F-4/A 1 d442548df4a.htm FORM F-4 AMENDMENT NO. 1 Form F-4 Amendment No. 1
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As filed with the Securities and Exchange Commission on November 30, 2017

Registration No. 333-221156

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Amendment No. 1

to

FORM F-4

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

 

 

ENEL CHILE S.A.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

REPUBLIC OF CHILE   4911   NOT APPLICABLE

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

 

Santa Rosa 76

Santiago, Chile

Telephone: +56 2 2353-4628

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

CT Corporation System

111 Eighth Avenue

New York, New York 10011

Telephone: (212) 894-8800

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

 

 

With Copies to:

Allen Miller, Esq.

Sey-Hyo Lee, Esq.

Winston & Strawn LLP

200 Park Avenue

New York, New York 10166

Telephone: (212) 294-6700

 

 

Approximate date of commencement of proposed sale to public: As soon as practicable following the effective date of this registration statement.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross Border Third-Party Tender Offer)  ☒

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933:

Emerging growth company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this preliminary prospectus is not complete and may be changed. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer, solicitation or sale is not permitted.

 

PRELIMINARY PROSPECTUS—SUBJECT TO COMPLETION, DATED NOVEMBER 30, 2017

 

LOGO

U.S. Offer to Purchase

(i) Outstanding Common Stock, without par value, held by U.S. Persons

and

(ii) Outstanding American Depositary Shares

(each American Depositary Share representing 30 shares of Common Stock)

of

ENEL GENERACIÓN CHILE S.A.

(“Enel Generación”)

for

Cash

by

ENEL CHILE S.A.

(“Enel Chile”)

Subject to the terms and conditions described in this prospectus, including the Enel Chile U.S. Share/ADS Subscription Condition (as defined herein)

THE OFFER PERIOD WILL COMMENCE AT          [A.M.]/[P.M.], NEW YORK CITY TIME, ON                     , 2018 AND WILL EXPIRE AT 3:30 P.M., NEW YORK CITY TIME (THE “EXPIRATION TIME”), ON                     , 2018 (THE “EXPIRATION DATE”), UNLESS THE U.S. OFFER IS EXTENDED.

 

 

 

Eligible Security

  

Corresponding Consideration per Eligible Security

Common stock, without par value, of Enel Generación (“Enel Generación Shares”)

 

ISIN: CLP3710M1090

   Ch$590 in cash, without interest, payable in U.S. dollars to be delivered net of applicable withholding taxes and distribution fees, subject to the Enel Chile U.S. Share/ADS Subscription Condition

American depositary shares, each representing 30 shares of Enel Generación common stock (“Enel Generación ADSs”)

 

ISIN: US29244T1016

CUSIP: 29244T101

   Ch$17,700 in cash, without interest, payable in U.S. dollars to be delivered net of applicable withholding taxes and distribution fees, subject to the Enel Chile U.S. Share/ADS Subscription Condition

Enel Chile S.A., a publicly held stock corporation (sociedad anónima abierta) organized under the laws of the Republic of Chile, hereby offers to purchase (i) all outstanding shares of common stock, without par value, of Enel Generación Chile S.A., a publicly held stock corporation (sociedad anónima abierta) organized under the laws of the Republic of Chile, other than Enel Generación Shares currently owned by Enel Chile, held by all U.S. Persons (as defined herein) for an amount of Ch$590 in cash, without interest, payable in U.S. dollars, net of applicable withholding taxes and distribution fees for each Enel Generación Share; and (ii) all outstanding American Depositary Shares of Enel Generación (together with Enel Generación Shares, “Enel Generación Securities”), from all holders of Enel Generación ADSs, wherever located, for an amount of Ch$17,700 in cash, without interest, payable in U.S. dollars, net of applicable withholding taxes and distribution fees for each Enel Generación ADS, in each case upon the terms and subject to certain conditions described in this prospectus (including the Enel Chile U.S. Share/ADS Subscription Condition as defined below) and in the Form of Acceptance, the ADS Letter of Transmittal, the Share Subscription Agreement and the ADS Subscription Agreement (which together, as they may be amended or supplemented from time to time, constitute the “U.S. Offer”).

The U.S. Offer is subject to the condition that any eligible holder of Enel Generación Shares and/or Enel Generación ADSs validly tendering Enel Generación Shares and/or Enel Generación ADSs in the U.S. Offer shall have agreed to apply Ch$236 of the consideration payable for each Enel Generación


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Share validly tendered (the “Enel Chile Share Subscription Amount”) and Ch$7,080 of the consideration payable for each Enel Generación ADS validly tendered to subscribe for shares of common stock, without par value, of Enel Chile (“Enel Chile Shares”) or American Depositary Shares, each representing 50 Enel Chile Shares (each an “Enel Chile ADS” and together with the Enel Chile Shares, the “Enel Chile Securities”), as the case may be, at a subscription price of Ch$82 per Enel Chile Share (or Ch$4,100 per Enel Chile ADS) (the “Enel Chile U.S. Share/ADS Subscription Condition”). Following completion of the U.S. Offer, for each Enel Generación Share validly tendered in the U.S. Offer, an Enel Generación shareholder will receive Ch$354 in cash, without interest, payable in U.S. dollars net of applicable withholding taxes and distribution fees, and 2.87805 Enel Chile Shares as a result of its satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition. Following completion of the U.S. Offer, for each Enel Generación ADS validly tendered in the U.S. Offer, an Enel Generación ADS holder will receive Ch$10,620 in cash, without interest, payable in U.S. dollars net of applicable withholding taxes and distribution fees, and 1.72683 Enel Chile ADSs as a result of its satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition.

The aggregate Enel Chile Share Subscription Amount of all Enel Generación Shares validly tendered by each Enel Generación shareholder will be used to purchase the largest whole number of Enel Chile Shares that can be purchased with such amount and any remaining portion of the Enel Chile Share Subscription Amount will be delivered in cash together with the cash portion of the consideration in the Offers.

This prospectus relates to the Enel Chile Shares (including Enel Chile Shares underlying the Enel Chile ADSs) to be subscribed by holders of Enel Generación Shares and Enel Generación ADSs tendering their Enel Generación Shares and/or Enel Generación ADSs in the U.S. Offer pursuant to the Enel Chile U.S. Share/ADS Subscription Condition.

Through a concurrent offer in Chile, Enel Chile is offering to purchase any and all of the outstanding Enel Generación Shares, other than Enel Generación Shares currently owned by Enel Chile but including Enel Generación Shares held by U.S. Persons (the “Chilean Offer”), at the purchase price of Ch$590 in cash for each Enel Generación Share.

The Chilean Offer is subject to the condition that any eligible holder of Enel Generación Shares tendering in the Chilean Offer shall have agreed to apply Ch$236 of the consideration payable for each Enel Generación Share tendered to subscribe for Enel Chile Shares at a subscription price of Ch$82 per Enel Chile Share (the “Enel Chile Share Subscription Condition”). As a result, following completion of the Chilean Offer, for each Enel Generación Share validly tendered, an Enel Generación shareholder will receive Ch$354 in cash and 2.87805 Enel Chile Shares as a result of its satisfaction of the Enel Chile Share Subscription Condition.

The U.S. Offer and the Chilean Offer are being conducted simultaneously and, in all material respects, have the same terms and are subject to the same conditions; however, participants in the Chilean Offer (including U.S. Persons), may not be granted the protection of the U.S. Securities Exchange Act of 1934, as amended. The Chilean Offer and the U.S. Offer are collectively referred to as the “Offers.”

Under Chilean law, the initial offering period of the Chilean Offer must be 30 calendar days and may be extended one time for a period of between 5 to 15 calendar days. The initial 30-day offering period of the Chilean Offer is scheduled to expire on                     , 2018. In the event that the Chilean Offer is extended beyond                     , 2018 for any reason, Enel Chile intends to also extend the U.S. Offer so that the U.S. Offer offering period coincides with the offering period set forth for the Chilean Offer.

 

 

For a discussion of the risk factors that you should consider in evaluating the U.S. Offer, see “Risk Factors” beginning on page 42.

 

Neither the Securities and Exchange Commission nor any foreign or state securities commission has approved or disapproved of the securities to be issued under this prospectus, nor passed upon the merits or fairness of the securities to be issued under this prospectus, nor determined if this prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

 

Enel Chile and Enel Chile Shares have been registered with the Superintendencia de Valores y Seguros (the Chilean Superintendence of Securities and Insurance, or the “SVS”). The SVS has not approved or disapproved of the securities offered hereby (including in the form of ADSs) or determined if this prospectus or any Spanish language prospectus that will be used in Chile is truthful or complete.

This prospectus and the related documents contain important information. You should carefully read these documents in their entirety before making a decision with respect to the U.S. Offer.

Dealer Manager for the U.S. Offer

BTG PACTUAL

 

 

This prospectus is dated                              and is expected first to be mailed to Enel Generación shareholders on or about that date.


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IMPORTANT

We are not making the U.S. Offer to, and will not accept any tendered Enel Generación Shares or Enel Generación ADSs from or on behalf of Enel Generación Share or Enel Generación ADS holders residing in any jurisdiction in which the making of the U.S. Offer or acceptance thereof would not be in compliance with the laws of that jurisdiction. However, we may, at our discretion, take any actions necessary for us to make the U.S. Offer to Enel Generación Share or Enel Generación ADS holders in any such jurisdiction.

Tenders by Holders of Enel Generación Shares: Any holder of Enel Generación Shares resident in the United States desiring to tender all or any portion of the Enel Generación Shares owned by such holder in the U.S. Offer must: (i) complete and sign the Form of Acceptance and Share Subscription Agreement (or a copy thereof, provided the signature is original) in accordance with the instructions in the Form of Acceptance and mail or deliver them to Computershare Trust Company N.A., as U.S. tender agent of Enel Chile for the Enel Generación Shares in the U.S. Offer (the “U.S. Share Tender Agent”) at the address appearing on the back cover page of this prospectus, (ii) deliver a certificate from the share department of Enel Generación which is administered by the Depósito Central de Valores S.A. (the “DCV”) evidencing rights to such tendered Enel Generación Shares free and clear of liens, pledges and encumbrances and all other required documents to the U.S. Share Tender Agent and (iii) either (a) deliver the título(s) de acciones (certificate(s) of title) representing the tendered Enel Generación Shares or (b) arrange for the book-entry delivery of your Enel Generación Shares through the system of the DCV to an account (the “DCV Custodial Account”) that has been established for the purposes of the U.S. Offer by              on behalf of the U.S. Share Tender Agent pursuant to the procedures for book-entry transfer set forth in “The Offers—Procedures for Participating in the U.S. Offer—Holders of Enel Generación Shares.” Any holder of Enel Generación Shares whose Enel Generación Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such holder desires to tender such Enel Generación Shares.

Tenders by Holders of Enel Generación ADSs: Any holder of Enel Generación ADSs desiring to tender all or any portion of the Enel Generación ADSs owned by such holder should either: (i) complete and sign the ADS Letter of Transmittal and ADS Subscription Agreement (or a copy thereof, provided the signature is original) in accordance with the instructions in the ADS Letter of Transmittal and mail or deliver them together with the American Depositary Receipts (“ADRs”) evidencing such tendered Enel Generación ADSs, if any, and all other required documents to Citibank, N.A., as tender agent of Enel Chile for the Enel Generación ADSs in the U.S. Offer, at the address appearing on the back cover page of this prospectus, or tender such Enel Generación ADSs pursuant to the procedures for book-entry transfer set forth in “The Offers—Procedures for Participating in the U.S. Offer—Holders of Enel Generación ADSs,” or (ii) cause such holder’s broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such holder. Any holder of Enel Generación ADSs whose Enel Generación ADSs are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such holder desires to tender such Enel Generación ADSs.

Copies of this prospectus, the Form of Acceptance, the ADS Letter of Transmittal, the Share Subscription Agreement, the ADS Subscription Agreement, or any other tender offer materials must not be mailed to or otherwise distributed or sent in, into or from any country where such distribution or offering would require any additional measures to be taken or would be in conflict with any law or regulation of such country or any political subdivision thereof. Persons into whose possession this prospectus comes are required to inform themselves about and to observe any such laws or regulations. This prospectus may not be distributed or used for, or in connection with, any offer to, or solicitation by, anyone in any jurisdiction or under any circumstances in which such offer or solicitation is not authorized or is unlawful.

Questions and requests for assistance including information on how holders of shares who are not resident in the United States may tender their Enel Generación Shares or to obtain a copy of the Chilean Offer tender offer documents, may be directed to Georgeson LLC, as information agent, at the telephone number set forth on

 

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the back cover of this prospectus. Additional copies of this prospectus, the Form of Acceptance, the ADS Letter of Transmittal, the Share Subscription Agreement, the ADS Subscription Agreement and the other tender offer documents may be obtained free of charge from Georgeson LLC or from brokers, dealers, commercial banks, trust companies or other nominees.

All references to “U.S. dollars,” “$” and “US$” are to the currency which is currently legal tender in the United States and all references to “Chilean pesos,” “pesos,” and “Ch$” are to the currency which is currently legal tender in the Republic of Chile.

