Monnerat Head of Equity Sales New York United States César Pérez-Novoa
Head of Research Santiago Alex Sadzawka Power & Utilities Santiago Research Robert Zweig Head of Syndicate New York Jill Wallach Head of Legal New York César Alvite ECM New York Kevin Younai Legal New York Guilherme Paes Head of Investment
Banking São Paulo I-
Clear separation of operations in Chile
Leadership in conventional electric generation segment Leadership in the electrical distribution segment Several companies listed Holding discount Interests not aligned, due to direct and indirect stakes Conventional and renewable generation through
different vehicles Current Situation Gx Chile Chile Dx Chile 99.09% 59.98% Current Structure Mkt. Cap: US$ 5,3 bn Mkt. Cap: US$ 2,2 bn Mkt. Cap: US$ 6,1 bn Chile 60.62% 100.00% 100.00% SPA Latinoamerica Source: Bloomberg as of 14/08/2017
I-
Proposed Transaction Final Structure Enel
Chile’s tender offer over Enel Gx Chile, payable in a cash and shares mix Merger between Enel Chile and Enel Green Power’s renewable assets in Chile, conditioned to the success of the tender offer Gx Chile Chile Dx Chile 99.09% Between
75% y ca. 100% 100% Chile I-
Advantages of the Transaction Advantages
of the Transaction Simplifying Corporate Structure Alignment of all interests in a single investment vehicle Creation of a larger company with more liquidity possible decrease in the holding discount of Enel Chile (today at ~ 12% or US $700 mm)
Consolidation of both conventional and renewable generation operations (EGP and Enel Gx) Neutral transaction from a tax point of view Does not infringe resolution 667 Improvement of the capital structure of Enel Chile (currently little leveraged)
Diversification and increase of the organic growth of Enel Chile through a greater capex 1 2 3 4 5 6 7 8 9 I-
According to Law 18.046 (Ley de
Sociedades Anónimas) and law 18.045 (Ley de Mercado de Valores) Required approvals in Enel Chile Enel Chile’s tender offer over Enel Gx Chile (Cash + Shares) Capital increase (in order to obtain shares for TO) requires approval of
>66.6% of issued shares in the ESM Requires registration of new shares in the SVS A 30-day preferred subscription period must be granted to existing shareholders. Requires simultaneous tender offer both in Chile as in USA Merger between Enel
Chile and Enel Green Power Chile Requires ESM, approval of >66.6% of issued shares Creates withdrawal rights for dissident shareholders (market terms, weighted average between 90 and 30 trading days prior to ESM) Requires appraiser to evaluate
terms and values OPR: requires independent advisor for the Board. Independent committee may designate an additional independent advisor Shareholders Structure of Enel Chile(1) Stake % % over float US$ bn(2) Enel 60.6% - 3,2 ADRs 7.3% 18.5% 0,4
Internationals 13.8% 35.0% 0,7 Pension Funds 11.1% 28.1% 0,6 Brokers 4.0% 10.2% 0,2 Others 3.2% 8.2% 0,2 Total 100% 100% 5,3 Source: Bloomberg, Bolsa de Comercio de Santiago (BCS) Notes: As of 2Q-2017 Considers price as of 11/08/2017 and an exchange
rate of 660 CLP/US$ Chile I-
According to the bylaws of Enel Gx Chile
and chapter XII of the DL 3,500 Required approvals in Enel Gx Chile Bylaws reform Article 5bis of the bylaws of Enel Generación Chile establishes that no company or related group may have more than 65% of the shares of the company The reform of
the bylaws requires a ESM with approval of > 75% of the Shares issued In the same ESM the transaction as an OPR would be approved, requiring an approval of > 66% of the shares issued Shareholders Structure of Enel Gx Chile(1) Stake % % over
float US$ bn(2) Enel Chile 60,0% - 3,6 ADRs 3.2% 8.0% 0,2 Internationals 9.7% 24.2% 0,6 Pension Funds 16.2% 40.1% 1,0 Brokers 3.7% 9.3% 0,2 Others 7.2% 18.3% 0,4 Total 100% 100% 6,1 Gx Chile Source: Bloomberg, Bolsa de Comercio de Santiago (BCS)
Notes: As of 2Q-2017 Considers price as of 11/08/2017 and an exchange rate of 660 CLP/US$ I-
Holding discount is estimated at a ~12%
of the NAV Enel Chile’s NAV Analysis NAV (US$ mm) Holding Discount -11.7% Soruce: Bloomberg as of 14/08/2017 I-
Enel Chile’s and Enel Gx
Chile’s Valuation Evolution Share Price Enel Gx Chile / Enel Chile Share Price Enel Chile and Enel Gx Chile Daily transaction Volume (1) (US $ mm) Enel Gx Chile weight on Mkt Cap of Enel Chile Average 7.1x + Enel Gx CL + Enel CL Source:
Bloomberg, Bolsa de Comercio de Santiago (BCS) Notes: Considers ordinary shares and ADR’s volume I-
Roles of the advisors in Elqui
Independent Evaluator Committee of directors (optional) Inform shareholders about the conditions of the operation, its effects and its potential impact on the company (in practice with a focus on minority shareholders) Appraiser Must be independent
and be designated by the Board of Directors of the company Must issue a referential report that confirms the values proposed by the Board of Directors Independent Evaluator Directory Inform shareholders about the conditions of the operation, its
effects and its potential impact on the company (in practice with a focus on all shareholders) I-
Disclaimer This presentation has been
prepared by BTG Pactual S.A. (“BTG Pactual”) for the exclusive use of the party to whom BTG Pactual delivers this presentation (together with its subsidiaries and affiliates, the “Company”) using information provided by the
Company and other publicly available information. BTG Pactual has not independently verified the information contained herein, nor does BTG Pactual make any representation or warranty, either express or implied, as to the accuracy, completeness or
reliability of the information contained in this presentation. Any estimates or projections as to events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based upon the best judgment of
BTG Pactual from the information provided by the Company and other publicly available information as of the date of this presentation. There is no guarantee that any of these estimates or projections will be achieved. Actual results will vary from
the projections and such variations may be material. Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. BTG Pactual expressly disclaims any and all liability relating or resulting from the
use of this presentation. This presentation has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The Company should not construe
the contents of this presentation as legal, tax, accounting or investment advice or a recommendation. The Company should consult its own counsel, tax and financial advisors as to legal and related matters concerning any transaction described herein.
This presentation does not purport to be all-inclusive or to contain all of the information that the Company may require. No investment, divestment or other financial decisions or actions should be based solely on the information in this
presentation. This presentation has been prepared on a confidential basis solely for the use and benefit of the Company; provided that the Company and any of its employees, representatives, or other agents may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to the Company relating to such tax treatment and tax structure.
Distribution of this presentation to any person other than the Company and those persons retained to advise the Company, who agree to maintain the confidentiality of this material and be bound by the limitations outlined herein, is unauthorized.
This material must not be copied, reproduced, distributed or passed to others at any time without the prior written consent of BTG Pactual. I-
ANNEX J
PRESENTATION, DATED AUGUST 30, 2017, MADE BY BTG PACTUAL CHILE S.P.A. AND BTG PACTUAL CHILE S.A. CORREDORES DE BOLSA, THE
FINANCIAL ADVISORS TO ENEL CHILE
This Annex J is a free English translation of the original Spanish language version, which reflects the
substantive content of the original Spanish language document, but may not be a
word-for-word
translation. In the event of any discrepancy with the English translation,
the original Spanish language document will prevail.
Presentation to Enel Chile S.A. Project
Elqui Update STRICTLY CONFIDENTIAL For additional information, please read carefully the notice at the end of this presentation. August 30th, 2017 Annex J
Introduction Enel Chile hires:
Independent evaluator of the Directory Independent evaluator of the Committee of Directors Appraiser Technical, legal and tax due diligence on EGP Latam assets in Chile Valuation Analysis Methodology: All advisors (evaluators and appraisers) will be
provided with the same information Via INTRALINKS, Virtual Data Room system Historical information Macroeconomic Projections Business Plan Management Meetings Management Presentation covering the main areas of each company (including
projections) Q&A Answers are made available to all advisors via Data Room J-
Independent Evaluators Report Analysis of
the strategic rationale and potential impact on the value with respect to the proposed transaction, in order to estimate whether it contributes to the company's social interest Valuation of Enel Chile, Enel Generación Chile and EGP Latam in the
context of the proposed transaction Valuation of the stock exchange in the merger, between Enel Chile and EGP Latam Assessment on the most suitable terms and conditions of the tender offer considering that: i) it contributes to the social interest
of the company and ii) its in line with the requirements of Enel Spa Description of the proposed reorganization J-
Information to be delivered to evaluators
a. Historical Information Financial statements Management reports Reports to the board of Directors c. Business Plan d. Management Presentations Regulatory Assets description Operational KPIs Projects Commercial Accounting and finance Human
Resources Legal Environmental Tax b. Macroeconomic Projections Macro (Inflation, FX, GDP, etc) Market (Demand growth, commodities prices) Energy prices and capacity J-
Indicative timeline for approvals stage
Enel Chile Enel Generación Chile BoD designates independent evaluators and appraiser BoD designates independent evaluators and appraiser 30 Ago. 1 Sept. Audited financial statements as of Sept. 30 Independent Evaluators reports Independent
Evaluators reports 27 Oct. End Oct Independent Evaluators works for ~45-60 days Committee of Directors issues its report and directors issue individual opinion Committee of Directors issues its report and directors issue individual opinion 7 Nov.
Appraiser finalize merger’s report BoD summons ESM to change bylaws Mid. Nov. BoD approves transaction terms and summons ESM to decide on the merger and capital increase ESM approves merger and capital increase ESM approves bylaws reform Mid.
