What if Iberdrola got rid of some Spanish supply assets?

Hearing Iberdrola’s chairman Ignacio Sánchez Galán to say the company was more British, US and Mexican that Spanish was a bitter pill to swallow for the Spanish government. That is the reason rumours about an eventual disinvestment of 25% of Iberdrola’s Spanish generation and supply business become noticeable.

In fact, that operation is not included in the company’s strategic plan for 2014-2016, so that if finally confirmed it would be “unexpected”, ACF analysts at Madrid commented. The selling would be valued at  €11,5 bn representing gains near €2,9 bn for the company. In the case debt was considered as a part of the transaction, the Spanish energy firm would recieve half that amount.

Iberdrola’s supply business in Spain manages 10.9 million of distribution points as well as energy totalling 91.656 Gwh. This division had a turnover of €1,9 bn in 2013 ( 5% of the Group’s total sales) and €1,4 bn EBITDA ( 2% of the whole company).

When asked by The Corner about that eventual operation, Iberdrola referred to the Relevant Fact sent to the Spanish market authorities on Thursday:

“In connection with the news published in certain media, we hereby inform you that Iberdrola is analyzing different alternatives for divestments of its assets. To date, Iberdrola has not made any decision in connection thereof. In case the governing bodies of Iberdrola decide to carry out divestments of any of the relevant assets of Iberdrola, such decision will be communicated accordingly. ”

In opinion of ACF’s experts the sale “would be good for Iberdrola to reduce the deleveraging ratio from 3.8x to 3.5x, so that net financial debt could decreased by 10.2% to € 25.1 bn.” However, analysts at Sabadell do not see so clearly that a total disinvestment of those supply assets “makes sense”. “It only would if Iberdrola continues holding the business operation,” they added.

Those words that Iberdrola’s chairman chose about the supposed nationality of the company were unfortunate. Mr Sánchez Galán has to send a letter to some peers who did not understand such a statement.He really meant to explain the importance of each corporate business on the company’s balancesheet. The fact is he had also announced that €9,6 bn of investments would be adressed to countries having an more stable and attractive legal framework than Spain, specially to UK, US, Brazil and Mexico.