We have not authorized any person to make any recommendation on our behalf as to whether you should tender or refrain from tendering your Enel Generación Shares or Enel Generación ADSs pursuant to the U.S. Offer. You should rely only on the information contained in this prospectus, the Form of Acceptance, the ADS Letter of Transmittal, the Share Subscription Agreement and the ADS Subscription Agreement to which we have referred you. We have not authorized anyone to provide you with information or to make any representation in connection with the U.S. Offer other than those contained in this prospectus, the Form of Acceptance, the ADS Letter of Transmittal, the Share Subscription Agreement, or the ADS Subscription Agreement. If anyone makes any recommendation or gives any information or representation regarding the U.S. Offer, you must not rely upon that recommendation, information or representation as having been authorized by us, our board of directors, Computershare Trust Company, N.A., as U.S. tender agent of Enel Chile for the Enel Generación Shares in the U.S. Offer, Citibank, N.A., as tender agent of Enel Chile for the Enel Generación ADSs in the U.S. Offer, BTG Pactual US Capital, LLC, as dealer manager for the U.S. Offer, or Georgeson LLC, as information agent for the U.S. Offer. You should not assume that the information provided in the U.S. Offer or this prospectus is accurate as of any date other than the date of this prospectus.

Subject to applicable law (including Rule 14e-1 under the U.S. Securities Exchange Act of 1934, as amended, which require that material changes be promptly disseminated to security holders in a manner reasonably designed to inform them of such changes), delivery of this prospectus shall not under any circumstances create any implication that the information contained in or incorporated by reference into this prospectus is correct as of any time after the date of this prospectus or the respective dates of the documents incorporated herein by reference or that there has been no change in the information included or incorporated by reference herein or in the affairs of Enel Chile or any of its subsidiaries or affiliates since the date hereof or the respective dates of the documents incorporated herein by reference.

 

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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE OFFERS

     1  

WHERE YOU CAN FIND MORE INFORMATION

     15  

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

     16  

PRESENTATION OF INFORMATION

     18  

Financial Information

     18  

Technical Terms

     18  

Calculation of Economic Interest

     19  

Rounding

     19  

SUMMARY

     20  

Introduction

     20  

The Companies

     20  

The Reorganization

     22  

The Offers

     22  

The Capital Increase

     23  

The Merger

     23  

Shareholder Approvals

     23  

Tentative Transaction Timetable

     24  

Reasons for the Reorganization

     25  

Conditions of the Offers

     26  

Fairness of the Reorganization

     27  

Enel Chile and Enel Generación

     27  

Enel

     27  

Appraisal/Statutory Dissenters’ Withdrawal Rights

     27  

Material U.S. Federal Income Tax Consequences of the U.S. Offer

     28  

Security Ownership by Enel Filing Persons, Enel Generación and their Respective Directors and Officers

     28  

Interests of Certain Persons That are Different from Your Interests

     29  

Ownership of Enel Chile and Enel Generación After the Reorganization

     29  

Plans for Enel Generación Following the Offers; Management and Operations After the Offers

     30  

Comparative Per Share Market Price Information

     31  

Listing of Enel Chile Shares

     31  

Regulatory Approvals

     31  

“Going Private” Transaction

     31  

Statutory Exemption from Certain U.S. Tender Offer Requirements

     31  

Antitrust and Regulatory Laws

     31  

Accounting Treatment

     32  

Summary Historical Financial Information

     33  

Enel Chile

     33  

Enel Generación

     35  

EGPL

     37  

Summary Pro Forma Consolidated Financial Information

     39  

Comparative Historical and Pro Forma Per Share Information

     40  

RISK FACTORS

     42  

Risks Related to the Offers

     42  

Risks Related to Enel Generación’s Business

     44  

Risks Related to Enel Chile’s Business

     44  

Risks Related to Enel Chile’s Business Following the Offers and the Merger

     44  

SPECIAL FACTORS

     46  

Background of the Offers

     46  

Historical Background

     46  

Background of the Reorganization, the Offers and the Merger

     47  


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Reasons for the Reorganization

     56  

Plans for Enel Generación Following the Offers; Management and Operations after the Offers

     57  

Certain Effects of the Offers and the Merger

     58  

Ownership of Enel Chile and Enel Generación After the Reorganization

     60  

Tax Consequences

     60  

Material U.S. Tax Consequences

     60  

Material Chilean Tax Consequences

     61  

The Offers as a Related Party Transaction Under Chilean Law

     62  

Position of Enel Generación as to the Fairness of the Reorganization; Recommendation

     62  

Position of Enel Generación as to the Fairness of the Reorganization

     62  

Recommendation of the Enel Generación Board of Directors

     67  

Summary of Enel Generación Directors’ Committee Reports and Directors’ Statements Required By Chilean Law

     68  

Position of Enel Chile and Enel as to the Fairness of the Reorganization

     80  

Position of Enel Chile as to the Fairness of the Reorganization

     81  

Position of Enel as to the Fairness of the Reorganization

     84  

Summary of Enel Chile Directors’ Committee Report and Directors’ Statements Required by Chilean Law

     85  

Projections Summary

     104  

Description of the Enel Filing Persons, Enel Generación and their Respective Directors and Officers

     105  

Security Ownership by Enel Filing Persons, Enel Generación and their Respective Directors and Officers

     106  

Interests of Certain Persons That are Different from Your Interests

     106  

Related Party Transactions

     107  

THE REORGANIZATION

     108  

General

     108  

Shareholder Approvals

     108  

Tentative Transaction Timetable

     109  

THE OFFERS

     113  

General

     113  

Terms of the U.S. Offer and Expiration Date

     113  

General

     113  

Expiration Date

     114  

Extensions and Amendment

     114  

Mailing

     115  

Differences Between Chilean and U.S. Tender Offer Laws

     116  

Conditions of the U.S. Offer

     116  

Acceptance and Payment for Enel Generación Securities

     117  

Procedures for Participating in the U.S. Offer

     118  

Holders of Enel Generación Shares

     119  

Holders of Enel Generación ADSs

     124  

Tender Withdrawal Rights

     128  

Appraisal/Statutory Dissenters’ Withdrawal Rights

     129  

No Fractional Enel Chile ADSs

     130  

Source and Amounts of Funds

     130  

Fees and Expenses

     131  

Certain Legal and Regulatory Matters

     132  

“Going Private” Transaction

     132  

Statutory Exemption from Certain U.S. Tender Offer Requirements

     132  

Antitrust and Regulatory Laws

     132  

Accounting Treatment

     133  

Miscellaneous

     133  


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     Page  

THE CAPITAL INCREASE

     134  

THE MERGER

     135  

The Merger

     135  

The Parties

     135  

Enel Chile

     135  

EGPL

     135  

Conditions of the Merger

     136  

Regulatory Approvals

     136  

Appraisal Rights/Statutory Merger Dissenters’ Withdrawal Rights

     137  

No Merger Agreement; Statutory Merger

     138  

The Merger as a Related Party Transaction Under Chilean Law

     138  

The Merger Proposal

     139  

Reports of Independent Appraisers

     139  

Merger Exchange Ratio

     139  

Effective Date and Completion of the Merger

     139  

MATERIAL UNITED STATES TAX CONSEQUENCES

     141  

Material U.S. Federal Income Tax Consequences of the U.S. Offer to U.S. Holders

     142  

Material U.S. Federal Income Tax Consequences of Ownership and Disposition of Enel Chile Shares and Enel Chile ADSs

     143  

Taxation of Distributions

     143  

Sale or Other Disposition of Shares or ADSs

     144  

Passive Foreign Investment Company Rules

     145  

U.S. Backup Withholding Tax and Information Reporting Requirements

     146  

Required Disclosure with Respect to Foreign Financial Assets

     146  

Information Reporting and Backup Withholding

     146  

MATERIAL CHILEAN TAX CONSEQUENCES

     147  

Material Chilean Tax Consequences of the U.S. Offer to Foreign Holders

     147  

The U.S. Offer

     147  

Chilean Tax Consequences of Ownership of Enel Chile Shares or Enel Chile ADSs by Foreign Holders

     148  

Ownership and Disposition of Enel Chile Shares and Enel Chile ADSs

     148  

Taxation of Shares and ADSs

     149  

Taxation on Capital Gains

     150  

Taxation on Sale or Exchange of ADSs, Outside of Chile

     150  

Taxation on Sale or Exchange of Shares

     150  

Taxation of Share Rights and ADS Rights

     151  

Other Chilean Taxes

     151  

COMPARATIVE MARKET PRICE DATA

     152  

COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE INFORMATION

     153  

ENEL CHILE SELECTED FINANCIAL DATA

     154  

ENEL GENERACIÓN SELECTED FINANCIAL DATA

     156  

EGPL SELECTED FINANCIAL DATA

     159  

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

     161  

INFORMATION ABOUT THE COMPANIES

     173  

Enel Chile

     173  

Enel Generación

     173  

EGPL

     174  

CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES

     175  

COMPARISON OF RIGHTS OF HOLDERS OF ENEL GENERACIÓN SHARES AND HOLDERS OF ENEL CHILE SHARES

     176  

Comparison of Rights

     176  

Dividends

     178  

LEGAL MATTERS

     179  


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     Page  

EXPERTS

     179  

ENFORCEABILITY OF CIVIL LIABILITIES

     180  

ANNEXES

  

Annex A—Directors and Executive Officers of the Enel Filing Persons and Enel Generación

     A-1  

Annex B—Information Regarding EGPL

     B-1  

Annex C—Opinion of Banchile Asesoría Financiera S.A., independent evaluator of Enel Generación

     C-1  

Annex D—Opinion of ASSET Chile S.A., additional independent evaluator of Enel Generación

     D-1  

Annex E—Opinion of Larraín Vial Servicios Profesionales Ltda., independent evaluator of Enel Chile

     E-1  

Annex F—Opinion of Econsult RS Capital S.p.A., additional independent evaluator of Enel Chile

     F-1  

Annex G—Report of Oscar Molina, independent appraiser of Enel Chile

     G-1  

Annex H—Report of Felipe Schmidt, independent appraiser of EGPL

     H-1  

Annex I—General Terms of the Reorganization

     I-1  


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QUESTIONS AND ANSWERS ABOUT THE OFFERS

Except as otherwise specifically noted, “Enel Chile,” as well as “we,” “our,” “us” and similar words in this prospectus refer to Enel Chile S.A. and its consolidated subsidiaries. Enel Generación Chile S.A. is one of our consolidated subsidiaries and when we describe Enel Chile we include Enel Generación Chile S.A. and its consolidated subsidiaries in that description. When we refer to “Enel Generación” or “Enel Generación Chile S.A.,” we mean Enel Generación Chile S.A. and its consolidated subsidiaries on a stand-alone basis, separate from the other businesses of Enel Chile.

In this section, “Questions and Answers About the Offers,” and in the “Summary” beginning on page 19, we highlight selected information contained in this prospectus but we have not included all of the information that may be important to you. To better understand the Offers (as defined below) and for a more complete description of their legal terms, you should read carefully this entire prospectus, including the annexes, as well as the documents we have incorporated by reference into this prospectus. See “Where You Can Find More Information.”

 

Q. Who is making the U.S. Offer?

 

A. Enel Chile, a publicly held stock corporation (sociedad anónima abierta) organized and existing under the laws of the Republic of Chile. As of the date of this prospectus, Enel Chile beneficially owns 4,919,488,794 shares of Enel Generación common stock, without par value (“Enel Generación Shares”), representing 60.0% of the total number of Enel Generación Shares (including Enel Generación Shares represented by American Depositary Shares or “ADSs”). Enel Chile is a subsidiary of Enel S.p.A. (“Enel”), which currently holds direct beneficial ownership of 60.6% of Enel Chile. On November 16, 2017, Enel South America S.r.l., a wholly owned subsidiary of Enel through which Enel held its ownership interest in Enel Chile, merged with and into Enel, with Enel as the surviving company. Enel is a holding company engaged, through subsidiaries and affiliates, in the integrated production, distribution, and sale of electricity and gas in 32 countries across 4 continents. See “Special Factors—Description of the Enel Filing Persons, Enel Generación and their Respective Directors and Officers.”

 

Q. What is the background and purpose of the Offers?

 

A. The Offers are part of a proposed Reorganization (as defined below), which seeks to consolidate Enel’s conventional and non-conventional renewable energy generation businesses in Chile under one company and to increase Enel Chile’s ownership interest in Enel Generación to obtain the potential benefits of such further consolidation of ownership, and must be considered within the context of the Reorganization. See “Special Factors—Background of the Offers” and “Special Factors—Reasons for the Reorganization.”

 

Q. What is the Reorganization?

 

A. In addition to the Offers, Enel Chile is expected to conduct (i) a capital increase (the “Capital Increase”) in order to obtain new shares of common stock, without par value, of Enel Chile (“Enel Chile Shares”) to be issued in connection with the Offers to satisfy the Enel Chile U.S. Share/ADS Subscription Condition (as defined below) or the Enel Chile Share Subscription Condition (as defined below), as applicable and (ii) a merger in which Enel Green Power Latin América S.A., a closely held stock corporation (sociedad anónima cerrada) organized under the laws of the Republic of Chile and a wholly owned holding company subsidiary of Enel holding non-conventional renewable energy projects in Chile (“EGPL”), merges into Enel Chile (the “Merger” and together with the Offers and the Capital Increase, the “Reorganization”). Under Chilean law, the Reorganization (including the Offers and the Merger) is deemed to be a related party transaction, subject to the statutory requirements and protections of Law No. 18,046 (the “Chilean Corporations Act”).