Dic. ~40 days (ADRs) Mid. Sept. Business Plan delivery Business Plan delivery J-
Next Steps Information delivery and due
diligence execution Activity Responsible Enel Chile / BTG Business Plan and projections delivery Enel Chile / Enel SpA Finalize proposal for implementation of the tender offer and capital increase Enel Chile / BTG / Carey Hire technical advisor Enel
Chile Legal and Tax Due diligence Carey J-
Disclaimer This presentation has been
prepared by BTG Pactual S.A. (“BTG Pactual”) for the exclusive use of the party to whom BTG Pactual delivers this presentation (together with its subsidiaries and affiliates, the “Company”) using information provided by the
Company and other publicly available information. BTG Pactual has not independently verified the information contained herein, nor does BTG Pactual make any representation or warranty, either express or implied, as to the accuracy, completeness or
reliability of the information contained in this presentation. Any estimates or projections as to events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based upon the best judgment of
BTG Pactual from the information provided by the Company and other publicly available information as of the date of this presentation. There is no guarantee that any of these estimates or projections will be achieved. Actual results will vary from
the projections and such variations may be material. Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. BTG Pactual expressly disclaims any and all liability relating or resulting from the
use of this presentation. This presentation has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The Company should not construe
the contents of this presentation as legal, tax, accounting or investment advice or a recommendation. The Company should consult its own counsel, tax and financial advisors as to legal and related matters concerning any transaction described herein.
This presentation does not purport to be all-inclusive or to contain all of the information that the Company may require. No investment, divestment or other financial decisions or actions should be based solely on the information in this
presentation. This presentation has been prepared on a confidential basis solely for the use and benefit of the Company; provided that the Company and any of its employees, representatives, or other agents may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to the Company relating to such tax treatment and tax structure.
Distribution of this presentation to any person other than the Company and those persons retained to advise the Company, who agree to maintain the confidentiality of this material and be bound by the limitations outlined herein, is unauthorized.
This material must not be copied, reproduced, distributed or passed to others at any time without the prior written consent of BTG Pactual.
ANNEX K
PRESENTATION, DATED OCTOBER 26, 2017, MADE BY BTG PACTUAL CHILE S.P.A. AND BTG PACTUAL CHILE S.A. CORREDORES DE BOLSA, THE
FINANCIAL ADVISORS TO ENEL CHILE
Presentation to Enel Chile Board of
Directors Project Elqui STRICTLY CONFIDENTIAL For additional information, please read carefully the notice at the end of this presentation. October 26th, 2017 Annex K
Transaction Section 1
Enel SpA Requirements The transaction
must be executed at market terms The transaction must be EPS accretive for Enel Chile Enel should retain a similar stake in the resulting EC Statutory concentration limit in EGC (65%) should be removed K-
Transaction Overview All transaction
steps are treated as OPR Merger between Enel Chile and Enel Green Power Latin America Requires approval from Extraordinary Shareholder Meeting (+2/3 approval needed) Generates withdrawal rights for dissenting shareholders (at average price between
90 and 30 business days before Shareholder Meeting) Tender Offer of Enel Chile over Enel Generación Chile Requires unsubscribed shares of Enel Chile Requires cash (additional debt) by Enel Chile Capital Increase of Enel Chile Needed to make
Enel Chile shares available to be used for the stock-portion of the Tender Offer Requires approval from: Extraordinary Shareholder Meeting (+2/3 approval needed) SVS (usually takes no less than 1 month) A 30-day preemptive rights period for existing
shareholders: Enel Generación Chile By-Laws Amendment Requires approval from Extraordinary Shareholder Meeting (+3/4 approval needed) to lift limit on ownership concentration K-
Execution Steps Cash-only transaction
with simultaneous settlement Merger between Enel Chile and Enel Green Power LP Requires approval from Extraordinary Shareholder Meeting Generates withdrawal rights for dissenting shareholders (at average price between 90 and 30 business days before
Shareholder Meeting) Capital Increase of Enel Chile Requires approval from: Extraordinary Shareholder Meeting SVS A 30-day preemptive rights period for existing shareholders: Payable only in cash Any unsubscribed share will be available to EC to be
used for the stock-portion of the Tender Offer Tender Offer over Enel Generación Chile Payable only in cash Conditioned to the fact that part of the price of the Tender Offer will be retained to subscribe Enel Chile’s capital increase
Shareholder Meeting (Capital Increase and Merger) ~1 week Capital Increase (Filing to the SVS) Capital Increase (Approval by the SVS) ~1-2 months Capital Increase (Start of POP) Capital Increase (End of POP) 30 days Tender Offer (Start) Tender Offer
(End) SETTLEMENT 30 days K-
Update on Market Views Section
2
Share Price Evolution Since the
transaction announcement, Enel Generacion Chile has outperformed Enel Chile and IPSA by ~ 10% Source: Bloomberg as of October 25th, 2017 Enel Chile Enel Generacion Chile ADTV (US$ mm) (days) Stock ADR Total 30 5.2 1.3 6.5 90 4.5 1.3 5.8 180 4.0 1.6
5.6 360 3.8 1.5 5.3 ADTV (US$ mm) (days) Stock ADR Total 30 7.1 3.1 10.2 90 6.0 3.1 9.1 180 4.7 3.0 7.7 360 4.0 2.5 6.5 5.6% (25-Oct-17) CLP$ 74.5 / share 6.2% 16.1% (25-Oct-17) CLP$ 567.6 / share Transaction Announcement Current (25-Aug-17) CLP$
70.5 / share (25-Aug-17) CLP$ 489.0 / share 6.2% K-
Share Price Evolution (cont’d)
Source: Bloomberg as of October 25th, 2017 Restructuring Announcement Current Share Price (CLP$) Company Undisturbed (25-Aug) Current Increase Enel Chile 70.5 74.5 5.6% Enel Generacion Chile 489.0 567.6 16.1% AES Gener 225.9 223.0 -1.3% Colbun 149.5
153.4 2.6% -1.3% 2.6% 16.1% K-
Rating Agencies Rating Agency Last Rating
/ Date Comments on the Reorganization Local Rating AA (cl) / Positive August 30, 2017 Current information indicates that the reorganization process will be a credit neutral event for the group “Strong credit quality of both Enel Chile and Enel
Gx supported by strong cash generation and conservative financial metrics, provide maneuverability during the reorganization process” “Depending on the final capital structure after the transaction, the company’s Outlook could be
revised to Stable from Positive if its leverage increases above 2.0x Local Rating AA (cl) / Credit Watch August 30, 2017 Credit Watch assigned due to still unknown total amount involved, financing and capital structure. A Credit Watch reflects a
possible rating action due to the announced short term events It will be considered positive for the corporate governance of the company, if the transaction is approved in a consensual manner rather than with the minimum required quorums
International Rating BBB+ / Stable August 29, 2017 “In our view, Enel Chile’s low leverage provides flexibility to pursue the aforementioned operation. The integration of Enel Green Power Chile’s assets would also somewhat benefit
its business position” “We will update out estimates as the process moves along to determine the impact on Enel Chile’s financial risks profile and overall creditworthiness” “A negative rating action could result if
Enel Chile’s debt-to-EBITDA ratio moves above 2.0x” K-
Evaluators and Appraiser Preliminary
Results Section 3
Independent Evaluators &
Appraisers Results Evaluator / Appraiser Equity Value (US$ mm) Chile Gx Oscar Molina Econsult Larrain Vial CLP$ 86-94 / Share CLP$ 1,116-1,270 / Share 6,650 7,250 1,450 1,650 7,223 CLP$ 561 / Share CLP$ 79-85 / Share CLP$ 1,237-1,422 / Share CLP$
531-583 / Share 1,622 1,865 6,903 7,579 5,890 6,432 CLP$ 79-86 / Share CLP$ 1,260-1,418 / Share CLP$ 535-593 / Share 6,649 7,363 1,579 1,777 6,118 6,583 K-
Independent Evaluators &
Appraisers Results (cont’d) Evaluator / Appraiser EC / EGC Ratio 6.5x – 7.1x EC / EGPL Ratio 6.8x – 6.9x n/a 15.0x – 17.3x 14.6x – 16.4x 12.4x – 15.7x Cash / Stock (%) 59% - 65% 60% – 65% n/a Tender offer
Price (CLP$) CLP 531 - 583 CLP 535 - 593 n/a Oscar Molina Econsult Larrain Vial K-
Disclaimer This presentation has been
prepared by BTG Pactual S.A. (“BTG Pactual”) for the exclusive use of the party to whom BTG Pactual delivers this presentation (together with its subsidiaries and affiliates, the “Company”) using information provided by the
Company and other publicly available information. BTG Pactual has not independently verified the information contained herein, nor does BTG Pactual make any representation or warranty, either express or implied, as to the accuracy, completeness or
reliability of the information contained in this presentation. Any estimates or projections as to events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based upon the best judgment of
BTG Pactual from the information provided by the Company and other publicly available information as of the date of this presentation. There is no guarantee that any of these estimates or projections will be achieved. Actual results will vary from
the projections and such variations may be material. Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. BTG Pactual expressly disclaims any and all liability relating or resulting from the
use of this presentation. This presentation has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The Company should not construe
the contents of this presentation as legal, tax, accounting or investment advice or a recommendation. The Company should consult its own counsel, tax and financial advisors as to legal and related matters concerning any transaction described herein.
This presentation does not purport to be all-inclusive or to contain all of the information that the Company may require. No investment, divestment or other financial decisions or actions should be based solely on the information in this
presentation. This presentation has been prepared on a confidential basis solely for the use and benefit of the Company; provided that the Company and any of its employees, representatives, or other agents may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to the Company relating to such tax treatment and tax structure.
Distribution of this presentation to any person other than the Company and those persons retained to advise the Company, who agree to maintain the confidentiality of this material and be bound by the limitations outlined herein, is unauthorized.
