Subsequent Events

Terna and the 2010 photovoltaic project

On January 29, 2010 the Board of Directors of SunTergrid, with a view to implementing the photovoltaic project under way, approved the sale to the subsidiary RTR of SunTergrid's plants for renewables generation for own consumption or sale, as well as all the assets, and contractual design, construction, operation, development and maintenance relationships related to those plants.
The transfer took effect as from February 1, 2010. The total amount paid came to €3.2 million.
The sale price is consistent with the market value of the transferred operations, as determined by an appraisal conducted by independent experts.
In order to give RTR the resources necessary to start operations, on the same date the Board of Directors of SunTergrid approved a capital contribution of €5.0 million to the subsidiary.

Italy-Montenegro intergovernmental agreement

On February 6, 2010 Italy and Montenegro formalised an intergovernmental agreement committing the two countries to the construction of a new underwater electricity interconnection line and the implementation of a strong strategic partnership between their respective national transmission operators, Terna and Prenos, for investment in Montenegro's power grid. In particular, the partnership provides for Terna to take a stake of at least 22% in Prenos by way of a restricted recapitalisation, the designation of two of the seven board members by Terna and governance arrangements in which Terna will have a right of veto on strategic decisions.
Prenos, which was established on April 1, 2009 in a spin-off from Elektroprivreda Crne Gore - EPCG (the leading public energy company in Montenegro), holds three licenses: transmission operator, system operator and market operator.
As from April 6, 2009, Prenos shares have been listed on the local stock exchange.
The intergovernmental agreement is a key step for the completion of the deal between Terna and Prenos and, in view of the importance of the investment environment for the industrial development of the country, will be submitted to Montenegro's parliament for approval. In addition, the accord incorporates and strengthens the main elements of the term sheet signed in July 2009 by Terna and Prenos, which formally took effect with the approval of Montenegro's Council of Ministers on September 3, 2009.

Renewal and expansion of EMTN programme and new bond issues

On February 17, 2010 the Board of Directors of Terna authorised the renewal and expansion from €2 to €4 billion of the existing EMTN programme and the issue in one or more tranches by March 31, 2011 of bonds in public or private placements of a total of €1.5 billion reserved for qualified investors in Italy or abroad either within the scope of the EMTN programme or outside that programme. The issues, to be denominated in euros or other currencies, may have a maximum term of 30 years.

2010-2014 Business Plan

On February 18, 2010, Terna presented the Company’s 2010-2014 business plan to financial analysts, after approval of the plan by the Board of Directors on that same date.

The 2010-2014 plan of the Terna Group follows four main guidelines:

  • sustainable growth: in the next five years a total of €4.3 billion will be invested, mainly to develop the power grid, an increase of €900 million or 26% over the level envisaged in the previous plan (€3.4 billion). Capital expenditure will also include more than €300 million for the photovoltaic project, bringing total budgeted expenditure to more than €4.6 billion;
  • improved margins (EBITDA margin): increasing revenue and containing costs will improve Group profitability from the current 74% to 77% at the end of the period covered by the plan;
  • a sound capital structure: during the period of the plan, net debt will remain below 60% of regulated capital employed;
  • confirmation of dividend policy: the policy provides for minimum annual growth of 4%, taking 2008 as the base year and half-yearly coupons in respect of the interim dividend and the balance. In addition, a portion of the proceeds from the sale of Terna Participações (approximately €150 million) will be allocated to the above policy until 2012.

TELAT-Terna plant transfer for NTG development and upgrade purposes

On March 3, 2010, for the purpose of facilitating work on NTG development and upgrades, TELAT’s board of directors authorised the transfer of a number of plants owned by the company to Parent Terna.
Pursuant to art. 6 of Presidential Decree no. 327/2001, the Ministry for Economic Development only empowers Terna to make compulsory purchases, since Terna, as the concession holder, is eligible to be thus mandated by the Ministry.
The rationalisation and upgrade activities principally concern Parent territorial organisational structures (Territorial Operating Areas) in Milan, Padua, Florence and Naples.
The overall value of the transaction, equal to the market value of the plants under transfer, corresponds to around €21.1 million.

Agreement with EIB to finance the SA.PE.I. project

On March 18, 2010, Terna S.p.A. signed an agreement with the European Investment Bank (EIB) for an additional loan of €73 million to connect Sardinia with the Italian peninsula via a high-voltage undersea cable at continuous 500 kW (“SA.PE.I.”). This financing is in addition to the €300 million agreed on May 5, 2008. The new loan also has a 20-year term and is repayable in half-yearly instalments from the fifth year. The terms are highly competitive, with interest accruing at the annual six-month Euribor plus a spread of 40 basis points.