 

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Following consummation of the Reorganization, due to Enel Chile’s ownership of Enel Generación and its Chilean electricity distribution business through Enel Distribución Chile S.A. (“Enel Distribución”) and the merger of EGPL’s renewable energy business into Enel Chile, holders of Enel Generación Shares and Enel Generación ADSs (as defined below) that become holders of Enel Chile Shares and Enel Chile ADSs pursuant to the Enel Chile U.S. Share/ADS Subscription Condition or the Enel Chile Share Subscription Condition, as applicable, will have the opportunity to participate directly in the future earnings, profits and growth of the businesses of Enel Chile and indirectly in the future earnings, profits and growth of the businesses of Enel Generación as well as Enel Distribución and the renewable business currently conducted by EGPL and will indirectly face the risk of losses or the risk of a decline in the value of Enel Generación, Enel Distribución, or the renewable business currently conducted by EGPL. See “Special Factors—Plans for Enel Generación Following the Offers; Management and Operations after the Offers” and “Special Factors—Certain Effects of the Offers and the Merger.”

Below is a tentative transaction timetable for the Reorganization. There may be significant changes depending on developments and all future dates are all subject to change.

 

Date

  

Action(s)

August 25-28, 2017    The Board of Directors of Enel Chile and Enel Generación authorized their respective companies to analyze the proposed Reorganization.
September 20, 2017    The Board of Directors of EGPL authorized the company to analyze the proposed Reorganization.
October 13, 2017    Chilean Superintendence of Securities and Insurance (Superintendencia de Valores y Seguros or “SVS”) confirmed that the SVS would not object if the Offers in Chile is conducted as a cash tender offer subject to the Enel Chile Share Subscription Condition.
October 24, 2017    EGPL is converted from a limited liability company (sociedad de responsibilidad limitada) into a closely held stock corporation (sociedad anónima cerrada).
October 24, 2017    Chilean Superintendence of Pensions (Superintendencia de Pensiones) confirmed that the Chilean Pension Funds Administrators (“AFPs”), as shareholders of Enel Generación, may agree to apply part of the consideration payable for each Enel Generación Share tendered to subscribe for Enel Chile Shares, subject to compliance with simultaneous delivery versus payment requirements set forth in the Compendium of Rules of the Pension System and standard share exchange procedures applicable to AFPs.
November 3, 2017    Delivery of interim Chilean financial statements of Enel Chile, Enel Generación and EGPL as of and for the nine months ended September 30, 2017 (i.e., within 90 days before the date of the shareholders’ meeting to approve the Merger, as required under Chilean law).
November 3, 2017    Delivery of (i) appraisals by independent appraisers to Enel Chile and EGPL, and (ii) reports by independent evaluators to Enel Chile and Enel Generación.
November 9, 2017    Delivery of the opinions of the Directors’ Committees of Enel Chile and Enel Generación required under Chilean law.

November 14, 2017

   Delivery of the opinions of the individual directors of Enel Chile and Enel Generación with respect to the Reorganization.
November 14, 2017    Delivery of the supplementary opinion of the Directors’ Committee of Enel Generación required under Chilean law.

 

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Date

  

Action(s)

November 14, 2017    The Boards of Directors of Enel Chile and EGPL unanimously approved, among other matters, the actions relating to the Reorganization and the summoning of extraordinary shareholders’ meetings (“ESMs”) of the respective companies to approve, among other matters, the Reorganization as a related party transaction and the Merger.
November 14, 2017    The members of the Board of Directors of Enel Generación without any interest in the Reorganization unanimously approved the Reorganization as a related party transaction, and the Board of Directors of Enel Generación unanimously approved, among other matters, the summoning of the ESM to inform the shareholders about the Reorganization and to approve the amendments to the bylaws of Enel Generación.
November 14, 2017    Public notice of Enel Chile, Enel Generación and EGPL Board actions.
November 14, 2017    Public notice of the agenda of the ESMs to shareholders of Enel Chile and Enel Generación.
November 29, 2017    Mailing of information statements with respect to the ESMs of Enel Chile and Enel Generación to the holders of Enel Chile ADSs and Enel Generación ADSs.
December 15, 2017    Voting cut-off date for Enel Chile ADSs and Enel Generación ADSs (3 business days prior to the ESMs).
December 20, 2017    The ESMs of Enel Chile, Enel Generación and EGPL held.
December 21, 2017    Beginning of exercise period for statutory merger dissenters’ withdrawal rights in connection with the Merger for Enel Chile and EGPL shareholders.
January 19, 2018    Expiration of the exercise period for statutory merger dissenters’ withdrawal rights in connection with the Merger for Enel Chile and EGPL shareholders (30 calendar days from approval of the Merger at the ESMs).
Early/Mid February 2018    Registration with the SVS and the Chilean Stock Exchanges (as defined below) of the new Enel Chile Shares to be issued in connection with the Capital Increase.
Mid/Late February 2018    Commencement of preemptive rights offering in connection with the Capital Increase.
Mid/Late February 2018    Launch of the Offers in Chile and the United States.

Mid/Late March 2018

   Expiration of the preemptive rights offering period in connection with the Capital Increase (30 calendar days from launch).
Mid/Late March 2018    Expiration of the tender offer period (minimum of 30 calendar days from launch of the Offers) in Chile and in the United States.
Mid/Late March 2018    Publication of the notice of the results of the Offers (aviso de resultado) and acceptance of tendered Enel Generación Securities (three calendar days after expiration of the Offers) and effectiveness of Enel Generación bylaw amendments.
Early April 2018    Reorganization effective.

 

Q. Are shareholder approvals required for the Offers?

 

A.

The Offers do not require the approval by the holders of Enel Chile Shares or Enel Generación Shares as a separate matter. However, given that the proposed Reorganization is deemed to be a related party transaction under Chilean law, the Offers will not be launched or consummated without the approval by

 

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  shareholders or the Board, as applicable, of Enel Chile, Enel Generación and EGPL of the Reorganization (including the Offers) as a related party transaction. In addition, the launch of the Offers is conditioned on approval by Enel Chile and EGPL shareholders of the Merger and approval by Enel Generación shareholders of amendments to the Enel Generación bylaws to eliminate the 65% stock ownership limitations under Title XII of Decree No. 3,500 of 1980 (“DL 3,500”), which is the Chilean law that regulates pension fund investments. As a result, the Offers will not be launched without obtaining such shareholder and/or Board approvals, as applicable.

The following are the matters to be approved by the shareholders of Enel Chile, Enel Generación and EGPL at their respective ESMs scheduled to be held on December 20, 2017:

 

    Enel Chile: Approval of (i) the Reorganization as a related party transaction under Chilean law; (ii) the Merger, (iii) the Capital Increase, (iv) the authorization to vote the Enel Generación Shares owned by Enel Chile in favor of the amendments to Enel Generación’s bylaws, and (v) the amendments to Enel Chile’s bylaws, each of which (other than the proposal described in clause (iv)) requires the affirmative vote of two-thirds of the outstanding voting shares of Enel Chile.

 

    Enel Generación: Approval of the amendments to Enel Generación’s bylaws to, among other things, remove the 65% ownership limitation applicable to any shareholder of Enel Generación, which requires the affirmative vote of 75% of the outstanding voting shares of Enel Generación. (Note that shareholder approval of the Reorganization as a related party transaction is not necessary because under Chilean law, a related party transaction may be approved either (i) by the unanimous approval of the directors of Enel Generación that do not have an interest in the Reorganization, or (ii) in the absence of such unanimous approval described in clause (i), by the shareholders of Enel Generación at an ESM with the approval of two-thirds of the outstanding voting shares. The Board of Directors of Enel Generación (including both non-interested directors) unanimously approved the Reorganization (including the Offers) as a related party transaction on November 14, 2017). See “Special Factors—Background of the Offers.”

 

    EGPL: Approval of (i) the Reorganization as a related party transaction under Chilean law, and (ii) the Merger, each of which will be approved by Enel as the sole shareholder of EGPL.

Enel directly owns 60.6% of the Enel Chile Shares and indirectly owns 100% of the shares of EGPL and intends to cause all such Enel Chile Shares and EGPL shares to be voted in favor of the Reorganization-related matters at the ESMs of Enel Chile and EGPL, subject to the conditions set forth below. Enel Chile directly owns 60.0% of Enel Generación Shares and intends to vote all such Enel Generación Shares in favor of the Reorganization-related matters at the ESM’s of Enel Generación. See “The Reorganization,” “The Offers,” “The Capital Increase” and “The Merger.”

 

Q. What securities are being sought in the U.S. Offer?

 

A. In the U.S. Offer, Enel Chile is offering to purchase (i) any and all outstanding Enel Generación Shares, other than Enel Generación Shares currently owned by Enel Chile, held by all U.S. Persons (as defined herein) and (ii) any and all outstanding ADSs of Enel Generación, each representing 30 Enel Generación Shares (the “Enel Generación ADSs” and together with Enel Generación Shares, “Enel Generación Securities”), held by all holders of Enel Generación ADSs, wherever located.

 

Q. What would I receive in exchange for my Enel Generación Shares and Enel Generación ADSs in the U.S. Offer and will I have to pay any fees or commission?

 

A. Holders of Enel Generación Securities who validly tender in the U.S. Offer and do not properly withdraw prior to 3:30 p.m., New York City time (the “Expiration Time”) on                 , 2018 (the “Expiration Date”), their Enel Generación Shares or Enel Generación ADSs, as the case may be, will receive the following:

 

    for each Enel Generación ADS, Ch$17,700 in cash, without interest, payable in U.S. dollars, net of applicable withholding taxes and distribution fees, subject to the Enel Chile U.S. Share/ADS Subscription Condition described below; and

 

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    for each Enel Generación Share, Ch$590 in cash, without interest, payable in U.S. dollars, net of applicable withholding taxes and distribution fees, subject to the Enel Chile U.S. Share/ADS Subscription Condition described below.

The U.S. Offer is subject to the condition that any eligible holder of Enel Generación Shares and/or Enel Generación ADSs validly tendering Enel Generación Shares and/or Enel Generación ADSs in the U.S. Offer shall have agreed to apply Ch$236 of the consideration payable for each Enel Generación Share validly tendered (the “Enel Chile Share Subscription Amount”) and Ch$7,080 of the consideration payable for each Enel Generación ADS validly tendered to subscribe for Enel Chile Shares or ADSs of Enel Chile, each representing 50 Enel Chile Shares (“Enel Chile ADSs” and together with Enel Chile Shares, the “Enel Chile Securities”), as the case may be, at a subscription price of Ch$82 per Enel Chile Share (or Ch$4,100 per Enel Chile ADS) (the “Enel Chile U.S. Share/ADS Subscription Condition”). Following completion of the U.S. Offer, for each Enel Generación Share validly tendered in the U.S. Offer, an Enel Generación shareholder will receive Ch$354 in cash, without interest, payable in U.S. dollars net of applicable withholding taxes and distribution fees, and 2.87805 Enel Chile Shares as a result of its satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition. Following completion of the U.S. Offer, for each Enel Generación ADS validly tendered in the U.S. Offer, an Enel Generación ADS holder will receive Ch$10,620 in cash, without interest, payable in U.S. dollars net of applicable withholding taxes and distribution fees, and 1.72683 Enel Chile ADSs as a result of its satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition.

The net cash consideration paid to U.S. Persons tendering Enel Generación Shares and tendering holders of Enel Generación ADSs in the U.S. Offer, after giving effect to the subscriptions for Enel Chile Shares and Enel Chile ADSs pursuant to the Enel Chile U.S. Share/ADS Subscription Condition, will be converted into U.S. dollars at the weighted average value exchange rate between the Chilean peso and the U.S. dollar for the spot transactions carried out on business days in Chile, between the Expiration Date of the Offers and the payment date. However, U.S. Persons who tender into the Chilean Offer will be paid the net cash consideration in Chilean pesos and not U.S. dollars. Furthermore, it is possible that, due to requirements of applicable law or market practice, holders of Enel Generación Shares tendering in the Chilean Offer will be paid either before or after holders tendering Enel Generación Shares and/or Enel Generación ADSs in the U.S. Offer, although the gross aggregate consideration offered per share denominated in Chilean pesos will be the same. In addition, it is recommended that U.S. Persons wishing to tender in the Chilean Offer consult their tax advisor as there may be different tax consequences in the Chilean Offer not contemplated in this prospectus. See “Risk Factors” and “Material Chilean Tax Consequences.”

If you are the record owner of your Enel Generación Shares or your Enel Generación ADSs and you tender your Enel Generación Shares or your Enel Generación ADSs to Enel Chile through Computershare Trust Company, N.A. (the “U.S. Share Tender Agent”) and Citibank, N.A. (the “ADS Tender Agent”) in the U.S. Offer, you will not have to pay brokerage fees or similar expenses, except that Citibank, N.A., in its capacity as depositary for the Enel Generación ADS program (the “Enel Generación ADS Depositary”), will deduct a distribution fee of US$0.05 per Enel Generación ADS from any payment of cash or distribution of Enel Chile ADSs in satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition to tendering Enel Generación ADS holders. If you own your Enel Generación Shares or your Enel Generación ADSs through a broker or other nominee, and your broker or nominee tenders your Enel Generación Shares or your Enel Generación ADSs on your behalf, your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine whether any charges or fees will apply.

 

Q. Does the consideration for the U.S. Offer represent a premium over the recent trading prices of Enel Generación Shares and Enel Generación ADSs?

 

A. The consideration for the U.S. Offer represents a premium of 9.6% over the closing price of Ch$538.39 per Enel Generación Share reported on the Santiago Stock Exchange on November 28, 2017 and a premium of 9.0% over the closing price of US$25.31 per Enel Generación ADS reported on the New York Stock Exchange (“NYSE”) on November 28, 2017.