This material must not be copied, reproduced, distributed or passed to others at any time without the prior written consent of BTG Pactual. K-
ANNEX L
MANAGEMENT PRESENTATION, DATED SEPTEMBER 8, 2017, PREPARED WITH THE PARTICIPATION OF MEDIOBANCA – BANCA DI CREDITO FINANZIARIO
S.P.A., THE FINANCIAL ADVISOR TO ENEL
Project Elqui – Transaction
presentation 8 September 2017
Project Elqui 60.6% 99.1% 60.0% 100% 100%
Chile Generación Chile Distribución Chile Transaction announcement (25 Aug 2017) 3rd July 2017 25th August2017 Enel Chile’s (EC) BoD sends to Enel SpA the proposal of a corporate reorganization Enel SpA gives favourable opinion on
the Transaction and sets acceptance conditions for the proposal 25th August2017 EC BoD’s approves analysis and implementation of Elqui process under Related Party Transaction scheme (“OPR”) Latin America Chile 28th August2017 EGC
takes note of EC proposal Current structure of ENEl in Chile L- Current Structure in Chile and Transaction announcement
Project Elqui Cash and stock PTO Cash
& stock PTO 60.6% 60-100.0% 99.1% 100.0% Chile Generación Chile Distribución Chile 75.0- c.100% Merger of EGP Latin America into EC ~60.6% 75.0-c.100% 99.1% Chile Generación Chile Distribución Chile 100.0% 1 2 100.0%
Latin América Chile Chile Enel SpA minimum conditions The transaction must be executed at market terms The transaction must be EPS accretive for Enel Chile Enel should retain a similar stake in the resulting EC Statuary concentration limit in
EGC (65%) should be removed Key steps and ENEL’s minimum conditions L-
Transaction Structure BoD Independent
advisors Financial appraisers (peritos) Oscar Molina Chile Gx Chile Committee Independent advisors On the 25th August Enel Chile’s Board of Directors agreed to declare that the Transaction should be dealt with as a related party transaction
(RPT), under the procedures and requirements included in Title XVI of the Ley de Sociedades Anónimas Standard process aiming at protecting minority shareholders Luis Felipe Schmidt Provide the Board of Directors and Independent Committees with
a report that assesses the corporate interest of the Transaction Scope Provide expert opinion on EC/EGP merger exchange ratio Independent Directors Opinions BoDs decide to proceed with the reorganization Committees’ Opinions RPT outcomes
Related Party Transaction process L-
Project Elqui Enel Chile (L1Y) Enel
Generación Chile (L1Y) Implied exchange ratio evolution (L1Y) +2.0% vs. unaffected price (+3.8% vs. IPSA) +7.0% vs. unaffected price (+8.8% vs. IPSA) Source: Factset as of September 6th, 2017 EC and EGC market performance post announcement
L-
Project Elqui Market reaction - Chilean
press reaction 25 agosto 2017: Enel Chile impulsa nueva fórmula para absorber activos de filial renovable de matriz italiana “Un nuevo ajuste tendrá la operación local de la italiana Enel. Enel Chile informó que había
logrado luz verde para sumar los activos de EGP a su estructura, lo que tendrá la condición de que se materialice primero una OPA para aumentar su participación en Enel Generación Chile” “La compañía propuso
una fórmula de pago mixta para quienes concurran a la OPA, que incluya dinero y acciones emitidas en Enel Chile. Esto, buscando básicamente que los minoritarios –que durante la reestructuración de 2015 pujaron por una
fusión de EGP con la ex Endesa- suban a la matriz.” 25 agosto 2017: Enel Chile propone incorporar activos en el país de Enel Green Power “El grupo Enel Chile propuso el viernes a su controlador incorporar los activos en el
país de la firma relacionada de energías renovables Enel Green Power Latinoamérica, mediante una fusión.” 26 agosto 2017: Enel Chile busca absorción de activos de filial renovable en el país “La
compañía dijo que prevé realizar un aumento de capital para financiar la operación, pero no anticipó el costo de la misma. Los directivos de Enel Chile acordaron que la propuesta sea tratada como una operación entre
partes relacionadas (OPR), lo que significa que será sometida a todos los procedimientos y requisitos respectivos contemplados en la Ley de Sociedades Anónimas, como mecanismo de protección a los accionistas minoritarios.“ 27
agosto 2017: Enel zanja disputa por renovables y anuncia OPA por la ex Endesa “La operación tendría un costo para Enel Chile de unos US$ 3.500 millones. Controlador ofrecería a los minoritarios fondos frescos y acciones de la
matriz La gran incógnita ahora es descubrir cómo tomará el mercado la apuesta de Enel en Chile. El mercado local ha mirado con recelo los proceso impulsados por la eléctrica y hay algunos que aún mantienen las esquirlas del
último gran cambio y que implicó la separación de los activos chilenos de los latinoamericanos. Pero a favor de Enel jugó que en este proceso el director independiente Gerardo Jofré votara a favor y sin reparos sobre la
nueva operación, decisión que fue destacada en el hecho esencial enviado el viernes al mercado. Clave fue la decisión de darle desde el inicio del proceso el carácter de ser una Operación entre Partes Relacionadas
(OPR).” 27 agosto 2017: Enel Chile, el conglomerado de capitales europeos anunció una nueva reorganización “Esta vez, recalca Jofré, es "a la chilena", con transparencia, valorizaciones independientes y como operación
entre partes relacionadas. En Roma, el 6 y 7 de mayo de este año, comenzó a fraguarse una megaoperación que una vez más tiene como protagonista al grupo de capitales italianos Enel Chile, la ex Enersis El deal entre manos no era
menor, pues había quedado como una promesa a resolver, tras la polémica reestructuración de Enersis hecha en 2015, también conocida como "Carter II“.” L-
Project Elqui Market reaction - Enel
Chile and Enel Generación Chile brokers Enel Chile and Enel GX Chile to start a justifiable new corporate restructuring Investors should try to arbitrate the tender offer price for ENELGXCH: our Price Target of CLP540 implies 10% upside
potential In our opinion the merger proposal promotes decent growth opportunities for ENELGXCH in the renewable space and should be approved by the genCo’s BoD Favors Enel Chile (ENIC) over Enel Generacion Chile (EOCC) In the scenario in which
ENIC reaches 75% ownership of EOCC, shares portion of OPA mix should be ~23-75% and in the scenario where ENIC reaches 100% of EOCC, shares portion of OPA mix should be ~9-28% (for controlling shareholder interest to remain within 60.6-65% range)
The transaction, we believe, will be well received by the market Gives exposure to growth in NCRE, the most dynamic vehicle in electric generation It would increase the liquidity of the stock and could also reduce the holding discount of Enelchile
The leverage could increase significantly, which investors believe improves the capital structure ENIC proposes a corporate reorganization and a PTO for EOCC This proposal is reflective of the current environment of lower-for-longer electricity
prices in Chile which we believe has led to a de-rating of Chilean pure generation stocks to a 6.0-8.0x average 12-month forward EV/EBITDA currently vs. 9.0-14.0x during the peak years (2011- 2014) of the commodity super-cycle For us, proposed
two-step deal would be qualitative improvement In our view, fair ratios would be: 3.875 ADRs of Enel Chile per ADR of Enel Generación Chile 6.458 shares of Enel Chile per share of Enel Generación Chile We believe the holding company could
possibly add up to half of the required amount (i.e. ~US$1.2bn) in debt Proposal to merge with Enel Green Power and buy out Enel Gx Chile’s minority shareholders We believe that the deal makes sense in a context of corporate structure
simplification for Enel, and that would also reduce substantially the perception of potential conflicts of interest We do not foresee any sizeable forced selling from pension funds should the tender for Enel Gx Chile be successful and therefore push
Enel Chile’s controlling stake past 75% We believe that the deal should be positive for Enel Gx Chile shareholders Enel Chile looks to incorporate EGP assets and launch a public offer for Enel Gx Chile The support of all the members of the
board of Enel Chile for the proposal is a positive signal for the transaction’s success According to our estimates, the EBITDA of the merged company would amount to USD 1.55bn in 2018, with a net debt of USD 2.2bn, which would allow the
company to raise debt of up to USD 1.7bn, maintaining its net debt/EBITDA ratio below 2.5x. This would allow Enel Chile to pay in cash up to 70% of Enel Gx Chile’s public offer Enel Chile/ Enel Generación Chile corporate reorganization
The transaction would reduce substantially the perception of potential conflicts of interest Key factors are EGP valuation and PTO premium Third Time's the Charm: ENIC to Reign Over Chile As all moves should be labeled "related-parties
transactions," benefits for ENIC minorities (notably the reduction of holding discount and elimination of conflict of interest) far outweigh the risks, in our view We expect the premium to be modest as many large investors own both names (Chile AFPs
own 16% of EOCC and 11% of ENIC). Such investors would have arguments to approve the deal more on its long-term merits than on EOCC premiums L-
Project Elqui Market reaction - Enel
S.p.A. brokers Further step to simplify corporate structure The operation seems consistent with latest Business Plan: The unknown prices for the assets involved and the deal cash/paper structure are obviously critical for a proper evaluation of the
deal What we can say at this stage is that debt of Enel will increase with the cash component paid for the minorities of Enel Generacion Chile . And this seems consistent with the amount of c$2.0bn included in Enel's latest business plan to buy the
minority interests in Latam And should lead to a simplification in corporate structure: While the operation is likely to be lengthy, it should lead to another simplification of shareholding structure of Enel's interest in Chile, something that we
see as a positive Furthermore the operation seems to better align the interest of Enel with the interest of Chile's pension funds that were very keen to get access to renewable energy assets Corporate reorganisation in line with Enel's target
to reduce minorities The final aim of the possible corporate reorganisation in Chile is the reduction of minorities, we believe The transaction is in line with Enel's strategy and with management comments at the 1H results In general we view a
simplification of the structure in Chile. However, given he lack of indications on potential values it is very difficult to assess any potential value accretion or destruction for Enel at this stage. A number of factors yet to be defined could bring
uncertainty, limiting our ability to make a more detailed assessment at this point. Key sources of uncertainty are: i) Valuation of renewable assets (controlled by Enel Greenpower in Latam); ii) Conditions of capital increase at Enel Chile; iii)
Exchange ratio for Enel Generation Chile for Enel Chile’s shares and the split between shares and cash to be received by Enel Generación Chile shareholders Said and Done: Reducing minorities in Latam Many milestones must be met before it
is done, but we believe the announcement goes in the right direction and it is supportive for Enel´s equity story All in all, in our opinion this announcement is positive for Enel´s equity story and we reiterate our Buy recommendation. We
believe that (depending on the implied price for EGP Chile) this transaction is positive as it eliminates the conflicts of interest with Enel Green Power Chile Enel has worked hard these past few years to improve its situation in Latam. This
transaction is another step forward. We believe that at some point, Enel should try to reduce the minorities in Enel Americas as well, where they have just a 52% and in its subsidiaries. In the case of Enel Americas, minorities account for more than
US$$0.5bn plus another US$€0.4-0.5bn of the holding itself. All in all, these figures represent c16-20% of the total ordinary net profit at Enel Spa level. Another step towards simplification We think the integration of Chilean activities
could lead to synergies, as seen in previous deals across Latam such as the Enel Americas integration In addition, Enel would also increase its exposure to conventional generation in Chile, which we expect to come under increasing pressure due to
the increasing competitiveness of wind/solar Possible Group Reorganisation in Chile This Transaction aligns with Enel intention to reduce its very complex minority structure in LatAm, in order to retain more earnings and reduce the holding discount
Given LatAm’s faster earnings growth profile, we view this as a strategically reasonable thing to do L-
Project Elqui Market reaction - Rating
agencies reaction August 29, 2017 S&P Global Ratings said today that its ratings on Enel Chile S.A. (Enel Chile; BBB+/Stable/--) and its subsidiary Enel Generacion Chile S.A. (Enel Generacion Chile; BBB+/Stable/--) are not immediately affected
by the announcement that it has proposed to its parent Enel SpA (Enel; BBB/Positive/A-2) a merger of Enel Green Power Chile and Enel Chile. Through the merger, all of the power generation operations of Enel in Chile, conventional as well as
non-conventional renewable, would be further handled by Enel Chile through its affiliates. The merger with Enel Green Power Chile will only happen if Enel Chile increases its ownership in Enel Generacion Chile above 75%. This involves a tender offer
that Enel Chile would carry out to acquire up to 100% of the shares of Enel Generacion Chile owned by minority shareholders. The tender offer would be paid for partly in cash and partly in shares issued by Enel Chile, and would be subject to the
condition that Enel Chile reaches a controlling percentage of Enel Generacion Chile above 75% of its stock capital. The market value of the shares held by minority shareholders of Enel Generacion Chile was around $2.5 billion as of August 25, 2017.
