Enel Mulls Up To EUR7 Billion Cap Hike;Details Still Unset-Sources

Italy's Enel SpA (ENEL.MI) is considering a capital increase worth up to EUR7 billion to slash debts ahead of next week's key strategy presentation, two people familiar with the matter said Thursday.

Enel is still working on the details of the share sale, as it discusses the eventual deal with banks before deciding which ones will help it arrange the rights issue, said the two people, who asked not to be named.

The Rome-based utility is working on the capital increase ahead of next Thursday's presentation of its 2009-2013 strategy plan. The market will be looking to the strategy plan for measures to slash Enel's debt pile, as well as a possible rights issue announcement, both of which would reduce the likelihood of a rating cut by credit agencies.

Enel's net debt is expected to top EUR60 billion after it agreed last month to buy a 25% stake in Endesa SA (ELE.MC), bringing its total holding in the Spanish utility to 92%. It also faces EUR13.4 billion in maturing debt in 2010, including a EUR2.2 billion revolving credit facility that can be extended to 2012.

The possible share price discount of the rights issue could be up to 30%, the people told Dow Jones Newswires Thursday. The timing of the capital increase is unclear at this time, they added.

In the event a capital increase is planned, Enel shareholders are expected to have to approve it at an extraordinary meeting.

At 1448 GMT, Enel shares were EUR0.02, or 0.48%, lower at EUR3.66, less than the 3.57% drop in Italy's benchmark S&PMib Index.

Company Web site: www.enel.it

-By Liam Moloney, Dow Jones Newswires; +39 06 6976 6924; liam.moloney@dowjones.com

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