ENDESA, Through Viesgo, Will Establish the Company That Will Integrate the Electricity Assets to be Sold in Spain.

Business Editors

NEW YORK--(BUSINESS WIRE)--May 23, 2001

-- The new Viesgo will be made up of a generation and a distribution company
and will become Spain's fifth largest electric utility.

-- Its generation assets will be Electra de Viesgo's former hydroelectric
plants; ENDESA's stakes in the nuclear plants of Garona (50%) and Trillo (1%);
and the thermoelectric plants in Algeciras), Puentenuevo, Puertollano, Cercs,
Escucha and Escatron.

-- The distribution company will be made up of Viesgo's current distribution
assets, with a customer portfolio of 560,000, annual sales of 4,800 GWh and a
market share close to 3%.

ENDESA (NYSE:ELE) is currently in the process of establishing, through its affiliate Viesgo, the company that will include the assets from the electricity business in Spain which are going to be divested. The new Viesgo will be made up of two companies, a generator and a distributor, with an installed capacity of 2,610 MW and a customer base of 560,000.

The generation company will have a market share of approximately 5.4% and a balanced and competitive mix broken down into 25% hydroelectric, 10% nuclear, 29% fuel-gas and 36% coal-fired.

The assets in the generation company are Electra de Viesgo's former hydro generation plants, currently 100% owned by ENDESA, with a total capacity of 668 MW (Alto Esla, Pico and Navia, with a total 329 MW plus the pumping plant of Aguayo, with 339 MW).

Besides, the new company will incorporate ENDESA's stakes in the nuclear plants of Garona (50%, 466 MW) and Trillo (1%, 1,066 MW).

The remaining generation assets, all of them fully owned by ENDESA, are the 753 MW fuel-gas plant in Algeciras and the coal-fired plants of Puentenuevo (323.5 MW, Puertollano (220.9 MW), Cercs (160 MW), Escucha (160 MW) and Escatron (80 MW).

On the other hand, the distribution company will be made up of the current distribution assets of Viesgo, with a customer base of 560,000, annual sales of 4,800 GWh and a market share close to 3%.

All of the above assets make up Spain's fifth largest electric utility. This new company will operate with a balanced and well-established generation mix and with an interesting position in the distribution segment, based on a dynamic customer base with a high potential for growth. With year 2000 figures, the new Viesgo would show annual revenues of Euro 710 million.

Solvency of potential buyers

The asset sale will be carried out by means of a controlled bid to which first-rate operators both from Europe and North America have been invited.

This asset sale is part of the ENDESA's strategy for the years 2001-2005, focused on value creation, which was communicated to the market last March and ratified in the Shareholders' meeting on 28th April.

This strategy includes, among others, the development of an Euro 20.5 billion investment plan, of which Euro 14.4 billion will be for the profitable and selective expansion mainly in the European and Latin American markets. The funds will mainly come from the company's cash flow and disposals both in Spain and abroad.

The disposals, for a total Euro 5 billion, also include financial investments and other assets not related to the core business or with limited strategic value within ENDESA's portfolio of assets. The first step in the disposal programme has been the sale of ENDESA's 40.19% in the Argentinean distributor Edenor, with a capital gain of Euro 494 million. The programme also includes the sale of the Chilean construction company Infraestructuras 2.000 for Euro 67.5 million.