Fitch Affirms Fortuna's Ratings at 'BBB-' After Change of Ownership.

CHICAGO -- Fitch Ratings has affirmed Empresa de Generacion Electrica Fortuna S.A.'s (Fortuna) 'BBB-' foreign and local currency Issuer Default Ratings (IDRs). Fitch has also affirmed the 'BBB-' foreign currency rating of the senior notes due 2013. The Rating Outlook for all ratings is Stable. Approximately US$147 million of debt securities is affected.

These rating actions follow Enel SpA's and Globeleq Ltd's acquisition of an indirect joint 49% equity interest in Fortuna from Hydro Quebec International Latin America Ltd. (HQILA) and El Paso Corporation, respectively. Fitch views the change in ownership structure as neutral to Fortuna's credit profile as Enel should continue to provide the operating expertise previously provided by HQILA given Enel's position as the largest provider of electric services in Italy and its growing presence in Latin America.

Fortuna's credit profile is solid and credit metrics are strong for the rating category given its project finance-like characteristics. The company had an EBITDA-to-interest expense ratio of 7.5 times (x) and a net debt-to-EBITDA ratio of 1.0x. The change in ownership structure does add some uncertainty regarding the new controlling partners' (Enel and Globeleq Ltd.) long-term financial strategy for the company. The risk of increasing debt at the operating company or increasing dividends to fund a portion of the acquisition remains a possibility, although this risk is contained by the strong structural enhancements of the outstanding notes as well as Enel's strong financial position (rated 'A+' by Fitch). Substantial changes in financial strategy could affect Fortuna's credit quality.

Fortuna's ratings reflect its position as the largest hydroelectric plant in Panama; its competitive dispatch priority, supported by a large storage reservoir; a sound operating strategy to optimize contract electricity sales; its acceptable projected debt-service coverage under various stress scenarios; and absence of foreign-exchange risk. The rating also incorporates potential weaknesses, including exposure to hydrology, commodity price risks, exposure to regulatory considerations, and potential for long-term competitive price pressures. Currently, Fortuna enjoys strong credit metrics due to a favorable pricing environment, de-leveraging of the company, and a revised commercial strategy. Fortuna had $147 million of debt outstanding as of March 31, 2006.

The current senior notes due 2013 have strong structural enhancements with limitations on incurring additional debt. The indenture limits additional debt other than the currently outstanding notes to debt for working capital up to $20 million, and debt for capital expenditures and/or subordinated debt providing that the projected debt service coverage ratio (DSCR) exceeds 1.5x. The senior notes represent nearly 100% of Fortuna's total debt. The notes also have a six-month debt service reserve.

On Aug. 3, 2006 Enel announced that it had acquired a 24.55% joint controlling stake in Fortuna from Hydro Quebec International Latin America Ltd. (HQILA) for $150 million. Previously, on April 13, 2006, El Paso sold its indirect ownership in Fortuna to Globeleq, Ltd. Enel's acquisition of Fortuna is part of the company's global strategy of developing renewable energy sources. The Enel group already owns generation assets in Costa Rica, Nicaragua, El Salvador, Guatemala, and Chile. In addition, Enel Latin America signed a contract last June for the acquisition of 11 Brazilian companies from Rede Group. Enel will be in charge of the operational management of the power generation plant. Enel has responsibility for operational management and Globeleq has responsibility for financial and administrative management governed by a jointly held majority of the board of directors of Fortuna through Americas Generation Corp., S.A. (AGC).

Enel SpA is Italy's largest integrated utility. Its average installed generation capacity of 45 gigawatts (GW) (54% of Italian capacity) for fiscal 2004 accounted for 125.9 Terawatt hours (TWh) (47% of Italian production). The generation mix is predominantly thermal (73%) and hydroelectric (23%). Enel is Italy's largest electricity supplier, with fiscal 2004 regulated sales of 157TWh and competitive sales of 7.4TWh. Enel also supplies increasing gas volumes to a fully competitive market (fiscal 2004: 5.2 billion cubic meters). In October 2004, the Italian government sold a further 19% of Enel's shares to the market; its current shareholding is 31.4%.

Fortuna is a hydroelectric generating company located in the western portion of Panama and one of the largest generation plans in the country. The company has an installed capacity of 300MW and generated 1,652GWh during 2005. Fortuna is 49% owned by Americas Generation Corp., S.A. (AGC), which currently is indirectly owned by Enel (50.1%) and Globeleq, Ltd. (49.9%). The Panamanian government owns an additional 49.9% of Fortuna, with employees owning the remaining 1.1%.

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