 

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Q. Why is there an Enel Chile U.S. Share/ADS Subscription Condition?

 

A. The Enel Chile U.S. Share/ADS Subscription Condition is provided to make the terms of the U.S. Offer match as closely as possible the Chilean Offer. See “—Why is there an Enel Chile Share Subscription Condition?”

 

Q. Does Enel Chile have the financial resources to complete the U.S. Offer?

 

A. The consideration for the U.S. Offer will consist of cash, subject to the Enel Chile U.S. Share/ADS Subscription Condition. The net cash consideration will be financed by cash on hand and borrowings under a bridge loan facility to be entered prior to the Expiration Date. Neither the U.S. Offer nor the Chilean Offer are subject to any financing condition.

 

Q. Is Enel Chile’s financial condition relevant to my decision to tender Enel Generación Securities?

 

A. Yes. If the U.S. Offer is consummated and you validly tendered and have not validly withdrawn Enel Generación Securities pursuant to the U.S. Offer, you will become a holder of Enel Chile Shares and/or Enel Chile ADSs, as the case may be, pursuant to the Enel Chile U.S. Share/ADS Subscription of the U.S. Offer. You should consider Enel Chile’s financial condition before you decide whether to participate in the U.S. Offer. In considering Enel Chile’s financial condition, you should review the documents incorporated by reference into this prospectus and the pro forma financial information included in this prospectus because they contain detailed business, financial and other information about Enel Chile.

 

Q. Who can participate in the U.S. Offer?

 

A. The U.S. Offer is open to all holders of Enel Generación ADSs (whether or not held by U.S. Persons) and to holders of Enel Generación Shares that are U.S. Persons. Non-U.S. Persons may tender Enel Generación Shares only in the Chilean Offer.

 

Q. What is the Chilean Offer?

 

A. Concurrently with the U.S. Offer, Enel Chile is offering to purchase any and all outstanding Enel Generación Shares, other than Enel Generación Shares currently owned by Enel Chile, held by all holders of Enel Generación Shares (including U.S. Persons) (the “Chilean Offer” and together with the U.S. Offer, the “Offers”), subject to, among other conditions, the Enel Chile Share Subscription Condition. See “What are the principal differences between the U.S. Offer and Chilean Offer?” and “The Offers—Terms of the U.S. Offer and Expiration Date—Differences Between Chilean and U.S. Tender Offer Laws.”

 

Q. Why is there a separate Chilean Offer?

 

A. U.S. and Chilean laws and practice relating to tender offers are different and inconsistent in several ways. We are making the U.S. Offer in compliance with U.S. law and the Chilean Offer in compliance with Chilean law. In general, the economic terms and conditions relating to the U.S. Offer and the Chilean Offer are substantially the same. See “The Offers—Terms of the U.S. Offer and Expiration Date.”

 

Q. Who can participate in the Chilean Offer?

 

A.

The Chilean Offer is open to all holders of Enel Generación Shares (including U.S. Persons). Holders of Enel Generación ADSs may not tender their Enel Generación ADSs in the Chilean Offer. Holders of Enel Generación ADSs who wish to participate in the Chilean Offer must cancel their Enel Generación ADSs in accordance with the terms thereof, receive the Enel Generación Shares and then comply with the requirements of the Chilean Offer. Holders of Enel Generación Shares and holders of Enel Generación

 

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  ADSs who surrender their Enel Generación ADSs and withdraw the Enel Generación Shares underlying their Enel Generación ADSs from the Enel Generación ADS program, in each case, who wish to participate in the Chilean Offer, should carefully consider that they may not be granted the protection of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), among other factors. See “The Offers—Terms of the U.S. Offer and Expiration Date—Differences Between Chilean and U.S. Tender Offer Laws.”

 

Q. Why is there an Enel Chile Share Subscription Condition?

 

A. The Enel Chile Share Subscription Condition is a condition established by Enel Chile in order to successfully implement the Reorganization, including the Capital Increase payable only with cash. On October 13, 2017, the SVS confirmed that the SVS would not object if the Chilean Offer is conducted as a cash tender offer subject to the Enel Chile Share Subscription Condition. In addition, on October 24, 2017, the Chilean Superintendence of Pension Funds Administrators (Superintendencia de Pensiones) confirmed that the AFPs, as shareholders of Enel Generación, may agree to apply part of the consideration payable for each Enel Generación Share tendered to subscribe for Enel Chile Shares, subject to compliance with normal settlement procedures applicable to AFPs.

 

Q. What are the principal differences between the U.S. Offer and Chilean Offer for a U.S. Person holding Enel Generación Shares?

 

A. The terms and conditions of the U.S. Offer and the Chilean Offer are substantially similar and only differ to the extent required by law or local customary market practice. The principal difference between the Chilean Offer and the U.S. Offer is that any eligible holder of Enel Generación Shares tendering in the Chilean Offer will receive Ch$590 per Enel Generación Share, subject to the Enel Chile Share Subscription Condition, payable in Chilean pesos rather than Ch$590 per Enel Generación Share, subject to the Enel Chile U.S. Share/ADS Subscription Condition, payable in U.S. dollars. However, there is no difference between the U.S. Offer and the Chilean Offer with respect to gross per share value of the consideration offered for each Enel Generación Share, the Enel Chile Share Subscription Amount or in the per share subscription price for Enel Chile Shares. In addition, U.S. Persons who wish to participate in the Chilean Offer may not be granted the protection of the Exchange Act. See “The Offers—Terms of the U.S. Offer and Expiration Date—Differences Between Chilean and U.S. Tender Offer Laws.”

 

Q. What are the significant conditions of the Offers?

 

A. The launch of the Offers will be subject to the satisfaction of the following conditions:

 

    the shareholders of Enel Chile and EGPL have approved the Merger at their respective ESMs, subject to the conditions precedent applicable to the Merger;

 

    the shareholders of Enel Generación have approved at its ESM the proposed amendments to the Enel Generación Bylaws (estatutos) to remove the limitations and restrictions set forth under Title XII of DL 3,500, including among other things, the 65% stock ownership limit applicable to any shareholder and any other related restrictions, even if the effectiveness of such bylaw amendments (which is subject to the satisfaction of its own applicable conditions precedent) has not yet occurred; and

 

    registration of the new Enel Chile Shares to be issued in connection with the Capital Increase and the Offers with the SVS and the Santiago Stock Exchange, the Valparaíso Stock Exchange and the Chilean Electronic Stock Exchange (collectively, the “Chilean Stock Exchanges”).

The Offers will be subject to the satisfaction or waiver of the following conditions on or before the expiration of the Offers:

 

   

the valid tender in the Offers of a total number of Enel Generación Securities such that Enel Chile would hold a more than 75% interest in Enel Generación following the consummation of the Offers,

 

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including the satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition in the case of the U.S. Offer and the Enel Chile Share Subscription Condition and the Enel Chile Share Subscription Condition in the case of the Chilean Offer (Note that as of the date of this prospectus, Enel Chile has not determined under what circumstances it may waive the condition that its ownership interest in Enel Generación must exceed 75% after completion of the Offers);

 

    Enel Chile has available for issuance the necessary number of newly issued Enel Chile Shares following the expiration of the preemptive right period in the Capital Increase to permit the subscription of Enel Chile Securities required to satisfy the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition (Note that as a practical matter, if holders of Enel Chile Shares exercise preemptive rights and subscribe for new Enel Chile Shares in excess of the limit required in order to have a sufficient number of Enel Chile Shares available to issue to tendering holders of Enel Generación Securities in satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition (between approximately 3.5 billion and 9.4 billion new Enel Chile Shares, assuming that Enel Chile acquires Enel Generación Shares and ADSs such that its ownership of Enel Generación after completion of the Offers would be between more than 75% and 100%), this condition cannot be satisfied);

 

    Enel does not cease to be at any time the controlling shareholder of Enel Chile and maintains at all times, more than 50.1% of the voting capital in Enel Chile;

 

    the absence of any legal proceeding or action seeking to: (i) prohibit or materially prevent the Merger between Enel Chile and EGPL; (ii) impose material limitations on Enel Chile’s ability to effectively exercise its property rights over the assets of EGPL to be assigned to Enel Chile as a consequence of the Merger; (iii) impose limitations on Enel Chile’s ability to continue developing and operating the projects owned by EGPL; and (iv) in general, any other legal proceeding or action before any regulatory, judicial or administrative authority resulting in any of the consequences indicated in (i) to (iii) above;

 

    the absence of any legal proceeding or action seeking to (i) prohibit or materially prevent the consummation of the Offers; (ii) impose material limitations on Enel Chile’s ability to effectively acquire the Enel Generación Securities, including any material restriction on the proposed amendments to the Enel Generación bylaws relating to Title XII of DL 3,500; (iii) impose limitations on Enel Chile’s ability to exercise its property rights over the Enel Generación Securities acquired in the Offers, including the right to vote such Enel Generación Securities; and (iv) in general, any other legal proceeding or action before any regulatory, judicial or administrative authority resulting in any of the consequences indicated in (i) to (iii) above; and

 

    the absence of any Material Adverse Effect, which is defined as any event, fact or circumstance resulting in or having a material adverse impact on the business, properties, assets, obligations, results or operations of Enel Generación, which materiality and exclusions shall be objectively determined.

Enel Chile will declare the Offers successful if the conditions above are satisfied or waived.

See also “The Reorganization—Conditions of the Reorganization.”

 

Q. Until when do I have to decide whether to tender in the U.S. Offer?

 

A. You will have until 3:30 p.m., New York City time, on                 , 2018, to validly tender your Enel Generación Shares and/or Enel Generación ADSs in the U.S. Offer, unless the U.S. Offer is extended. Under Chilean law, the Chilean Offer is expected to initially expire at 5:30 p.m., Chilean time, on                 , 2018, which corresponds to 3:30 p.m. New York City Time, so that the expirations of the U.S. Offer and the Chilean Offer coincide. There is no guaranteed delivery procedure for the tendering of Enel Generación Shares or Enel Generación ADSs into the U.S. Offer. See “The Offers—Terms of the U.S. Offer and Expiration Date,” “The Offers—Procedures for Participating in the U.S. Offer—Holders of Enel Generación Shares” and “The Offers—Procedures for Participating in the U.S. Offer—Holders of Enel Generación ADSs.”

 

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Q. Can the U.S. Offer be extended and under what circumstances?

 

A. Yes. We expressly reserve the right, in our sole discretion but subject to applicable law, to extend the period of time during which the U.S. Offer remains open, from time to time. In the event that the Chilean Offer is extended beyond 5:30 p.m., Chilean time, on                 , 2018 for any reason, Enel Chile intends to also extend the U.S. Offer so that the expiration of the U.S. Offer offering period coincides with the expiration of the offering period for the Chilean Offer. “The Offers—Terms of the U.S. Offer and Expiration Date.”

 

Q. How will I be notified if the U.S. Offer is extended?

 

A. If we extend the U.S. Offer, we will inform the ADS Tender Agent and the U.S. Share Tender Agent of that fact. We also will make a public announcement of the extension, not later than 9:00 a.m., New York City time, on the next business day after the day on which the U.S. Offer was scheduled to expire. See “The Offers—Terms of the U.S. Offer and Expiration Date.”

 

Q. If the U.S. Offer is extended, what impact will this have on the Chilean Offer?

 

A. We expect to conduct the U.S. Offer and the Chilean Offer simultaneously and, therefore, we currently intend the U.S. Offer and the Chilean Offer to expire on the same day. If the U.S. Offer is extended for any reason, we currently expect to extend the Chilean Offer for the same length of the extension of the U.S. Offer, subject to limitations under Chilean law, pursuant to which we may only extend the Chilean Offer once for a period of no less than five (5) calendar days and no more than fifteen (15) calendar days.

 

Q. If the Chilean Offer is extended, what impact will this have on the U.S. Offer?

 

A. We expect to conduct the U.S. Offer and the Chilean Offer simultaneously and therefore currently intend the U.S. Offer and the Chilean Offer to expire on the same day. If the Chilean Offer is extended for any reason beyond the initial expiration of the U.S. Offer, we currently expect to extend the U.S. Offer for the length of the extension of the Chilean Offer.

 

Q. How do I tender my Enel Generación Shares and/or Enel Generación ADSs in the U.S. Offer?

 

A. To tender your Enel Generación Shares in the U.S. Offer, prior to the expiration of the U.S. Offer, you must (1) complete and sign the Form of Acceptance and the Share Subscription Agreement (or a copy thereof, provided the signature is original) in accordance with the instructions in the Form of Acceptance and mail or deliver it to the U.S. Share Tender Agent, (2) deliver a certificate from the share department of Enel Generación administered by DCV Registros S.A. (the “DCV”) to the U.S. Share Tender Agent and (3) either (i) deliver the título(s) de acciones (certificate(s) of title) representing your Enel Generación Shares to the U.S. Share Tender Agent or (ii) arrange for book-entry delivery of your Enel Generación Shares through the system of the DCV to an account (the “DCV Custodial Account”) that has been established for the purposes of the U.S. Offer by on behalf of the U.S. Share Tender Agent. See “The Offers—Procedures for Participating in the U.S. Offer—Holders of Enel Generación Shares.”