In our view, Enel Chile's low leverage provides it with flexibility to pursue the aforementioned operation. The integration of Enel Green Power Chile's assets would also somewhat benefit its business position. We will update our estimates as the
process moves along to determine the impact on Enel Chile's financial risk profile and overall creditworthiness. As we have previously indicated, a negative rating action could result if Enel Chile's debt-to-EBITDA ratio moves above 2.0x. Only a
rating committee may determine a rating action and this report does not constitute a rating action. L-
ANNEX M
MANAGEMENT PRESENTATION, DATED NOVEMBER 8, 2017, PREPARED WITH THE PARTICIPATION OF MEDIOBANCA – BANCA DI CREDITO FINANZIARIO
S.P.A., THE FINANCIAL ADVISOR TO ENEL
Project Elqui – OPR key results 8
November 2017 Annex M
M- Summary of valuators and appraisers
key outcomes – Companies valuation Evaluator / Appraiser Equity Value (US$ mm) Chile Gx Price per Share (CLP) Oscar Molina CLP$ 80 – 82 CLP$ 570 – 579 Felipe Schmidt US$ 1,654 – 1,680 m Ranges overlapping Project Elqui
– OPR key results
Summary of valuators and appraisers key
outcomes – Exchange ratios and PTO cash portion Evaluator / Appraiser Oscar Molina Felipe Schmidt EGC / EC Ratio (x) EGPL / EC Ratio (x) Cash / Stock (% cash) 7.0x – 7.2x1 15.1x – 15.8x 60% – 63% Ranges overlapping
Overlapping excluding Asset EGC/EC exchange ratio Project Elqui – OPR key results M-
On the past 13 October Superintendencia
de Valores y Seguros (SVS) gave green light to the Proposed Transaction structure On 24 October Superintendencia Pensiones (SP) also confirmed that the mechanism proposed would work for AFPs Project Elqui – Transaction Structure Both SVS and
SP validated Elqui proposed Transaction structure Proposed Transaction Structure DESCRIPTION OPA, payable in cash only EC would retain part of the PTO price to subscribe and deliver the shares of EC to EGC shareholders Capital increase at EC to
raise shares for PTO EC shareholders receive a mix of cash and stock Merger is effective once conditions are verified and PTO is settled CI pre- emptive period starts PTO starts 30 days PTO ends OPA settlement and Merger effectiveness 30 days 3 days
T T+1 T+30 T+31 T+34 ü ü CI pre- emptive period ends M-
Project Elqui – market update Enel
Chile (L1Y) Enel Generación Chile (L1Y) Implied exchange ratio evolution (L1Y) +3.8% vs. unaffected price (-2.2% vs. IPSA) +12.2% vs. unaffected price (+6.2% vs. IPSA) Source: Factset as of November 3nd, 2017 EC and EGC market performance post
announcement M-
ANNEX N
MANAGEMENT PRESENTATION, DATED NOVEMBER 20, 2017, PREPARED WITH THE PARTICIPATION OF MEDIOBANCA – BANCA DI CREDITO FINANZIARIO
S.P.A., THE FINANCIAL ADVISOR TO ENEL
Project Elqui Enel Chile proposal 20
November 2017 Annex N
Project Elqui Overview N- Proposed
transaction Enel Chile (“EC”) is promoting a transaction consisting in a corporate reorganization that would entail i) the merger of Enel Chile with EGP Latin America (“EGPL”), and ii) a Public Tender Offer
(“PTO”) launched by Enel Chile over Enel Generación Chile (“EGC”) Current situation 60.6% 99.1% 60.0% 100.0% 100.0% Generación Chile Distribución Chile Chile Cash & Stock(1) PTO PTO 60.6% 60-100.0% 99.1%
100.0% Chile Generación Chile Distribución Chile 75-100% Merger EGP Chile – EC 75-100% 99.1% Chile Generación Chile Distribución Chile 100.0% Merger subject to minimum PTO acceptance of more than 75% of EGC share capital 1
2 100.0% Similar Latin America Latin America EC would impute part of the PTO price to subscribe and deliver the shares of EC to EGC shareholders
Project Elqui Overview Transaction
rationale and conditions Transaction Rationale Consolidating Enel Chile leadership position in the Chilean energy space Increasing Enel Chile market capitalization, deriving in greater liquidity Integrating the renewable energy platform of EGPL in
the conventional generation platform of Enel Chile, providing with a clear and sustainable path for growth Reducing Enel Chile’s holding discount thanks to the increase of the stake of Enel Chile in Enel Generación Chile, and thus
lowering the minority leakage 1 2 3 4 Enel SpA Minimum Conditions The transaction must be executed at market terms The transaction must be EPS accretive for Enel Chile Enel should retain a similar stake in the resulting EC Statuary concentration
limit in EGC (65%) should be removed N-
Final Transaction terms proposed by Enel
Chile Evaluator / Appraiser Chile Gx Price per Share (CLP) Oscar Molina Felipe Schmidt EGC / EC Ratio (x) EGPL / EC Ratio (x) The terms proposed by EC’s BoD (14 Nov) are in line with independent evaluators and appraisers Proposed key terms
Independent directors Committee N-
Timeline and Next Steps Transaction
expected timetable Under the proposed Transaction structure the PTO and the Merger will occur simultaneously with the aim of completing the Transaction during first quarter of 2018 EC EGM to approve Merger and Capital Increase PTO starts PTO ends
PTO settlement and merger effectiveness upon verification of conditions precedent 20 December 2017 By Mid February 2018 By Mid March 2018 By the end of 1Q 2018 Transaction approval (2017) Transaction execution (2018) EGC EGM to approve change in
Bylaws 14 November 2017 Board of Directors of EC presents Transaction Proposal and summons EGM Board of Directors of EGC summons EGM CI preemptive period starts CI preemptive period ends N-
Enel Chile Enel Generación Chile
EGMs to approve Elqui Transaction (20.12.2017) EGP Chile Related Party Transaction (OPR) Merger EC - EGPL Enel Chile capital increase Voting instruction for EGC’s EGM EC bylaws modifications Registry of New shares at SVS and new ADRs at SEC
Related Party Transaction (OPR) EGC bylaws modifications Related Party Transaction (OPR) Merger EC - EGPL Agenda key points Pursuant to Title XVI of the Chilean Law Nº 18.046 Pursuant to Title IX of the Chilean Ley de Sociedades Anonimas
Required to issue the number of shares needed both for the merger with EGPL and the cash/stock PTO To give power of attorney to the Chairman of the Board of Directors of EC to vote favorably in the EGC’s EGM Various modifications required to
execute the merger and the capital increase And all the deeds required to complete the Transaction Pursuant to Title XVI of the Chilean Law Nº 18.046 To eliminate the current restrictions under the Title XII of the DL N. 3.500 (65% statutory
concentration limit) Pursuant to Title XVI of the Chilean Law Nº 18.046 Pursuant to Title IX of the Chilean Ley de Sociedades Anonimas 1 2 3 4 5 6 1 2 1 2 For information purposes only N-
ANNEX O
GENERAL TERMS FOR THE REORGANIZATION
This Annex O is a free English translation of the original Spanish language version, which reflects the substantive content of the original Spanish
language document, but may not be a word-for-word translation. In the event of any discrepancy with the English translation, the original Spanish language document will prevail.
