Owners go head to head over flotation -- EHN's web of entanglement

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The owners of Energía Hidroeléctrica de Navarra (EHN), Spain's largest wind plant operator and developer, are in fierce dispute over turning it into a public company. A group of Navarran investors holds 63% of EHN, while the country's second largest utility, Iberdrola, has a 37% stake. It is the Navarra group that at last month's annual general meeting announced its desire to float EHN next year, with Iberdrola subsequently coming out against the proposal.

Iberdrola argues that EHN has not prepared a strategic plan for the flotation, which is aimed at financing a EUR 700 million investment program. The Navarran bloc says the plan will be prepared by the end of May. The Navarra regional government is a major participant in the Navarra ownership group, and like Iberdrola has a 37% stake in EHN.

The rift between the owners is widely considered to be the result of a breakdown in negotiations earlier this year to merge Iberdrola's renewables activities with those of EHN. The proposed merger would have resulted in one of the world's largest wind power companies, with a combined capacity of 1400 MW of operating capacity and plans for 5000 MW of development by 2005, mostly from wind (Windpower Monthly, February 2002). While Iberdrola was to have had a 60% share in the new venture, the Navarran government demanded that its business division, Sodena, retain the right to veto executive decisions -- because EHN has an important strategic position within the Navarran economy. Iberdrola's objection to this clause six months later proved to be the start of steadily worsening relations.


Sources close to the Navarra base strongly suspect Iberdrola of trying to torpedo EHN's expansion program. They believe the utility has plans to set itself up as a competing wind developer. Iberdrola has recently consolidated all its renewable energy activities in Iberenova, its renewables wing. Among other ventures, these activities include the 37% share in EHN and Iberdrola's 18.5% share in Gamesa, Spain's largest turbine manufacturer and second largest developer. Iberenova, says Iberdrola, is involved in nearly 2000 MW of operating wind plant and has 1400 MW under construction, 660 MW under its direct control.

EHN claims to have around 1000 MW of wind power on-line via 36 wind plant in Spain and another four totalling 17 MW in France. About half of the 1000 MW is via a joint venture with Iberdrola, Energías Eólicas Europeas. EHN also claims 400 MW building and 2000 MW in firm concessions at home and abroad. Iberdrola's international influence and EHN's project prestige have earned the partnership authorisation to develop a total of 693 MW in Brazil as well as other large scale development concessions for Canada, New York state, France and Italy.

The tangle of mutual interests at home and massive joint venture developments abroad make the consequences of the worst-case scenario of outright conflict between EHN's owners impossible to predict. EHN management are leaving nothing to chance, however. They recently began to flex their muscles with a decision to extend EHN's business capital in its joint venture with France's largest developer, Compagnie du Vent (below).

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