To tender your Enel Generación ADSs in the U.S. Offer, prior to the expiration of the U.S. Offer, the ADS Tender Agent must receive the American Depositary Receipts (“ADRs”) representing the Enel Generación ADSs, if applicable, or book-entry transfer of such Enel Generación ADSs, together with a properly completed and duly executed ADS Letter of Transmittal and the ADS Subscription Agreement, or a message transmitted by The Depository Trust Company to the ADS Tender Agent stating that you have expressly agreed to be bound by the terms of the ADS Letter of Transmittal, and the ADS Subscription Agreement and all other required documents. See “The Offers—Procedures for Participating in the U.S. Offer—Holders of Enel Generación ADSs.”

 

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Q. Until what time can I withdraw previously tendered Enel Generación Shares or Enel Generación ADSs?

 

A. You can withdraw previously tendered Enel Generación Shares or Enel Generación ADSs from the U.S. Offer at any time until the U.S. Offer has expired and, if we have not agreed by                 , 2018 (60 days after the commencement of the U.S. Offer) to accept your Enel Generación Shares or Enel Generación ADSs for payment, you can withdraw them at any time after such date until we accept your tendered Enel Generación Shares or Enel Generación ADSs for payment. See “The Offers—Terms of the U.S. Offer and Expiration Date” and “The Offers—Procedures for Participating in the U.S. Offer—Tender Withdrawal Rights.”

 

Q. How do I withdraw previously tendered Enel Generación Shares and/or Enel Generación ADSs?

 

A. To withdraw previously tendered Enel Generación Shares or Enel Generación ADSs from the U.S. Offer, you must deliver a written notice of withdrawal, or a copy of one, with the required information to the U.S. Share Tender Agent or the ADS Tender Agent, as applicable, while you still have the right to withdraw the previously tendered Enel Generación Shares or Enel Generación ADSs. Withdrawn Enel Generación Shares and Enel Generación ADSs may be retendered again following one of the procedures described in this prospectus, at any time until the U.S. Offer has expired. See “The Offers—Procedures for Participating in the U.S. Offer—Holders of Enel Generación Shares,” “The Offers—Procedures for Participating in the U.S. Offer—Holders of Enel Generación ADSs” and “The Offers—Procedures for Participating in the U.S. Offer—Tender Withdrawal Rights.”

 

Q. How will I receive the consideration for my Enel Generación Securities tendered in the U.S. Offer?

 

A. Subject to the terms and conditions of the U.S. Offer, we will pay for all Enel Generación Shares and Enel Generación ADSs validly tendered and not validly withdrawn promptly after the Expiration Date and upon the satisfaction or waiver by us of all conditions to the U.S. Offer set forth in “The Offers—Conditions of the U.S. Offer,” and in any case pursuant to applicable Chilean law or practice.

We will pay for your Enel Generación Shares and/or Enel Generación ADSs that are validly tendered and not validly withdrawn by depositing the purchase price, net of withholding taxes, distribution fees and the applicable subscription price pursuant to the Enel Chile U.S. Share/ADS Subscription Condition, with the U.S. Share Tender Agent or the ADS Tender Agent, as applicable, who will act as depositary for the purpose of receiving payments from us and transmitting such payments to you. In all cases, payment for tendered Enel Generación Shares will be made only after timely receipt by the U.S. Share Tender Agent of the títulos de acciones (certificates of title) representing your Enel Generación Shares or of a confirmation of a book-entry transfer of such Enel Generación Shares to the DCV Custodial Account as described in “The Offers—Procedures for Participating in the U.S. Offer—Holders of Enel Generación Shares.”

In addition, we will apply the Enel Chile Share Subscription Amount to the subscription of the Enel Chile Shares to be issued in connection with the U.S. Offers to satisfy the Enel Chile U.S. Share/ADS Subscription Condition (including Enel Chile Shares underlying Enel Chile ADSs) and cause the Enel Chile Shares to be delivered through the facilities of DCV in Chile at the same time as Enel Chile Shares are delivered in the Chilean Offer. The aggregate Enel Chile Share Subscription Amount of all Enel Generación Shares validly tendered by each Enel Generación shareholder will be used to purchase the largest whole number of Enel Chile Shares that can be purchased with such amount and any remaining portion of the Enel Chile Share Subscription Amount will be delivered in cash together with the cash portion of the consideration in the Offers. Until the Enel Chile Shares are allocated to your account, you will not have title to the Enel Chile Shares and will not be able to sell your new Enel Chile Shares on the Chilean Stock Exchanges. Similarly, until the Enel Chile ADSs are issued by Enel Chile’s ADS depositary and accepted for listing on the NYSE, you will not be able to sell your new Enel Chile ADSs on the NYSE. The newly issued Enel Chile Shares to be offered in connection with the Enel Chile U.S. Share/ADS Subscription

 

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Condition in the U.S. Offer, including Enel Chile Shares underlying Enel Chile ADSs, will be listed on the Chilean Stock Exchanges and the new Enel Chile ADSs will be listed on the NYSE. Tendering Enel Generación shareholders (including the ADS Custodian) will receive their new Enel Chile Shares pursuant to the Enel Chile Share Subscription Condition and the Enel Chile U.S. Share/ADS Subscription Condition in connection with the Offers on the same date as the cash payment, which is expected to be the first Chilean business day of the month following the date on which Enel Chile publishes the results notice declaring the Offers successful. The distribution of the cash payment and Enel Chile ADSs to tendering Enel Generación ADS holders will be in accordance with the ADS Depositary’s normal procedures for ADS issuances and cash distributions. Under no circumstances will interest be paid by Enel Chile on the purchase price paid for Enel Generación Shares and Enel Generación ADSs pursuant to the U.S. Offer regardless of any delay in making such payments or extension of the Expiration Date.

If any tendered Enel Generación Shares and/or Enel Generación ADSs are not accepted for any reason, any documents of title relating to the Enel Generación Shares or Enel Generación ADSs and other documents of title, if any, will be returned, without expense to, but at the risk of, the tendering holder (or, in the case of Enel Generación Shares or Enel Generación ADSs delivered by book-entry transfer, by transfer of such Enel Generación Shares or Enel Generación ADSs to an account maintained at DCV or the Book-Entry Transfer Facility, as applicable), as promptly as practicable.

 

Q. Is the Reorganization fair to the unaffiliated shareholders of Enel Generación?

 

A. Each of Enel Chile and Enel (collectively, the “Enel Filing Persons”), as well as Enel Generación believes that the Reorganization (including the Offers, as well as the Capital Increase and the Merger) is substantively and procedurally fair to the unaffiliated shareholders of Enel Generación.

In accordance with the requirements of Chilean law, each of the Boards of Directors of Enel Chile and Enel Generación appointed independent evaluators (evaluadores independientes) to evaluate the Reorganization as a related party transaction under Chilean law and provide opinions in accordance with Article 147 of the Chilean Corporations Act. In connection with the Merger and in accordance with the requirements of Chilean law, the respective Boards of Directors of Enel Chile and EGPL each appointed an independent appraiser (perito independiente) to provide a report in accordance with Articles 156 and 168 of the Chilean Corporate Regulations (Reglamento de Sociedades Anónimas) on the valuations of Enel Chile and EGPL and the merger exchange ratio in connection with the Merger, based on interim 2017 financial statements as of and for the nine months ended September 30, 2017.

For purposes of determining whether or not the Reorganization is substantively and procedurally fair to the unaffiliated shareholders of Enel Generación, as required by Rule 13e-3 under the Exchange Act, each of the Boards of Directors of Enel Chile and Enel Generación reviewed and evaluated the terms of the Reorganization based on the opinions and reports delivered by the independent evaluators and independent appraisers and Enel adopted the determination of the Board of Directors of Enel Chile.

See “Special Factors—Position of Enel Generación as to the Fairness of the Reorganization; Recommendation” and “Special Factors—Position of Enel Chile and Enel as to the Fairness of the Reorganization.”

 

Q. Has the Board of Directors of Enel Generación made any recommendation regarding the U.S. Offer and/or the Chilean Offer?

 

A. The Board of Directors of Enel Generación unanimously resolved that the Reorganization (including the Offers and the Merger) is substantively and procedurally fair to the unaffiliated shareholders of Enel Generación that participate in the Offers. See “Special Factors—Position of Enel Generación as to the Fairness of the Reorganization; Recommendation.” However, as the Offers have not yet been launched, the Board of Directors of Enel Generación have not yet made a specific recommendation to the shareholders of Enel Generación whether to accept or reject the Offers.

 

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Although under Chilean law the Board of Directors of Enel Generación, as a body, is not required to make a recommendation to its shareholders whether to accept or reject the Offers, the Board of Directors of Enel Generación intends to take action to determine the recommendation of the Board with respect to the U.S. Offer as required to be disclosed by Rule 14e-2 under the Exchange Act. Enel Generación must file a Solicitation/Recommendation Statement on Schedule 14D-9 within 10 business days of the date of the launch of the U.S. Offer that includes a statement by the Board of Directors of Enel Generación as to whether it recommends that Enel Generación shareholders accept or reject the U.S. Offer.

 

Q: Do I have appraisal rights?

 

A. The Chilean Corporations Act does not provide for appraisal rights in connection with the Offers. However, if Enel Chile acquires Enel Generación Shares in the Offers that result in Enel Chile’s ownership exceeding 95% of the outstanding Enel Generación Shares, a minority holder of Enel Generación Shares that did not tender in the Offers may exercise statutory dissenters’ withdrawal rights (derecho a retiro) in accordance with Article 71 bis of the Chilean Corporations Act, and receive from Enel Generación a cash payment equivalent to the weighted average of the closing prices for Enel Generación Shares as reported on the Chilean Stock Exchanges during the 60-trading day period preceding the 30th trading day prior to the date on which the results of the Offers are published by Enel Chile. A holder of Enel Generación ADSs who wishes to exercise statutory dissenters’ withdrawal rights must cancel such holder’s Enel Generación ADSs and must be a registered holder of Enel Generación Shares (i) on the date on which the results of the Offers are published and (ii) continuously until the date the statutory dissenters’ withdrawal rights are exercised. See “The Offers—Procedures for Participating in the U.S. Offer—Appraisal/Statutory Dissenters’ Withdrawal Rights.”

 

Q. What are the U.S. federal income tax consequences if I tender my Enel Generación Shares and/or Enel Generación ADSs?

 

A. For U.S. federal income tax purposes, (i) the tender by a U.S. Holder (as defined in “Material United States Tax Consequences”) participating in the U.S. Offer of Enel Generación Shares (or Enel Generación ADSs) for only cash and (ii) the subsequent, mandatory subscription by such U.S. Holder for Enel Chile Shares (or Enel Chile ADSs) should be treated as a single transaction in which such U.S. Holder exchanges Enel Generación Shares (or Enel Generación ADSs) for a combination of cash and Enel Chile Shares (or Enel Chile ADSs). Notwithstanding the fact that the U.S. Offer is a cash tender offer subject to the Enel Chile U.S. Share/ADS Subscription Condition, the following discussion assumes, for U.S. federal income tax purposes only, that a U.S. Holder of Enel Generación Shares (or Enel Generación ADSs) that tenders Enel Generación Shares (or Enel Generación ADSs) in the U.S. Offer would be considered to have done so in exchange for a combination of cash and Enel Chile Shares (or Enel Chile ADSs).

The receipt of Enel Chile Shares or Enel Chile ADSs and cash pursuant to the U.S. Offer will be a taxable transaction for U.S. federal income tax purposes to U.S. Holders.

A U.S. Holder who receives Enel Chile Shares or Enel Chile ADSs and cash pursuant to the U.S. Offer will generally recognize gain or loss equal to the difference between such U.S. Holder’s amount realized and such U.S. Holder’s tax basis for the Enel Generación Shares (or Enel Generación ADSs) tendered. If a Chilean tax is withheld on such disposition, a U.S. Holder’s amount realized will include the gross amount of the proceeds of the disposition before deduction of the Chilean tax, and so will equal the sum of the amount of cash received (or deemed received) and the fair market value of the Enel Chile Shares or Enel Chile ADSs received (or deemed received) in exchange for the Enel Generación Shares (or Enel Generación ADSs) tendered by such U.S. Holder, including any amount withheld in respect of Chilean withholding (see “Material Chilean Tax Consequences—Chilean Tax Consequences of Ownership of Enel Chile Shares or Enel Chile ADSs by Foreign Holders—Taxation on Capital Gains” below for more information on Chilean withholding taxes). That gain or loss generally will constitute capital gain or loss. The deductibility of capital losses is subject to limitations. See “Material United States Tax Consequences” for a more complete discussion of certain U.S. federal income tax consequences of the U.S. Offer.

 

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Q: If I tender my Enel Generación Securities in the U.S. Offer, how will my rights as a shareholder or ADS holder change?

 

A: If the U.S. Offer is consummated, you will receive either Enel Chile Shares or Enel Chile ADSs, as the case may be, upon satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition of the U.S. Offer. Therefore, you will be entitled to certain rights as a shareholder or ADS holder of Enel Chile that are different from your rights as a shareholder or ADS holder of Enel Generación. See “Special Factors—Plans for Enel Generación Following the Offers; Management and Operations after the Offers,” “Special Factors—Certain Effects of the Offers and the Merger” and “Comparison of the Rights of Shareholders of Enel Chile and Enel Generación.”

 

Q: How will consummation of the Offers affect untendered Enel Generación Shares and Enel Generación ADSs? Will Enel Generación be delisted or deregistered in the U.S. and in Chile following the completion of the Offers?