GENERAL TERMS FOR THE REORGANIZATION
involving
ENEL CHILE S.A.
ENEL GREEN POWER LATIN AMERICA S.A.
and
ENEL GENERACIÓN CHILE
S.A.
November 2017
GENERAL TERMS FOR THE REORGANIZATION
ENEL CHILE S.A., ENEL GREEN POWER LATIN AMERICA S.A.
and
ENEL
GENERACIÓN CHILE S.A.
This instrument sets forth the general terms for the reorganization (“
Terms
”) involving ENEL CHILE
S.A., a Chilean publicly held stock corporation (
sociedad anónima abierta)
, TIN
76.536.353-5,
with its legal address at Avda. Santa Rosa 76, Floor 17, Santiago (
“Enel Chile”
);
ENEL GREEN POWER LATIN AMERICA S.A., a Chilean closed stock corporation (
sociedad anónima cerrada)
, TIN 96.920.210-7, with its legal address at Avda. Presidente Riesco 5335, Floor 15, Las Condes, Santiago (
“Enel Green
Power”
); and ENEL GENERACIÓN CHILE S.A., a Chilean publicly held stock corporation (
sociedad anónima abierta)
, TIN
91.081.000-6,
with its legal address at Avda. Santa Rosa 76,
Floor 17, Santiago (
“Enel Generación
” and, together with Enel Chile and Enel Green Power, the “
Parties
”):
RECITALS
A.
Enel Chile is a Chilean publicly held stock corporation (
sociedad anónima abierta)
incorporated on March 1, 2016,
as evidenced in a public deed dated January 8, 2016, executed at the Santiago Notarial Office of Mr. Iván Torrealba Acevedo. An excerpt of said public deed was entered on folio 4288, No. 2570 in the Commerce Registry kept by
the Santiago Real Estate Records Office for 2016, published in the Official Gazette on January 19, 2016. Enel Chile is an issuer of publicly offered securities and, as such, is registered in the SVS Securities Registry under No. 1139. The
shares of Enel Chile are also registered in said registry and listed on the Santiago Stock Exchange, on the Chilean Electronic Exchange and in the Valparaíso Brokers’ Exchange. Likewise, the shares of Enel Chile, through American
Depositary Shares (ADS) represented by American Depositary Receipts (ADRs), are listed on the New York Stock Exchange.
B.
Enel
Generación is a Chilean publicly held stock corporation (
sociedad anónima abierta)
incorporated as evidenced in a public deed dated December 1, 1943, executed at the Santiago Notarial Office of Mr. Luciano Hiriart
Corvalán. An excerpt of said public deed and of Finance Ministry Executive Order No. 97 of January 3, 1944, were entered on folio 61, No. 62, and folio 65 (overleaf) No. 63, respectively, in the Commerce Registry kept by
the Santiago Real Estate Records Office for 1944. Enel Generación is an issuer of publicly offered securities and, as such, is registered in the SVS Securities Registry under No. 114. The shares of Enel Generación are also
registered in said registry and listed on the Santiago Stock Exchange, on the Chilean Electronic Exchange and in the Valparaíso Brokers’ Exchange. Likewise, the shares of Enel Generación, through American Depositary Shares (ADS)
represented by American Depositary Receipts (ADRs), are listed on the New York Stock Exchange.
C.
Enel Green Power is a Chilean
closed stock corporation (
sociedad anónima cerrada)
, incorporated as evidenced in a public deed dated May 15, 2000, executed at the Santiago Notarial Office of Mr. Andrés Rubio Flores. An excerpt of said public deed
was entered on folio 12298, No. 9932 in the Commerce Registry kept by the Santiago Real Estate Records Office for 2000, published in the Official Gazette on May 20, 2000. The bylaws of Enel Green Power have undergone several amendments,
the most recent being its conversion from a
sociedad de responsabilidad limitada
to a
sociedad
an
ó
nima
cerrada
, as agreed on October 24, 2017, the amendment being executed as a
public deed on the same date, at the Santiago Notarial Office of Mr. Eduardo Díez Morello, under Notarial Record No. 24313-2017, the respective excerpt pending recordation and publication.
D.
Under the LMV, the Parties are ‘related companies’ that belong to the same corporate group controlled by Enel S.p.A., a
società per azioni
listed, organized and validly existing under the laws of the Republic of Italy. Enel S.p.A. is the ultimate controlling shareholder of Enel Chile (with a 60.62% equity interest), Enel Green Power (as the direct and
indirect owner of a 100% equity interest) and Enel Generación. Enel Chile is the direct controlling shareholder of Enel Generación with a 59.98% equity interest.
3
E.
The Parties are evaluating a corporate reorganization in accordance with the terms
and conditions described herein (the “
Reorganization
”), which, given its particular nature, shall require several approvals and authorizations set forth in Title XVI of the LSA, in Title XIV of the LMV, in relation to the Enel
Generación Tender Offer, and in article 99 of the LSA and Section 3 of Title IX of the RSA, in relation to the Merger.
F.
By means of a letter dated July 3, 2017, Enel Chile submitted the Reorganization to consideration of the controlling
shareholder, Enel S.p.A. Said letter was replied to by Enel S.p.A. by means of a letter dated August 25, 2017, whereby Enel S.p.A. indicated that the Reorganization would be supported by Enel S.p.A., provided the following minimum conditions
were met: (i) that the Reorganization be conducted on arm’s length terms, considering the growth prospects for renewable energies in Chile; (ii) that the earnings per share of Enel Chile be increased; (iii) that Enel S.p.A.
maintain, at the end of the process, an equity interest in Enel Chile within the maximum equity concentration limit set out in the bylaws, i.e. 65%; and (iv) that, after the process, Enel Generación is no longer subject to Title XII of
Decree Law No. 3500 of 1980, on the pensions system (“
D.L. 3500
”), eliminating the current limitations to equity concentration and other restrictions currently included in the Enel Generación bylaws.
SECTION ONE:
DEFINITIONS AND RULES OF INTERPRETATION
The following capitalized terms used herein shall have the meaning
indicated below:
“
Amendment to Enel Generación Bylaws
” means the amendment to the bylaws of Enel
Generación, eliminating the limitations and restrictions set out in Title XII of DL 3500, including but not limited to a restriction on any person holding more than 65% of the voting capital of Enel Generación.
“Enel Chile Capital Increase”
means the capital increase in Enel Chile conducted in order to obtain sufficient shares to be
issued to the tendering shareholders of Enel Generación within the context of the Enel Generación Tender Offer.
“
Enel Chile Financial Statements
” means the Chilean audited consolidated financial statements of Enel Chile, as of
September 30, 2017, prepared in accordance with IFRS.
“
Enel Generación Tender Offer
” means the public tender
offer (TO) to be launched by Enel Chile to acquire up to 100% of the shares issued in Enel Generación and held by the minority shareholders of Enel Generación.
“
Enel Green Power Financial Statements
” means the Chilean audited consolidated financial statements of Enel Green Power, as
of September 30, 2017, prepared in accordance with IFRS.
“
Experts’ Reports
” means the reports dated
November 3, 2017, prepared by Mr. Óscar Molina, as independent expert designated by Enel Chile, and by Mr. Luis Felipe Schmidt, as independent expert designated by Enel Green Power, as provided in Article 156 of the RSA,
indicating the value of Enel Chile and Enel Green Power as merging companies, the exchange ratio for the shares applicable to the Merger, and the
pro-forma
balance sheet to be submitted by Enel Chile as the
company that survives after the Merger.
“IFRS”
means the international financial reporting standards adopted in Chile
for the preparation and submission of financial statements.
“
LMV
” means Law No. 18045 on the securities market, as
amended from time to time.
“
LSA
” means Law No. 18046 on stock companies, as amended from time to time.
4
“
Merger
” means the merger of Enel Green Power into Enel Chile, the latter
acquiring all the assets, liabilities and equity of the former and succeeding the same in all of its rights and obligations.
“
OPR
” is a Spanish acronym for ‘transaction between related parties’.
“
Reference Financial Statements
” means the Enel Chile Financial Statements and the Enel Green Power Financial Statements, as
of September 30, 2017, or, in their absence, the Enel Chile Financial Statements and the Enel Green Power Financial Statements, as of a date not more than 90 days prior the date of the Reorganization Meetings.
“Reorganization Effective Date”
means, subject to satisfaction of the conditions of each of the acts comprising the
Reorganization, the first business day of the month following the date on which Enel Chile publishes the results notice declaring the Enel Generación Tender Offer successful.
“
Reorganization Meetings
” means each of the special general shareholders’ meetings to be held by Enel Chile, Enel Green
Power and Enel Generación to decide on the specific matters applicable to them within the context of the Reorganization.
“
RSA
” means the Stock Companies Regulations contained in Decree No. 702 of 2011, issued by the Ministry of Finance, as
amended form time to time.
“
SEC
” means the United States Securities and Exchange Commission.
“
SVS
” means the Chilean Superintendence of Securities and Insurance and its legal successor, the Financial Market Commission,
under Law No. 21000.
The following table includes the location herein where the terms indicated below are defined:
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Term
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Location
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“Terms”
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Introduction
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“Enel Chile”
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Introduction
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“Enel Generación”
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Introduction
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“Enel Green Power”
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Introduction
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“Parties”
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Introduction
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“Reorganization”
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2.1
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(a)
The words in the singular include the plural voice and vice
versa, and the words in the masculine gender include all genders.
(b)
Unless otherwise expressly indicated, any reference to terms
of days shall be understood as calendar days, and these shall be calculated pursuant to articles 48 and 50 of the Civil Code.
(c)
The titles, subtitles and headings of clauses, sections, paragraphs or letters used herein are for reference only and are not to be considered in the interpretation hereof or in determining the extent of the rights and obligations of the Parties.
(d)
References to clauses and sections shall be deemed as references to the clauses and sections hereof, unless otherwise
indicated, and terms such as “hereof”, “herein”, “hereunder” and other analogous expressions shall mean and refer to these Terms as a whole rather than to any portion hereof.
