ENDESA Spain To Take Control of Leading Latin American Electric Group.

MADRID, Spain--(BUSINESS WIRE)--Aug. 4, 1997--ENDESA (NYSE:ELE), a major electric utility company in Spain, announced Friday that it plans to take effective control of Enersis, the Chilean electricity company, through a tender offer on the Santiago Stock Exchange for the Series A shares in Inversiones Chispa Uno S.A., Inversiones Chispa Dos S.A., Inversiones Los Almendros S.A., Inversiones Luz y Fuerza, S.A. and Inversiones Luz S.A. (the "Chispas"), which together own a 29.04% stake in Enersis.

The tender offer will be made to holders of Series A shares and to employees of the Enersis Group who were holders of record of such shares on May 30, 1997.

Upon successful completion of the tender offer, Endesa will buy 51% of the Series B shares of the Chispas and will obtain the voting rights of, and agree to buy, the remaining 49% of the Series B shares. The Series B shares have no economic rights but important voting rights. The total initial investment to be made by Endesa in the transaction is US$ 1,243 million, assuming the acquisition of 100% of the Series A shares and 51% of the Series B shares. Endesa has also agreed to pay for the remaining 19% of the Series B shares additional amounts during a five year period contingent upon the achievement of certain financial goals by Enersis and the continuation of the current effective control of Enersis and its subsidiaries by the Chispas. These amounts would increase Endesa's total investment to US$ 1,500 million.

Certain executive officers of Enersis and its subsidiaries have agreed to remain in their posts and will reinvest part of the proceeds received from the sale of their shares in shares of Endesa. Endesa will also give any shareholder who tender their Series A shares, the option to reinvest their proceeds through a common vehicle in Endesa shares up to a maximum amount, together with the Endesa shares received by holders of Series B shares, of 5% of Endesa's total share capital. Endesa's principal shareholder, Sociedad Estatal de Participaciones Industriales (SEPI), has reached agreements with Endesa to provide all such shares of Endesa.

Contemporaneously with Endesa becoming a shareholder of the Chispas and the entrance in Endesa's share capital by the Chilean group led by Enersis' principal executive officers, Endesa and Enersis will form a strategic alliance through a jointly-owned company through which new investments in the Latin American energy industry will be made. Endesa and Enersis are already joint-venture partners in Edelnor (Peru) and CERJ (Brazil).

As part of the transaction, officers of Endesa will participate in the management of Enersis and be designated as directors of its subsidiaries. Enersis' General Manager, Jose Yuraszeck Troncoso, will be nominated to Endesa's Board of Directors.

Enersis, headquartered in Santiago, Chile, is primarily engaged in the distribution and generation of electricity in Chile, Argentina, Brazil Colombia and Peru, with a combined total installed capacity of 7,145 Mw and 5.4 million clients. In Chile, Enersis has a market share of approximately 40% in electricity distribution through its subsidiaries Chilectra, Rio Maipo and Empresa Electrica Colina, as well as a 48% market share in generation through Endesa Chile and Pehuenche.

Furthermore, Enersis has achieved a successful presence outside Chile. In Argentina, its subsidiaries account for 36% of electricity distribution in Buenos Aires Province (Edesur) and 16% of the country's total installed capacity (El Chocon, Central Costanera and Central Buenos Aires). In Peru, Enersis controls 33% of electricity distribution (Edelnor and Edechancay) and 23% of the country's installed capacity (Edegel). In Brazil Enersis was awarded in November 1996 control of CERJ, R!o de Janeiro electricity distribution company, with 1.3 million clients. In Colombia, the company controls 5% of the country's total installed capacity through Betania, which was acquired in December 1996. In addition, Enersis is quoted on the Santiago and New York stock exchanges with a market capitalisation of US$ 4.96 billion. (the third largest company in Chile in terms of market capitalisation).

In the last four years, Enersis' net income has grown at a compounded annual growth rate of 30.2% in US$, reaching US$ 249 million in 1996 (after minority shareholders). As of December 1996, its total consolidated assets amounted to US$ 9.7 billion. During the first half of 1997 Enersis' net income amounted to US$ 165 million, representing a 6% growth over similar period in 1996.

Endesa is Spain's largest electricity company, with market shares of 47.4% and 42.9% in generation and distribution, respectively. With a total installed capacity of 22,014 MW, the Endesa Group generated 95,901 Gwh and distributed 94,212 Gwh to 14.5 million clients in 1996, of which 5.1 million are outside Spain. Endesa's net income in 1996 amounted to US$ 1.27 billion, with total stockholders' equity of US$ 11.3 billion.

Its market capitalisation of US$ 21.4 billion is the second largest in Spain and the third largest among the quoted European electricity companies.

Santander Investment acted as Financial Advisor to Endesa in this transaction.

CONTACT: ENDESA

Fernando Lario, North America Investor Relations 

212/750-7200

www.endesa.es