 

A: If you do not tender your Enel Generación Shares and/or Enel Generación ADSs in the Offers, you will remain a holder of Enel Generación Shares and/or Enel Generación ADSs, as the case may be. Once the Offers are completed, the number of Enel Generación Shares and Enel Generación ADSs that are publicly held may be significantly reduced and there may no longer be an active trading market for Enel Generación Shares or Enel Generación ADSs or the liquidity of any such market may be significantly reduced. If Enel Generación Shares lose the “sufficient stock market liquidity” (presencia bursátil) status (as defined in “Material Chilean Tax Consequences—Material Chilean Tax Consequences of the U.S. Offer to Foreign Holders—The U.S. Offer”) in the Chilean Stock Exchanges, certain holders of Enel Generación Shares would lose a capital gains tax exemption under Chilean law.

It is possible that the Enel Generación Shares and Enel Generación ADSs will fail to meet the criteria for continued listing on Chilean Stock Exchanges and the NYSE after the completion of the Offers. If this were to happen, the Enel Generación Shares or Enel Generación ADSs could be delisted from one or more of these exchanges by action taken by the relevant exchange. In addition, we may decide to cause Enel Generación to delist from the NYSE, terminate the deposit agreement for the Enel Generación ADSs and deregister the Enel Generación Shares and the Enel Generación ADSs under the Exchange Act, which will suspend Enel Generación’s obligation to file reports under the Exchange Act. The decision would depend on, among other factors, the results of the Offers and on our management’s evaluation of the public float, trading volumes and liquidity of the Enel Generación ADSs after completion of the Offers. In the event Enel Generación Securities are delisted, the value of any Enel Generación Securities not tendered in the Offers could decrease to a price per share significantly less than the consideration offered in the Offers.

In addition, AFPs may no longer be able to invest in Enel Generación at the levels permitted under Title XII of DL 3,500 following the Offers because Enel Generación will no longer be subject to Title XII of DL 3,500 due to the condition of the Offers that requires the removal of the 65% stock ownership limit applicable to any shareholder that was included in Enel Generación’s bylaws in accordance with Title XII of DL 3,500 and other related restrictions. As a result, AFPs who have not tendered their Enel Generación Shares in the Offers may be required to divest some of their Enel Generación Shares if they are above the permitted level and the liquidity of Enel Generación Securities may be further reduced and the value of Enel Generación Securities not tendered in the Offers could further decrease.

See “Summary—Conditions of the Offers,” “Special Factors—Plans for Enel Generación Following the Offers; Management and Operations after the Offers,” “Special Factors—Certain Effects of the Offers and the Merger” and “Risk Factors—Risks Related to the Offers—Those holders who do not tender their Enel Generación Securities in the Offers will continue to be minority shareholders and ADS holders of Enel Generación. The value of any Enel Generación Securities not tendered in the Offers could decrease, and there may not be a liquid market for the Enel Generación Securities following the completion of the Offers.”

 

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Q. What are Enel Chile ADSs?

 

A. An Enel Chile ADS is an American Depositary Share which represents 50 Enel Chile Shares. The Enel Chile ADSs will be issued under the terms of a deposit agreement to allow U.S. shareholders to more easily hold and trade interests in Enel Chile after the consummation of the Offers. Citibank, N.A. is the depositary for the Enel Chile ADSs and will issue the Enel Chile ADSs to you and hold the Enel Chile Shares represented by the Enel Chile ADSs on your behalf in a custodial account in Chile. ADSs may be evidenced by ADRs. ADRs are like stock certificates which evidence shares represented by ADSs.

 

Q. Are Enel Chile Shares traded on any stock exchange?

 

A. Yes. Enel Chile Shares are traded on the Chilean Stock Exchanges under the symbol “ENELCHILE.”

 

Q. Are Enel Chile ADSs traded on any stock exchange?

 

A. Yes. Enel Chile ADSs are listed and traded on the NYSE under the symbol “ENIC.” Enel Chile ADSs are also actively traded over-the-counter outside the NYSE.

 

Q. What is the market value of my Enel Generación Shares and/or Enel Generación ADSs as of a recent date?

 

A. On November 28, 2017, the closing price of Enel Generación Shares reported on the Santiago Stock Exchange was Ch$538.39 per Enel Generación Share and the closing price of Enel Generación ADSs reported on the NYSE was US$25.31 per Enel Generación ADS. We advise you to obtain a more recent quotation for Enel Generación Shares and/or Enel Generación ADSs in deciding whether to tender your Enel Generación Shares and/or Enel Generación ADSs. See “Comparative Market Price Data.”

 

Q. Who can help answer my questions about the U.S. Offer?

 

A. If you have any questions about the U.S. Offer, or if you would like additional copies of this prospectus, you can contact the Georgeson LLC (the “Information Agent”) below:

E-mail: enelchile@georgeson.com

Telephone: +1-781-575-2137 (International)

Telephone (U.S. toll free): 866-216-0459 

 

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WHERE YOU CAN FIND MORE INFORMATION

Enel Chile and Enel Generación file annual and current reports and other information with the U.S. Securities and Exchange Commission (the “SEC”) and these filings are available to the public from the SEC’s web site at www.sec.gov. You may also read and copy any document filed by the companies at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain copies of any document filed by the companies at prescribed rates by writing to the Public Reference Section of the SEC at that address. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.

Information about Enel Chile and Enel Generación, including their SEC filings, is also available on their respective websites at www.enelchile.cl and www.enelgeneracion.cl. Each of Enel Chile and Enel Generación is an issuer in Chile of securities registered with the SVS. Shares of Enel Chile and Enel Generación common stock are traded on the Chilean Stock Exchanges under the symbols “ENELCHILE” and “ENELGXCH”, respectively. Accordingly, each of Enel Chile and Enel Generación is currently required to file quarterly and annual reports and issue hechos esenciales o relevantes (notices of essential or significant events) to the SVS, and provide copies of such notices to the Chilean Stock Exchanges. Such notices are in Spanish and available at www.enelchile.cl and www.enelgeneracion.cl, as applicable, and also at www.svs.cl. English translations of such reports and notices are also furnished to the SEC (www.sec.gov) on Forms 6-K promptly following a public SVS filing. Unless otherwise specifically designated as incorporated by reference, these Forms 6-K furnished to the SEC are not incorporated by reference in accordance with SEC rules. Except as otherwise specifically provided, information contained on and linked from the websites of Enel Chile and Enel Generación or the SVS website is not incorporated by reference into this prospectus.

 

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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

This prospectus is “incorporating by reference” specified documents that filed with the SEC, which means:

 

    incorporated documents are considered part of this prospectus;

 

    Enel Chile is disclosing important information to you by referring you to those documents; and

 

    information contained in documents that Enel Chile or Enel Generación files in the future with the SEC automatically will update and supersede earlier information contained in or incorporated by reference into this prospectus (any information so updated or superseded will not constitute a part of this prospectus, except as so updated or superseded).

Because the U.S. Offer is a “going private” transaction under Rule 13e-3 under the Exchange Act, the Enel Filing Persons have filed a combined Schedule TO and Schedule 13E-3 with the SEC pursuant to Rule 14d-3 under the Exchange Act. The Schedule TO and Schedule 13E-3, including the exhibits and any amendments and supplements thereto, may be examined, and copies may be obtained, at the same places and in the same manner set forth below.

This prospectus incorporates by reference the documents listed below and any future Annual Reports on Form 20-F and Reports on Form 6-K (to the extent designated in the Form 6-K as being filed and incorporated by reference into this prospectus) of Enel Chile or Enel Generación that is filed with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date of this prospectus and prior to the termination of the offering under this prospectus:

 

    The Annual Report on Form 20-F for the year ended December 31, 2016 of Enel Chile (the “Enel Chile 2016 Form 20-F”);

 

    Enel Chile’s Report on Form 6-K filed with the SEC on October 24, 2017 (SEC File No. 001-37723) (the “Enel Chile October 2017 Form 6-K”);

 

    Enel Chile’s Report on Form 6-K filed with the SEC on October 24, 2017 (SEC File No. 001-37723) (the “Enel Chile October 2017 Form 6-K (EGPL)”);

 

    Enel Chile’s Report on Form 6-K filed with the SEC on November 29, 2017 (SEC File No. 001-37723);

 

    The Registration Statement on Form 20-F of Enel Chile, initially filed on March 30, 2016, as amended (SEC File No. 001-37723);

 

    The Annual Report on Form 20-F for the year ended December 31, 2016 of Enel Generación (the “Enel Generación 2016 Form 20-F”);

 

    Enel Generación’s Report on Form 6-K filed with the SEC on October 24, 2017 (SEC File No. 001-13240) (the “Enel Generación October 2017 Form 6-K”); and

 

    Enel Generación’s Report on Form 6-K filed with the SEC on November 29, 2017 (SEC File No. 001-13240).

Except for any Reports on Form 6-K specifically listed or described above, Enel Chile is not incorporating any document or information furnished and not filed in accordance with SEC rules.

In accordance with Chilean laws and regulations, documents, reports and other information relating to the Reorganization have been made publicly available to the shareholders of Enel Chile on Enel Chile’s website at www.enelchile.cl, subsection “Investors,” under the heading “Corporate Reorganization.” Except as otherwise specifically provided, information contained on and linked from the company’s website is not incorporated by reference into this prospectus.

 

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This prospectus incorporates by reference important business and financial information about Enel Chile and Enel Generación that is contained in their filings with the SEC but that is not included in, or delivered with, this prospectus. You can obtain any of the documents incorporated by reference from Enel Chile, Enel Generación or the SEC. Documents incorporated by reference are available without charge, excluding all exhibits unless an exhibit has been specifically incorporated by reference into this prospectus. Shareholders may obtain documents incorporated by reference into this prospectus by requesting them in writing, by telephone or by e-mail from the appropriate company at the following addresses:

 

Enel Chile

  

Enel Generación

Enel Chile S.A.

Attention: Investor Relations

Santa Rosa 76, 15th floor

Santiago, Chile

 

E-mail: ir.enelchile@enel.com

Telephone: +56 2 2353-4400

  

Enel Generación Chile S.A.

Attention: Investor Relations

Santa Rosa 76, 15th floor

Santiago, Chile

 

E-mail: ir.enelgeneracionchile@enel.com

Telephone: +56 2 2630-9000

In order to receive timely delivery of these documents, you must make such a request no later than five business days before the then-scheduled expiration date of the U.S. Offer. This deadline is currently                     , 2018 because the Expiration Date is currently                     , 2018, but the actual deadline will be different if the U.S. Offer is extended.

The documents incorporated by reference into this prospectus are available to the public from the SEC’s web site at www.sec.gov. You may also read and copy any document filed by the companies at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain copies of any document filed by the companies at prescribed rates by writing to the Public Reference Section of the SEC at that address. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.

 

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PRESENTATION OF INFORMATION

Financial Information

In this prospectus, unless otherwise specified, references to “U.S. dollars,” “USD” or “US$,” are to dollars of the United States of America; references to “pesos,” “CLP” or “Ch$” are to Chilean pesos, the legal currency of Chile; and references to “UF” are to Development Units (Unidades de Fomento). The UF is a Chilean inflation-indexed, peso-denominated monetary unit that is adjusted daily to reflect changes in the official Consumer Price Index (“CPI”) of the Chilean National Institute of Statistics (Instituto Nacional de Estadísticas or “INE”). The UF is adjusted in monthly cycles. Each day in the period beginning on the tenth day of the current month through the ninth day of the succeeding month, the nominal peso value of the UF is indexed in order to reflect a proportionate amount of the change in the Chilean CPI during the prior calendar month. As of June 30, 2017, one UF was equivalent to Ch$26,665.09. The U.S. dollar equivalent of one UF was US$40.14 on June 30, 2017, using the Observed Exchange Rate reported by the Central Bank of Chile (Banco Central de Chile) as of such date of Ch$664.29 per US$1.00. The U.S. dollar observed exchange rate (dólar observado) (the “Observed Exchange Rate”), which is reported by the Central Bank of Chile and published daily on its webpage, is the weighted average exchange rate of the previous business day’s transactions in the Formal Exchange Market. The Central Bank of Chile may intervene by buying or selling foreign currency on the Formal Exchange Market to maintain the Observed Exchange Rate within a desired range.

The consolidated financial statements, and, unless otherwise indicated, other financial information concerning Enel Chile and Enel Generación included in or incorporated by reference into this prospectus are presented in Chilean pesos. Enel Chile and Enel Generación have prepared their consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

All of Enel Chile’s and Enel Generación’s subsidiaries are consolidated and all their assets, liabilities, income, expenses and cash flows are included in the consolidated financial statements after making the adjustments and eliminations related to intra-group transactions. Affiliates are investments in associates and joint ventures that are recorded in our consolidated financial statements using the equity method. For detailed information regarding consolidated entities, affiliates, jointly-controlled entities and associated companies, see Appendices 1, 2 and 3 to (i) the Enel Chile consolidated financial statements included in the Enel Chile 2016 Form 20-F and the Enel Chile October 2017 Form 6-K, each incorporated by reference into this prospectus and (ii) the Enel Generación consolidated financial statements included in the Enel Generación 2016 Form 20-F and the Enel Generación October 2017 Form 6-K, each incorporated by reference into this prospectus.

Solely for the convenience of the reader, this prospectus contains translations of certain Chilean peso amounts into U.S. dollars at specified rates. Unless otherwise indicated, the U.S. dollar equivalent for information in Chilean pesos is based on the Observed Exchange Rate for June 30, 2017 of Ch$664.29 per US$1.00. The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos. No representation is made that the Chilean peso or U.S. dollar amounts shown in this prospectus could have been or could be converted into U.S. dollars or Chilean pesos, as the case may be, at such rate or at any other rate.