5
(e)
Notwithstanding the preceding provisions, the provisions of Title XIII of Book IV
of the Civil Code on the “Interpretation of Contracts” shall apply in a subsidiary manner for the interpretation of these Terms.
SECTION TWO
REORGANIZATION
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2.1.
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Reorganization and Objective.
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The Parties are evaluating a corporate reorganization
consisting of the Merger of Enel Green Power into Enel Chile, and a public tender offer (TO) to be launched by Enel Chile to purchase up to 100% of the shares issued by Enel Generación held by the minority shareholders of the latter, allowing
the shareholders who accept the offer to sell their shares to subscribe for shares in Enel Chile (the “
Reorganization
”).
The purpose of the Reorganization is to have a single company (Enel Chile) controlling the companies that conduct the conventional and
non-conventional
renewable energy generation and energy distribution businesses in Chile, allowing: (i) Enel Chile to participate indirectly in the nonconventional renewable energies generation business and
assets developed and held by Enel Green Power in Chile (all in accordance with the Merger); and (ii) the minority shareholders of Enel Generación to participate in the ownership of Enel Chile and consequently, indirectly in the
conventional and
non-conventional
renewable energy generation and energy distribution businesses (all in accordance with the Enel Generación Tender Offer).
Notwithstanding other benefits expected from the Reorganization and applicable to each of the Parties, which are detailed in the reports of
the independent evaluators, directors’ committee reports and individual opinions of the directors, if applicable, the Reorganization is expected to render the following specific benefits:
a) Consolidation as a leading generation and distribution company in Chile.
The Reorganization will allow for leadership in the energy market to be consolidated in a single company, through its interests in distribution
(through Enel Distribución Chile S.A.), conventional generation (through Enel Generación), and nonconventional generation (through Enel Green Power).
b) Alignment of interests.
The Reorganization will allow for the interests of the Parties’ controlling shareholder Enel S.p.A. to become aligned with those of Enel
Chile and its shareholders, allowing them all to participate in the conventional and renewable generation businesses. This alignment of interests will also benefit the minority shareholders in Enel Generación who sell their shares in the Enel
Generación Tender Offer, since the Reorganization allows the minority shareholders in Enel Generación to invest in a company that engages in the distribution, conventional generation and renewable generation businesses on a fully
integrated and diversified basis.
c) Optimization of capital structure of Enel Chile.
The Merger of Enel Green Power into Enel Chile, as well as the cash payment in the Enel Generación Tender Offer will increase the net
indebtedness of Enel Chile to a higher level without any negative consequences for its credit risk and ratings, allowing for the optimal enhancement of the capital structure in Enel Chile, improving returns to its shareholders.
d) Reduced holding discount affecting Enel Chile.
The Reorganization could reduce the holding discount that currently affects Enel Chile, to the potential benefit of all of its shareholders.
6
e) More free float for Enel Chile equities.
As a result of the Enel Generación Tender Offer, Enel Chile’s free float could increase with the addition of minority shareholders,
i.e. the shareholders of Enel Generación who decide to sell their holdings in the Enel Generación Tender Offer. In turn, greater free float in Enel Chile could result in greater weight carried by Enel Chile in the leading stock indexes
(IPSA, MSCI), improving the share’s free float even more given potential adjustments to investors’ portfolios.
f)
Technological diversification and reduced operational risk.
The Reorganization, and the Merger in particular, would allow Enel Chile
to reduce its market risk, with likely impact on the implied discount rate at which the market calculates the present value of its future flows, and this may positively impact its valuation.
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2.2.
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Acts comprising the Reorganization.
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The Reorganization contemplates the following
specific acts that are of the essence for its completion and attainment of its objectives: (i) the Merger; (ii) the Enel Generación Tender Offer; (iii) the Enel Chile Capital Increase; and (iv) the Amendment to the Bylaws
of Enel Generación.
The acts described in the preceding paragraph are instrumental in consummating the Reorganization, and cannot
be considered individually, separate from each other. In this sense, the effectiveness of each act comprising the Reorganization will be subject to satisfaction of the conditions indicated further below, all of which are interrelated, and therefore
the Reorganization’s success depends on all those acts being effective. Thus, since this is a common objective, the Reorganization will not be consummated in whole or in part if the Enel Generación Tender Offer is not declared successful
or if the conditions to the Merger are not satisfied.
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2.3.
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Merger of Enel Green Power into Enel Chile.
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Under the Merger of Enel Green Power into
Enel Chile, the former shall be dissolved and be incorporated into Enel Chile, and the latter shall acquire all the assets, liabilities and equity of Enel Green Power, succeeding it in all of its rights and obligations. As a result of the Merger,
Enel Green Power shall be dissolved, which dissolution shall occur without a
wind-up
process, since its shareholders will become shareholders of Enel Chile.
Prior to the approval of the Merger, Enel Green Power shall contribute minority equity or ownership interests in companies organized outside
Chile to another company that will be under the direct or indirect control of Enel S.p.A.
As a consequence of the Merger:
(a) Enel Chile shall become solely responsible for the payment of the debts or obligations owed directly or indirectly by Enel Green Power to
its shareholders, employees, vendors, banks, financial institutions, companies and generally any individual or entity, in the same form and on the same terms as such obligations were incurred by Enel Green Power, benefiting from or being bound by
all the terms, conditions, modalities, guarantees and exceptions that Enel Green Power has in relation to such liabilities since, as a result of the Merger, Enel Chile shall be deemed successor of Enel Green Power for all legal purposes; and
(b) Enel Chile shall be jointly and severally liable and be required to pay any applicable taxes, in accordance with the respective
end-of-business
balance sheets to be prepared by Enel Green Power as provided in article 69 of the Tax Code. Likewise, for the purposes of articles 69 and 71 of the Tax Code,
Enel Chile shall be held liable before the Chilean tax authorities for all the taxes, charges, assessments, deferred customs or tax credit rights, for real estate taxes and other tax obligations, for any reason owed or likely to be owed by Enel
Green Power.
7
Based on the valuations and suggestions made for such purposes by the independent appraisers
and independent experts who issued reports about the Reorganization, an exchange rate of 15.80 Enel Chile shares for each Enel Green Power share held by the shareholders of the latter (without considering share fractions) shall be proposed.
Pursuant to the LSA, the voting majority required for the approval of the Merger by the shareholders of Enel Chile and Enel Green Power shall
be of 2/3 of the issued voting shares of each company. The approval of the Merger by the Reorganization Meetings of Enel Chile and Enel Green Power will entitle dissenting shareholders to withdraw from the respective company, in exchange for payment
by such company of each share value according to the terms and conditions set out in the LSA and RSA.
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2.4.
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Enel Generación Tender Offer.
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As a part of the Reorganization, and subject to
the satisfaction of the conditions set out herein, Enel Chile shall launch the Enel Generación Tender Offer, complying with the formalities and requirements set forth in Title XXV of the LMV and other SVS regulations. The Enel
Generación Tender Offer shall be addressed to all the minority shareholders of Enel Generación, offering to purchase up to 100% of the shares issued by the same. The securities offered to be purchased in the Enel Generación
Tender Offer shall be registered,
non-par-value,
single-series shares of common stock, fully subscribed for and paid up, issued by Enel Generación, free of any
and all liens and held by the shareholders who accept the Enel Generación Tender Offer, to be evidenced with a certificate issued by Enel Generación or the entity in charge of its shareholder registry.
The Enel Generación Tender Offer shall remain effective for at least 30 days from the publication of the relevant commencement notice.
The Enel Generación Tender Offer shall contemplate a price payable in cash to the shareholders of Enel Generación who
accept to sell their shares. Notwithstanding the foregoing, and as provided by the SVS in its Ordinary Official Letter No. 27562 dated October 13, 2017, the procedure of the Enel Generación Tender Offer contemplates that, by
accepting the Enel Generación Tender Offer, the shareholders of Enel Generación shall apply part of the cash price paid to the subscription of newly-issued shares of Enel Chile. To this end, the procedure of the Enel Generación
Tender Offer contemplates that Enel Chile shall automatically deduct and apply to the payment of the subscription price of the newly-issued shares in Enel Chile such portion of the price of the Enel Generación Tender Offer that, according to
its terms, is to be used for said subscription. The other portion of the price shall be paid in cash to the shareholders of Enel Generación on the payment date of the Enel Generación Tender Offer.
In this context, and additionally to the share transfer forms, delivery of certificates and other documents usually required for the
acceptance of a TO, the shareholders of Enel Generación who accept to sell their shares under the Enel Generación Tender Offer will also be required to execute a subscription agreement for newly-issued shares in Enel Chile for the
price and number of shares to be described in the commencement notice and prospectus of the Enel Generación Tender Offer, authorizing Enel Chile or the manager of the Enel Generación Tender Offer to make the application referred to in
the preceding paragraph. In the case of pension fund managers and mutual fund managers, for the funds managed by them, as well as other institutional investors who are required to hold their investments to their own name until sold, the acceptance
procedure for the Enel Generación Tender Offer shall assure that the subscription and delivery of newly-issued shares in Enel Chile be made simultaneously with the transfer and payment of the shares sold under the Enel Generación
Tender Offer (payment upon delivery). The above is in accordance Ordinary Official Letter No. 24211 of the Pensions Superintendence, dated October 24, 2017.
In any case, the terms of the aforementioned obligation shall apply to all the shareholders who sell their shares under the Enel
Generación Tender Offer, and therefore all of them shall be treated equally pursuant to article 209 of the LMV.
8
Based on the valuations and suggestions made to that effect by the independent evaluators
and independent appraisers who issued reports about the Reorganization, the proposed price for the Enel Generación Tender Offer shall be Ch$590.00 per share. A proposal will be made to apply 40% of the total amount to the payment of the
subscription price the newly issued shares of Enel Chile, delivering as many shares in Enel Chile as it may result from applying an exchange ratio for this 40% at a rate of 7.19512 Enel Chile shares per Enel Generación share; thus, every
shareholder of Enel Generación who sells in the TO shall receive for each share in Enel Generación, 2.87807 shares in Enel Chile and Ch$354.
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2.5.
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Enel Chile Capital Increase.
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As a part of the Reorganization, the shareholders of Enel
Chile must approve a capital increase in said company, issuing a sufficient number of new shares to be delivered to the shareholders of Enel Generación who decide to sell their shares within the context of the Enel Generación Tender
Offer. The Enel Chile Capital Increase would be paid in cash only.
Once the new shares issued as a consequence of the Enel Chile Capital
Increase are registered in the SVS Securities Registry, the preemptive subscription period shall commence in accordance with the LSA. The new shares in Enel Chile made available upon completion of the preemptive subscription period shall be used to
be delivered to the shareholders of Enel Generación who have sold their shares under the Enel Generación Tender Offer.
In
any case, the Enel Chile Capital Increase will be rendered null and void if the condition described below is satisfied.
The bylaws of
Enel Chile provide that the voting majority required to have the Enel Chile Capital Increase approved by the shareholders of Enel Chile (for the Enel Generación Tender Offer) shall be 2/3 of the voting shares issued in Enel Chile.
Upon approval of the Enel Chile Capital Increase, said company shall carry out the acts conducive to and necessary for registering the new
shares in the SVS Securities Registry, in the national securities exchanges, and whit the SEC.
Once the registrations described in the
preceding paragraph have been made, Enel Chile shall proceed to offer the new shares preemptively to its shareholders on a
one-time
basis, over a
30-day
period, in
accordance with the LSA. Those shareholders or third parties who decide to exercise their preemptive subscription rights during said period, shall execute the share subscription agreement as from the Reorganization Effective Date, and be effective
as from such date.
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2.6.
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Amendment to the bylaws of Enel Generación.
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To allow the success of the Enel
Generación Tender Offer and therefore of the success of the Reorganization, the shareholders of Enel Generación shall approve an amendment to its bylaws, eliminating the concentration limit set forth under Title XII of DL 3500, which
prevents anyone from holding more than 65% of the voting stock of Enel Generación, as well as the other limitations to stock ownership provided for in Title XII.
As provided in the bylaws of Enel Generación, the voting majority for approval of the Amendment to the Bylaws of Enel Generación
by the shareholders of Enel Generación shall be 75% of the shares of voting stock issued in said company.
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SECTION THREE
RELATED PARTIES TRANSACTION
As provided in these Terms, the Reorganization is a unitary reorganization process involving Enel Chile, Enel Generación and Enel Green
Power (all of which belong to the same corporate group since all of them are under the common control of Enel S.p.A.), requiring the consent or approval of all such companies (said consent or approval to be expressed through the corporate approvals
described herein) for the Reorganization to come into full force and effect.
Since there could be a conflict of interests between Enel
S.p.A., Enel Chile, Enel Generación and Enel Green Power, and in accordance with the LSA, the Reorganization shall be approved in accordance with the rules and procedures applicable for the approval of related party transactions (OPRs) set
forth in Title XVI of the LSA in the case of Enel Chile and Enel Generación and, in the case of Enel Green Power, in accordance with the rules and procedures set forth in article 44 of the LSA. In the specific case of Enel Chile, the
Reorganization as an OPR must be approved at its Reorganization Meeting, in accordance with article 147(4) and (5) of the LSA. In the specific case of Enel Generación, the Reorganization as an OPR must be approved at its Reorganization
Meeting, in accordance with article 147(4) and (5) of the LSA. Finally, in the specific case of Enel Green Power, the Reorganization as an OPR must be approved at its Reorganization Meeting, in accordance with article 44 of the LSA.
In accordance with the above, the effectiveness of these Terms shall be subject to the approval of the Terms and the Reorganization as an OPR
in accordance with the rules and procedures set forth in Title XVI of the LSA in the case of Enel Chile and Enel Generación and, in the case of Enel Green Power, in accordance with the rules and procedures set forth in article 44 of the LSA.
SECTION FOUR
CORPORATE APPROVALS
Through their respective boards of directors, directors’
committees and management bodies, the Parties shall take all actions conducive to and necessary to analyze the terms of the Reorganization, the applicable reports of the independent evaluators and appraisers, to issue the reports and individual
opinions required under the LSA, and ultimately proceed to summon the applicable Reorganization Meetings. In the case of the board members of Enel Generación, each of them must also issue a report with their well-founded opinion on the
benefits of the Enel Generación Tender Offer for the shareholders in Enel Generación, pursuant to letter c) of article 207 of the LMV.
In order to allow the independent evaluators and appraisers designated
by each of the Parties within the context of the Reorganization and OPR to study, analyze and issue their reports about the Reorganization, as required under the law, each of the Parties disclosed certain legal, tax, technical, commercial and
financial information according to the terms of the Clean Hands Protocol approved by the relevant corporate authorities of each party prior to the date of these Terms (the “
Protocol
”). The information referred to in this section 4.2
was provided only to the aforementioned independent evaluators and appraisers through a digital platform managed by BTG Pactual S.A.
Likewise, the advisors of Enel Chile have conducted a legal, tax and technical due diligence process on Enel Green Power and its subsidiaries,
the information and reports on which have been delivered solely to the independent appraisers and experts who participated in the Reorganization. In order to allow for this due
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diligence process to be conducted, Enel Green Power provided the legal, tax and technical advisors of Enel Chile with access to the legal, tax and technical information requested by said
advisors, following execution of a confidentiality agreement whereby they agreed to provide the information received only to the independent evaluators and appraisers.
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4.3
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Reorganization Meetings.
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Each of the Parties shall carry out all acts conducive to and
necessary for summoning the Reorganization Meetings in order to submit, of the consideration of their shareholders, among others, the matters indicated below, which shall be developed and detailed by each of the Parties at the instances and on the
dates deemed pertinent:
(a) At the Special Shareholders Meeting of Enel Chile.
(i)
Approve, pursuant to the terms of Title XVI of the LSA, the Reorganization as an OPR, including the terms of the Enel
Generación Tender Offer, the Amendment to the Bylaws of Enel Generación and the Merger, all of the above based on of the applicable background documents and reports in accordance with the LSA;
(ii)
Approve the Enel Chile Capital Increase, intended to make sufficient shares available to be delivered within the context of the
Enel Generación Tender Offer. The above does not prevent the Enel Chile Capital Increase from including a margin of additional shares that may be subscribed for and paid up during the preemptive subscription period or following the effective
date of the Reorganization. The shares issued under the Enel Chile Capital Increase shall be fully subscribed for and paid up prior to the deadline set by the Reorganization Meeting of Enel Chile.
(iii)
Approve the Merger of Enel Green Power into Enel Chile, with the latter as continuing entity, subject to the conditions indicated
below.
(iv)
Approve the documents that serve as background for the Merger, including (A) these Terms, which describe the
terms and conditions to the Merger and have been prepared in accordance with letter a) of article 155 of the LSA; (B) the Reference Financial Statements; and (C) the Experts’ Reports.
(v)
Approve the exchange ratio between the shares of Enel Chile and Enel Green Power.
(vi)
Approve the Enel Chile Capital Increase and the issuance of new shares to be wholly addressed to the shareholders of Enel Green
Power, in the applicable proportion in accordance with the exchange ratio agreed to effect the Merger.
(vii)
Approve the
amendments to the bylaws of Enel Chile to reflect the modifications adopted at the special general shareholders’ meeting of said company.
(viii)
Take all other action deemed necessary to effect the Reorganization on the terms and conditions ultimately approved by the
shareholders, including the Amendment to the Bylaws of Enel Generación, and granting broad authority to the board of directors to register the new shares issued in the SVS Securities Registry, carry out all acts deemed necessary before the
SEC and, in general, grant all the
powers-of-attorney
deemed necessary, in particular those required to legalize, effect and execute the decisions taken in connection
with the Reorganization.
(b) At the Special Shareholders Meeting of Enel Green Power.
(i)
Approve, pursuant to article 44 of the LSA, the Reorganization as an OPR, including the terms of the Enel Generación Tender
Offer and the Amendment to the Bylaws of Enel Generación;
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(ii)
Approve the Merger of Enel Green Power into Enel Chile, with the as continuing
entity, subject to the conditions indicated below;
(iii)
Approve the documents that serve as background for the Merger, including
(A) these Terms, which describe the terms and conditions to the Merger and have been prepared in accordance with letter a) of article 155 of the LSA; (B) the Reference Financial Statements; and (C) the Experts’ Reports;
(iv)
Approve the exchange ratio between the shares of Enel Chile and Enel Green Power;
(v)
Approve the amended bylaws of Enel Chile, in case the Merger is effect; and
(vi)
Take all other action deemed necessary to effect the Reorganization on the terms and conditions ultimately approved by the
shareholders, granting broad authority to the board of directors to grant all the
powers-of-attorney
deemed necessary, in particular those required to legalize, effect
and execute the decisions taken in connection with the Reorganization.
(c) At the Special Shareholders Meeting of Enel
Generación.
(i)
In case the OPR is not approved unanimously by the uninterested directors of Enel Generación,
approves pursuant to the terms of Title XVI of the LSA, the Reorganization as an OPR, including the terms and conditions of the Enel Generación Tender Offer. If the OPR is approved unanimously by the uninterested directors of Enel
Generación, inform the shareholders on the Reorganization as an OPR, including the terms and conditions of the Merger and the Enel Generación Tender Offer;
(ii)
Approve the Amendment to the Bylaws of Enel Generación;
(iii)
Approve the amendments to the bylaws of Enel Generación to reflect the modifications adopted at the special general
shareholders’ meeting of said company; and
(iv)
Take all other action deemed necessary to effect the Reorganization on the
terms and conditions ultimately approved by the shareholders, granting broad authority to the board of directors to grant all the
powers-of-attorney
deemed necessary, in
particular those required to legalize, effect and execute the decisions taken in connection with the Reorganization.