Earnings before interest, taxes, depreciation and amortization (EBITDA) is net income plus depreciation and amortization, financial expense and income taxes.

Technical Terms

References to “TW” are to terawatts (or a trillion watts); references to “GW” and “GWh” are to gigawatts (or a billion watts) and gigawatt hours, respectively; references to “MW” and “MWh” are to megawatts (or a million watts) and megawatt hours, respectively; references to “kW” and “kWh” are to kilowatts (or a thousand watts) and kilowatt hours, respectively; references to “kV” are to kilovolts, and references to “MVA” are to

 

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megavolt amperes. References to “BTU” and “MBTU” are to British thermal unit and million British thermal units, respectively. A “BTU” is an energy unit equal to approximately 1,055 joules. References to “Hz” are to hertz; and references to “mtpa” are to metric tons per annum. Unless otherwise indicated, statistics provided in this prospectus with respect to the installed capacity of electricity generation facilities are expressed in MW. One TW equals 1,000 GW, one GW equals 1,000 MW and one MW equals 1,000 kW.

Statistics relating to aggregate annual electricity production are expressed in GWh and based on a year of 8,760 hours, except for leap years, which are based on 8,784 hours. Statistics relating to installed capacity and production of the electricity industry do not include electricity of self-generators.

Energy losses experienced by generation companies during transmission are calculated by subtracting the number of GWh of energy sold from the number of GWh of energy generated (excluding their own energy consumption and losses on the part of the power plant), within a given period. Losses are expressed as a percentage of total energy generated.

Calculation of Economic Interest

References are made in this prospectus to the “economic interest” of Enel Chile and Enel Generación in their related companies. A company could have direct and indirect ownership interest in such related companies. In circumstances where the company does not directly own an interest in a related company, this economic interest in such ultimate related company is calculated by multiplying the percentage of economic interest in a directly held related company by the percentage of economic interest of any entity in the ownership chain of such related company. For example, if Enel Chile owns a 6% equity stake in an associated company and 40% is directly held by Enel Chile’s 60% owned subsidiary, Enel Chile’s economic interest in such associate would be 60% times 40%, plus 6%, or 30%.

Rounding

Certain figures included in this prospectus have been rounded for ease of presentation. Because of this rounding, it is possible that amounts in tables may not add up to exactly the same amounts as the sum of the entries.

 

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SUMMARY

This summary highlights certain information contained in this prospectus. It does not contain all of the information that is important to you. You should carefully read the entire prospectus and the other documents referred to or incorporated by reference into this prospectus to fully understand the U.S. Offer. In particular, you should read the documents incorporated by reference into this prospectus, including the Enel Chile 2016 Form 20-F, Enel Generación 2016 Form 20-F, Enel Chile October 2017 Form 6-K and Enel Generación October 2017 Form 6-K. You may obtain the information incorporated by reference into this prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” and “Incorporation of Certain Information by Reference.”

Introduction

Enel Chile S.A., a publicly held stock corporation (sociedad anónima abierta) organized under the laws of the Republic of Chile, is offering to purchase (i) all outstanding shares of common stock, without par value, of Enel Generación Chile S.A., a publicly held stock corporation (sociedad anónima abierta) organized under the laws of the Republic of Chile, other than Enel Generación Shares currently owned by Enel Chile, held by all U.S. Persons (as defined herein) for an amount of Ch$590 in cash, without interest, payable in U.S. dollars, net of applicable withholding taxes and distribution fees for each Enel Generación Share; and (ii) all outstanding Enel Generación ADSs from all holders of Enel Generación ADSs, wherever located, for an amount of Ch$17,700 in cash, without interest, payable in U.S. dollars, net of applicable withholding taxes and distribution fees for each Enel Generación ADS, in each case upon the terms and subject to certain conditions described in this prospectus (including the Enel Chile U.S. Share/ADS Subscription Condition) and in the Form of Acceptance, the ADS Letter of Transmittal, the Share Subscription Agreement and the ADS Subscription Agreement (which together, as they may be amended or supplemented from time to time, constitute the “U.S. Offer”).

In connection with the Offers, Enel Chile is expected to conduct the Capital Increase to obtain the new Enel Chile Shares to be issued in connection with the Offers to satisfy the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition. Following consummation of the Offers, EGPL will merge with and into Enel Chile, with Enel Chile as the surviving company.

The Companies

Enel Chile S.A.

Santa Rosa 76

Santiago, Chile

Telephone: +56 2 2353-4400

www.enelchile.cl

Enel Chile is a publicly held stock corporation (sociedad anónima abierta) organized on March 1, 2016 under the laws of the Republic of Chile that traces its origins to Enersis S.A. (currently known as Enel Américas S.A.). Enel Chile was spun off from Enersis S.A. on April 21, 2016 and currently owns and operates Enersis S.A.’s former electricity generation and distribution businesses in Chile, including Enel Generación, independently from Enel Américas S.A.

Enel Chile is an electricity utility company engaged, through subsidiaries and affiliates, in the electricity generation and distribution businesses in Chile. As of December 31, 2016, Enel Chile had 6,351 MW of installed capacity and 1.8 million distribution customers. Enel Chile’s installed capacity is comprised of 28 generation facilities and a total of 111 generation units, of which 54.6% consists of hydroelectric power plants.

 



 

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For additional information regarding Enel Chile, see the documents listed under “Incorporation by Reference,” including the Enel Chile 2016 Form 20-F and the Enel Chile October 2017 Form 6-K, which are incorporated by reference into this prospectus.

Enel Generación Chile S.A.

Santa Rosa 76

Santiago, Chile

Telephone: +56 2 2630-9000

www.enelgeneracion.cl

Enel Generación is a publicly held stock corporation (sociedad anónima abierta) that was organized on December 1, 1943 under the laws of the Republic of Chile and was formerly known as Empresa Nacional de Electricidad S.A., or Endesa Chile. Empresa Nacional de Electricidad S.A. spun-off Endesa Américas S.A. on April 21, 2016, then holding its electricity generation business in Argentina, Colombia and Peru, as well as its minority interests in electricity generation, distribution and transmission operations in Brazil, and subsequently changed its name to Enel Generación Chile S.A.

Enel Generación is an electricity utility company engaged, directly and through subsidiaries and affiliates, in the electricity generation business in Chile. As of December 31, 2016, Enel Generación had 6,351 MW of installed capacity, with 28 generation facilities and a total of 111 generation units. Of Enel Generación’s total installed capacity, 54.6% consists of hydroelectric power plants and 77% of Enel Generación’s thermoelectric installed capacity is gas/fuel oil power plants, and the remaining 23% is coal-fired steam power plants.

For additional information regarding Enel Generación, see the documents listed under “Incorporation by Reference,” including the Enel Generación 2016 Form 20-F and the Enel Generación October 2017 Form 6-K, which are incorporated by reference into this prospectus.

Enel Green Power Latin América S.A.

Avenida Presidente Riesco 5335, 15th Floor

Las Condes

Santiago, Chile

Telephone: +56 2 2899-9200

EGPL is a closely held stock corporation (sociedad anónima cerrada) organized under the laws of the Republic of Chile, and is indirectly wholly owned by Enel, the parent company of Enel group. Enel develops its renewable energy business and holds its renewable energy assets located in Chile primarily through EGPL.

EGPL is a renewable energy generation holding company engaged, through its wholly owned subsidiary Enel Green Power Chile Ltda. (“EGP Chile”), in the electricity generation business in Chile. As of December 31, 2016, EGPL had 1,036 MW of installed capacity from 16 solar, wind, hydro and geothermal generation facilities. Of EGPL’s installed capacity as of such date, 47.5% consisted of solar power plants, 43.6% consisted of wind power plants, and 8.9% consisted of hydro and geothermal power plants.

EGPL currently has 18 operational power plants with a total installed capacity of 1,196 MW consisting of 92 MW of hydroelectric power, 564 MW of wind power, 492 MW of solar power, and 48 MW of geothermal power. However, the 112 MW Sierra Gorda Este wind farm and the 48 MW Cerro Pabellón geothermal plant have not officially started commercial operations and are selling electricity on a test basis.

For additional information regarding EGPL, see “EGPL Selected Financial Data,” “Information About the Companies—EGPL,” Annex B to this prospectus and the Enel Chile October 2017 Form 6-K (EGPL), which is incorporated by reference into this prospectus.

 



 

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The Reorganization

Enel Chile is proposing to conduct the Reorganization, which involves the following transactions:

 

    the Offers;

 

    the Capital Increase in order to have a sufficient number of Enel Chile Shares available to issue to tendering holders of Enel Generación Securities in satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition in the Offers; and

 

    the Merger of EGPL with Enel Chile.

Under Chilean law, the Reorganization is deemed to be a related party transaction, subject to the statutory requirements and protections of the Chilean Corporations Act. See “Special Factors—Background of the Offers.”

The Offers

In the U.S. Offer, Enel Chile will pay:

 

    for each Enel Generación ADS, Ch$17,700 in cash, without interest, payable in U.S. dollars, net of applicable withholding taxes and distribution fees, subject to the Enel Chile U.S. Share/ADS Subscription Condition described below; and

 

    for each Enel Generación Share, Ch$590 in cash, without interest, payable in U.S. dollars, net of applicable withholding taxes and distribution fees, subject to the Enel Chile U.S. Share/ADS Subscription Condition described below.

The U.S. Offer is subject to the condition that any eligible holder of Enel Generación Shares and/or Enel Generación ADSs validly tendering Enel Generación Shares and/or Enel Generación ADSs in the U.S. Offer shall have agreed to apply Ch$236 of the consideration payable for each Enel Generación Share tendered and Ch$7,080 of the consideration payable for each Enel Generación ADS tendered to subscribe for Enel Chile Shares or Enel Chile ADSs, as the case may be, at a subscription price of Ch$82 per Enel Chile Share (or Ch$4,100 per Enel Chile ADS) (the “Enel Chile U.S. Share/ADS Subscription Condition”). Following completion of the U.S. Offer, for each Enel Generación Share validly tendered in the U.S. Offer, an Enel Generación shareholder will receive Ch$354 in cash, without interest, payable in U.S. dollars net of applicable withholding taxes and distribution fees, and 2.87805 Enel Chile Shares as a result of its satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition. Following completion of the U.S. Offer, for each Enel Generación ADS validly tendered in the U.S. Offer, an Enel Generación ADS holder will receive Ch$10,620 in cash, without interest, payable in U.S. dollars net of applicable withholding taxes and distribution fees, and 1.72683 Enel Chile ADSs as a result of its satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition.

Through the concurrent Chilean Offer, Enel Chile is offering to purchase any and all of the outstanding Enel Generación Shares, other than Enel Generación Shares currently owned by Enel Chile but including Enel Generación Shares held by U.S. Persons, at the purchase price of Ch$590 in cash for each Enel Generación Share. The Chilean Offer is subject to the condition that any eligible holder of Enel Generación Shares tendering in the Chilean Offer shall have agreed to apply Ch$236 of the consideration payable for each Enel Generación Share tendered to subscribe for Enel Chile Shares at a subscription price of Ch$82 per Enel Chile Share (the “Enel Chile Share Subscription Condition”). As a result, following completion of the Chilean Offer, for each Enel Generación Share purchased, an Enel Generación shareholder will receive Ch$354 in cash and 2.87805 Enel Chile Shares as a result of its satisfaction of the Enel Chile Share Subscription Condition.

The U.S. Offer and the Chilean Offer are being conducted simultaneously and, in all material respects, have the same terms and are subject to the same conditions; however, participants in the Chilean Offer (including U.S.

 



 

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Persons) may not be granted the protection of the Exchange Act. See “The Offers—Terms of the U.S. Offer and Expiration Date—Differences Between Chilean and U.S. Tender Offer Laws.”

The Capital Increase

As part of the Reorganization, Enel Chile is seeking to conduct the Capital Increase, in part, to obtain Enel Chile Shares to be issued in connection with the Offers to satisfy the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition. The Capital Increase is subject to approval by the affirmative vote of two-thirds of the outstanding voting shares of Enel Chile at the ESM of Enel Chile scheduled to be held on December 20, 2017.

Under Chilean law, existing shareholders of a company have preemptive rights to subscribe for additional shares issued by means of a capital increase pro rata in proportion to their interest in the company (“preemptive rights”). Also under Chilean law, a preemptive rights offering is conducted for a 30-calendar day period following the publication by the company of a notice in a newspaper with national coverage of the commencement of the preemptive rights offering period with respect to the newly issued shares. In the Reorganization, the existing holders of Enel Chile Shares (including Enel) will have preemptive rights to subscribe for additional Enel Chile Shares pro rata in connection with the newly issued Enel Chile Shares, other than the Enel Chile Shares to be issued in connection with the Merger. In addition, Enel Chile Shares underlying Enel Chile ADSs will have preemptive rights to subscribe for additional Enel Chile Shares pro rata. Any existing holders of Enel Chile Shares that have preemptive rights in connection with the Capital Increase will be able to exercise such preemptive rights only by paying cash for the newly issued Enel Chile Shares. See “The Capital Increase.”

The Merger

If the Offers are consummated and the Merger is approved by the shareholders of Enel Chile and EGPL, EGPL will merge with and into Enel Chile. Enel Chile will be the surviving corporation under the name “Enel Chile S.A.,” and EGPL will cease to exist as a separate entity. The terms and conditions of the Merger are expected to be determined by the respective Boards of Directors of Enel Chile and EGPL, subject to shareholder approval, at the time the terms and conditions to the Offers and the Capital Increase are determined. See “The Merger.”