SECTION FIVE
CONDITIONS AND EFFECTIVENESS OF THE REORGANIZATION
The various acts to be conducted by the Parties within the context of the
Reorganization are instrumental for its consummation, and cannot be considered individually separately from each other. In this sense, the effectiveness of each of the acts comprising the Reorganization shall be subject to satisfaction of the
conditions indicated below, all of which are interrelated, and therefore such acts shall only be effective if the other acts comprising the Reorganization are also effective.
The conditions indicated below are not exclusive, and the Parties or their boards may establish additional conditions precedent.
Subject to satisfaction of the conditions indicated below, the Parties shall approve that, with the sole exception of the Amendment to the
Bylaws of Enel Generation, each of the other acts comprising the Reorganization be effective as of the same date, i.e. on the Reorganization Effective Date. In the case of the
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Amendment to the Bylaws of Enel Generación, it shall be effective on the date on which Enel Chile publishes the results notice declaring the OPA Enel Generación successful. The
above is notwithstanding the fulfillment of the formalities set out in the LSA, including the timely registration and publication of the excerpts of the respective instruments.
In any case, the conditions of the Reorganization indicated for each case below must be completely fulfilled on or before December 31,
2018. Thus, the Reorganization Effective Date shall not be later than the aforementioned date.
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5.2
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Conditions for the Merger.
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The Merger shall be subject to satisfaction of the following
conditions precedent:
(a)
That the shareholders of Enel Generación shall have agreed to the Amendment to the Bylaws of Enel
Generación;
(b)
That Enel Chile shall have declared the Enel Generación Tender Offer successful;
(c)
That the withdrawal rights exercised by the shareholders of Enel Chile as a result of the Merger do not exceed 5% of the shares of
voting stock issued in said company; the above also to the extent that the exercise of the withdrawal rights by the shareholders of Enel Chile does not result in any shareholder exceeding the maximum equity concentration limit of 65% in Enel Chile
as of the expiration of the deadline for dissenting shareholders to exercise their withdrawal rights, considering for such purposes the additional number of shares of Enel Chile approved for issuance in the Merger and the Enel Chile Capital Increase
shall be divided;
(d)
That, as of the Reorganization Effective Date, no decision or resolution shall have been issued with the
intent of, and no claim, action or proceeding, judicial or administrative, shall be pending and reasonably expected to result in: (i) forbidding or materially preventing the Merger; or (ii) imposing material limitations to the exercise of
all the ownership rights of Enel Chile on the assets of Enel Green Power allocated to Enel Chile as a consequence of the Merger; (iii) imposing limitations on Enel Chile for continuing the development or operation of any of the projects owned
by Enel Green Power; and generally any other action by any court, superintendence, service or other competent authority resulting in any of the consequences indicated in (i) to (iii) above.
Enel Chile or Enel Green Power may define other objective conditions for the success of the Merger, to the extent that said additional
conditions are not contrary to the terms contained herein.
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5.3
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Conditions for the Enel Chile Capital Increase.
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The Enel Chile Capital Increase shall
be cancelled if any of the following resolutory conditions occurs: (i) if on or before December 31, 2018, the results notice of the Enel Generación Tender Offer set forth in article 212 of the LMV is not published; or (ii) if
on or before December 31, 2018, Enel Chile publishes a results notice for the Enel Generación Tender Offer, according to article 212 of the LMV, declaring that the Enel Generación Tender Offer expired or was unsuccessful on its
own terms and conditions.
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5.4
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Conditions for the commencement of the Enel Generación Tender Offer.
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Commencement of the Enel Generación Tender Offer shall be subject to fulfillment of the following conditions precedent:
(a)
That the shareholders of Enel Chile and Enel Green Power shall have agreed on the Merger, subject to the conditions described in
Section 5.2 above;
(b)
That the shareholders of Enel Generación shall have agreed on the Amendment to the Bylaws of
Enel Generación, even if the effectiveness of said amendment could still be pending until the applicable conditions have been fulfilled; and
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(c)
That the shares issued under the Enel Chile Capital Increase are registered in
the SVS Securities Registry.
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5.5
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Conditions for the success of the Enel Generación Tender Offer.
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The success of
the Enel Generación Tender Offer shall be subject to fulfillment of all of the following conditions precedent (any of which may be waived by Enel Chile):
(a)
That acceptances for the Enel Generación Tender Offer shall have been received for a number of shares in Enel
Generación, allowing Enel Chile to hold, upon completion of the Enel Generación Tender Offer, more than 75% of the shares in Enel Generación, including as part of such acceptances the commitment by the shareholders of Enel
Generación to use a portion of the cash price they receive to subscribe for newly-issued shares in Enel Chile (on the terms set out in Section 2.4 of these Terms, and, in any case, those reported in the commencement notice and prospectus
of the Enel Generación Tender Offer);
(b)
That upon completion of the preemptive subscription period applicable to the Enel
Chile Capital Increase, a sufficient number of newly-issued shares in Enel Chile remain available to be offered to the shareholders of Enel Generación who sell their shares under the Enel Generación Tender Offer on the terms and
conditions thereof;
(c)
That as a consequence of (i) the acceptances received under the Enel Generación Tender Offer
and, accordingly, the number of new shares of Enel Chile that shall be subscribed by the shareholders which decide to sell their shares during the Enel Generación Tender Offer (pursuant to the terms set forth in Section 2.4 of these
Terms) and (ii) the exchange ratio of the Merger: Enel S.p.A. does not cease to be at any time the controlling shareholder of Enel Chile, maintaining at any and all times more than 50,1% of the voting capital in Enel Chile;
(d)
That no decision or resolution shall have been issued with the intent of, and no claim, action or proceeding, judicial or
administrative, shall be pending and reasonably expected to result in: (i) prohibiting or materially preventing the Merger; (ii) imposing material limitations on the exercise of all the ownership rights of Enel Chile on the assets of Enel
Green Power allocated to Enel Chile as a consequence of the Merger; or (iii) imposing limitations on Enel Chile for continuing the development or operation of any of the projects owned by Enel Green Power; and generally any other action by any
court, superintendence, service or other competent authority resulting in any of the consequences indicated in (i) to (iii) above;
(e)
That no decision or resolution shall have been issued with the intent of, and no claim, action or proceeding, judicial or
administrative, shall be pending and reasonably expected to result in: (i) prohibiting or materially preventing consummation of the Enel Generación Tender Offer; (ii) imposing material limitations on the acquisition of some or all
the shares of Enel Generación by Enel Chile, including any material restriction to the Amendment to the Bylaws of Enel Generación; or (iii) imposing material limitations on the possibility of Enel Chile to actually exercise its
ownership rights in the shares of Enel Generación, including the right to vote said shares, and generally any other action by any court, superintendence, service or other competent authority resulting in any of the consequences indicated in
(i) to (iii) above; and
(f)
That no material adverse change shall have occurred in Enel Generación. To this end, a
‘material adverse change’ shall be any event, fact or circumstance resulting in or having a material adverse impact on the business, properties, assets, obligations, results or operations of Enel Generación, which materiality and
exclusions shall be objectively determined.
Enel Chile may define other objective conditions for the success of the Enel
Generación Tender Offer, to the extent said additional conditions are not contrary to the terms contained herein.
14
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5.6
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Conditions for the Amendment to the Bylaws of Enel Generación.
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The Amendment to
the Bylaws of Enel Generación shall be subject to the condition precedent consisting in Enel Chile having declared the Enel Generación Tender Offer successful.
* * * * * * * * * * * * * * *
The Parties shall
inform on the existence and contents of these Terms both to the respective regulatory entities having competent jurisdiction over them (e.g. the SVS or SEC), as well as to the Reorganization Meetings and any other bodies that shall issue a
determination on the Reorganization.
15
The ADS Letter of Transmittal,
certificates for Enel Generación Shares, Enel Generación ADSs and any other required documents should be sent or delivered by each holder of Enel Generación Share or Enel Generación ADS who wishes to participate in the
U.S. Offer or such Enel Generación Share or Enel Generación ADS holder’s broker, dealer, commercial bank, trust company or other nominee, to the U.S. Share Tender Agent or ADS Tender Agent, as applicable by the Expiration Date at
one of the addresses set forth below:
The U.S. Share Tender Agent for the U.S. Offer is:
COMPUTERSHARE TRUST COMPANY, N.A.
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By First Class Mail:
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By Registered or Overnight Delivery:
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Computershare Trust Company, N.A.
c/o Voluntary Corporate Actions
P.O. Box 43011
Providence, RI 02940-3011
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Computershare Trust Company, N.A.
c/o Voluntary Corporate Actions
250 Royall Street, Suite V
Canton, MA 02021
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E-mail:
canoticeofguarantee@computershare.com
The ADS Tender Agent for the U.S. Offer is:
CITIBANK, N.A.
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By Mail:
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By Overnight Delivery:
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Citibank, N.A.
c/o Voluntary Corporate Actions
P.O. Box 43011
Providence, RI 02940-3011
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Citibank, N.A.
c/o Voluntary Corporate Actions
250
Royall Street, Suite V
Canton, MA 02021
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Confirmation Telephone Number:
1-877-248-4237 (in case of lost ADRs)
973-461-7021 (in case of ADS cancellations)
Questions or requests for assistance may be directed to the Information Agent at its telephone numbers and address set forth
below. Questions or requests for assistance or additional copies of the prospectus and the ADS Letter of Transmittal may be directed to the Information Agent at the e-mail address and telephone numbers set forth below. Share or ADS holders
may also contact their broker, dealer, commercial bank or trust company for assistance concerning the U.S. Offer.
The Information Agent
for the U.S. Offer is:
GEORGESON LLC
E-mail:
enelchile@georgeson.com
Telephone (International):
+1-781-575-2137
Telephone (U.S. toll free):
866-216-0459
The Dealer Manager for the U.S. Offer is:
BTG PACTUAL