Shareholder Approvals

The following are the matters to be approved by the shareholders of Enel Chile, Enel Generación and EGPL at their respective ESMs scheduled to be held on December 20, 2017:

 

    Enel Chile: Approval of (i) the Reorganization as a related party transaction under Chilean law; (ii) the Merger, (iii) the Capital Increase and (iv) the amendments to Enel Chile’s bylaws, each of which requires the affirmative vote of two-thirds of the outstanding voting shares of Enel Chile.

 

   

Enel Generación: Approval of the amendments to Enel Generación’s bylaws to, among other things, remove the 65% ownership limitation applicable to any shareholder of Enel Generación, which requires the affirmative vote of 75% of the outstanding voting shares of Enel Generación. (Note that shareholder approval of the Reorganization as a related party transaction is not necessary because under Chilean law, a related party transaction may be approved either (i) by the unanimous approval of the directors of Enel Generación that do not have an interest in the Reorganization, or (ii) in the absence of such unanimous approval described in clause (i), by the shareholders of Enel Generación at an ESM with the approval of two-thirds of the outstanding voting shares. The Board of Directors of Enel Generación (including both non-interested directors) unanimously approved the Reorganization

 



 

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(including the Offers) as a related party transaction on November 14, 2017). See “Special Factors—Background of the Offers.”

 

    EGPL: Approval of (i) the Reorganization as a related party transaction under Chilean law, and (ii) the Merger, each of which will be approved by Enel as the sole shareholder of EGPL.

Tentative Transaction Timetable

Below is a tentative transaction timetable for the Reorganization. There may be significant changes depending on developments and all future dates are all subject to change.

 

Date

  

Action(s)

August 25-28, 2017

   The Board of Directors of Enel Chile and Enel Generación authorized their respective companies to analyze the proposed Reorganization.

September 20, 2017

   The Board of Directors of EGPL authorized the company to analyze the proposed Reorganization.

October 13, 2017

   SVS confirmed that the SVS would not object if the Offers in Chile is conducted as a cash tender offer subject to the Enel Chile Share Subscription Condition.

October 24, 2017

   EGPL is converted from a limited liability company (sociedad de responsibilidad limitada) into a closely held stock corporation (sociedad anónima cerrada).

October 24, 2017

   Chilean Superintendence of Pensions (Superintendencia de Pensiones) confirmed that the AFPs, as shareholders of Enel Generación, may agree to apply part of the consideration payable for each Enel Generación Share tendered to subscribe for Enel Chile Shares, subject to compliance with simultaneous delivery versus payment requirements set forth in the Compendium of Rules of the Pension System and standard share exchange procedures applicable to AFPs.

November 3, 2017

   Delivery of interim Chilean financial statements of Enel Chile, Enel Generación and EGPL as of and for the nine months ended September 30, 2017 (i.e., within 90 days before the date of the shareholders’ meeting to approve the Merger, as required under Chilean law).

November 3, 2017

   Delivery of (i) appraisals by independent appraisers to Enel Chile and EGPL, and (ii) reports by independent evaluators to Enel Chile and Enel Generación.

November 9, 2017

   Delivery of the opinions of the Directors’ Committees of Enel Chile and Enel Generación required under Chilean law.

November 14, 2017

   Delivery of the opinions of the individual directors of Enel Chile and Enel Generación with respect to the Reorganization.

November 14, 2017

   Delivery of the supplementary opinion of the Directors’ Committee of Enel Generación required under Chilean law.

November 14, 2017

   The Boards of Directors of Enel Chile and EGPL unanimously approved, among other matters, the actions relating to the Reorganization and the summoning of ESMs of the respective companies to approve, among other matters, the Reorganization as a related party transaction and the Merger.

November 14, 2017

   The members of the Board of Directors of Enel Generación without any interest in the Reorganization unanimously approved the Reorganization as a related party transaction, and the Board of Directors of Enel Generación unanimously approved, among other matters, the summoning of the ESM to inform the shareholders about the Reorganization and to approve the amendments to the bylaws of Enel Generación.

November 14, 2017

   Public notice of Enel Chile, Enel Generación and EGPL Board actions.

November 14, 2017

   Public notice of the agenda of the ESMs to shareholders of Enel Chile and Enel Generación.

 



 

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Date

  

Action(s)

November 29, 2017

   Mailing of information statements with respect to the ESMs of Enel Chile and Enel Generación to the holders of Enel Chile ADSs and Enel Generación ADSs.

December 15, 2017

   Voting cut-off date for Enel Chile ADSs and Enel Generación ADSs (3 business days prior to the ESMs).

December 20, 2017

   The ESMs of Enel Chile, Enel Generación and EGPL held.

December 21, 2017

   Beginning of exercise period for statutory merger dissenters’ withdrawal rights in connection with the Merger for Enel Chile and EGPL shareholders.

January 19, 2018

   Expiration of the exercise period for statutory merger dissenters’ withdrawal rights in connection with the Merger for Enel Chile and EGPL shareholders (30 calendar days from approval of the Merger at the ESMs).

Early/Mid February 2018

   Registration with the SVS and the Chilean Stock Exchanges of the new Enel Chile Shares to be issued in connection with the Capital Increase.

Mid/Late February 2018

   Commencement of preemptive rights offering in connection with the Capital Increase.

Mid/Late February 2018

   Launch of the Offers in Chile and the United States.

Mid/Late March 2018

   Expiration of the preemptive rights offering period in connection with the Capital Increase (30 calendar days from launch).

Mid/Late March 2018

   Expiration of the tender offer period (minimum of 30 calendar days from launch of the Offers) in Chile and in the United States.

Mid/Late March 2018

   Publication of the notice of the results of the Offers (aviso de resultado) and acceptance of tendered Enel Generación Securities (three calendar days after expiration of the Offers) and effectiveness of Enel Generación bylaw amendments.

Early April 2018

   Reorganization effective.

Reasons for the Reorganization

The Offers are part of a proposed Reorganization which seeks to consolidate Enel’s conventional and non-conventional renewable energy businesses in Chile under one company. Enel Chile is undertaking the Offers with the goal to increase its ownership interest in Enel Generación from its current participation of 60% to one exceeding 75%. See “Special Factors—Background of the Offers” and “Special Factors—Reasons for the Reorganization.”

The completion of the Reorganization is expected to provide Enel Chile with the following principal benefits:

 

    Higher market capitalization and liquidity, as a result of the combination of Enel Chile with EGPL.

 

    Higher and more diversified organic growth through the integration of Chilean renewable activities in Chile currently owned by EGPL, giving Enel Chile shareholders access to a more balanced energy portfolio based on both conventional and non-conventional renewable energy, as well as electricity distribution.

 

    A significantly higher equity stake in Enel Generación, Enel Chile’s principal subsidiary, from its current interest of 60% to an interest exceeding 75%.

 

    Higher share of Enel Generación’s income and a simpler and clearer overall structure aligned with shareholder interests.

 

    Potential reduction of the holding company discount.

See also “Position of Enel Chile and Enel as to the Fairness of the Reorganization.”

 



 

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Conditions of the Offers

The launch of the Offers will be subject to the satisfaction of the following conditions:

 

    the shareholders of Enel Chile and EGPL have approved the Merger at their respective ESMs, subject to the conditions precedent applicable to the Merger;

 

    the shareholders of Enel Generación have approved at its ESM the proposed amendments to the Enel Generación Bylaws (estatutos) to remove the limitations and restrictions set forth under Title XII of DL 3,500, including among other things, the 65% stock ownership limit applicable to any shareholder and any other related restrictions, even if the effectiveness of such bylaw amendments (which is subject to the satisfaction of its own applicable conditions precedent) has not yet occurred; and

 

    registration of the new Enel Chile Shares to be issued in connection with the Capital Increase and the Offers with the SVS and the Chilean Stock Exchanges.

The Offers will be subject to the satisfaction or waiver of the following conditions on or before the expiration of the Offers:

 

    the valid tender in the Offers of a total number of Enel Generación Securities such that Enel Chile would hold a more than 75% interest in Enel Generación following the consummation of the Offers, including the satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition in the case of the U.S. Offer and the Enel Chile Share Subscription Condition and the Enel Chile Share Subscription Condition in the case of the Chilean Offer (Note that as of the date of this prospectus, Enel Chile has not determined under what circumstances it may waive the condition that its ownership interest in Enel Generación must exceed 75% after completion of the Offers);

 

    Enel Chile has available for issuance the necessary number of newly issued Enel Chile Shares following the expiration of the preemptive right period in the Capital Increase to permit the subscription of Enel Chile Securities required to satisfy the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition (Note that as a practical matter, if holders of Enel Chile Shares exercise preemptive rights and subscribe for new Enel Chile Shares in excess of the limit required in order to have a sufficient number of Enel Chile Shares available to issue to tendering holders of Enel Generación Securities in satisfaction of the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition (between approximately 3.5 billion and 9.4 billion new Enel Chile Shares, assuming that Enel Chile acquires Enel Generación Shares and ADSs such that its ownership of Enel Generación after completion of the Offers would be between more than 75% and 100%), this condition cannot be satisfied);

 

    Enel does not cease to be at any time the controlling shareholder of Enel Chile and maintains at all times, more than 50.1% of the voting capital in Enel Chile;

 

    the absence of any legal proceeding or action seeking to: (i) prohibit or materially prevent the Merger between Enel Chile and EGPL; (ii) impose material limitations on Enel Chile’s ability to effectively exercise its property rights over the assets of EGPL to be assigned to Enel Chile as a consequence of the Merger; (iii) impose limitations on Enel Chile’s ability to continue developing and operating the projects owned by EGPL; and (iv) in general, any other legal proceeding or action before any regulatory, judicial or administrative authority resulting in any of the consequences indicated in (i) to (iii) above;

 

   

the absence of any legal proceeding or action seeking to (i) prohibit or materially prevent the consummation of the Offers; (ii) impose material limitations on Enel Chile’s ability to effectively acquire the Enel Generación Securities, including any material restriction on the proposed amendments to the Enel Generación bylaws relating to Title XII of DL 3,500; (iii) impose limitations on Enel

 



 

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Chile’s ability to exercise its property rights over the Enel Generación Securities acquired in the Offers, including the right to vote such Enel Generación Securities; and (iv) in general, any other legal proceeding or action before any regulatory, judicial or administrative authority resulting in any of the consequences indicated in (i) to (iii) above; and

 

    the absence of any Material Adverse Effect, which is defined as any event, fact or circumstance resulting in or having a material adverse impact on the business, properties, assets, obligations, results or operations of Enel Generación, which materiality and exclusions shall be objectively determined.

Enel Chile will declare the Offers successful if the conditions above are satisfied or waived.

See also “The Reorganization—Conditions of the Reorganization.”

Fairness of the Reorganization

Enel Chile and Enel Generación

Each of the Boards of Directors of Enel Chile and Enel Generación believe that the Reorganization (including the Offers, as well as the Capital Increase and the Merger) is substantively and procedurally fair to the unaffiliated shareholders of Enel Generación.

In accordance with the requirements of Chilean law, each of the Boards of Directors of Enel Chile and Enel Generación appointed independent evaluators (evaluadores independientes) to evaluate the Reorganization as a related party transaction under Chilean law and provide opinions in accordance with Article 147 of the Chilean Corporations Act. In connection with the Merger and in accordance with the requirements of Chilean law, the respective Boards of Directors of Enel Chile and EGPL each appointed an independent appraiser (perito independiente) to provide a report in accordance with Articles 156 and 168 of the Chilean Corporate Regulations (Reglamento de Sociedades Anónimas) on the valuations of Enel Chile and EGPL and the merger exchange ratio in connection with the Merger, based on interim 2017 financial statements as of and for the nine months ended September 30, 2017.

For purposes of determining whether or not the Reorganization is substantively and procedurally fair to the unaffiliated shareholders of Enel Generación, as required by Rule 13e-3 under the Exchange Act, each of the Boards of Directors of Enel Chile and Enel Generación reviewed and evaluated the terms of the Reorganization based on the opinions and reports delivered by the independent evaluators and independent appraisers.

See “Special Factors—Position of Enel Generación as to the Fairness of the Reorganization; Recommendation” and “Special Factors—Position of Enel Chile and Enel as to the Fairness of the Reorganization.”

Enel

Enel adopted the determination of the Board of Directors of Enel Chile and as such, Enel believes that the Reorganization (including the Offers, as well as the Capital Increase and the Merger) is substantively and procedurally fair to the unaffiliated shareholders of Enel Generación. See “Special Factors—Position of Enel Chile and Enel as to the Fairness of the Reorganization—Position of Enel as to the Fairness of the Reorganization.”

Appraisal/Statutory Dissenters’ Withdrawal Rights

The Chilean Corporations Act does not provide for appraisal rights in connection with the Offers. However, if Enel Chile acquires Enel Generación Shares in the Offers that result in Enel Chile’s ownership exceeding 95%

 



 

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of the outstanding Enel Generación Shares, a minority holder of Enel Generación Shares that did not tender in the Offers may exercise statutory dissenters’ withdrawal rights (derecho a retiro) in accordance with Article 71 bis of the Chilean Corporations Act, and receive from Enel Generación a cash payment equivalent to the weighted average of the closing prices for Enel Generación Shares as reported on the Chilean Stock Exchanges during the 60-trading day period preceding the 30th trading day prior to the date on which the results of the Offers are published by Enel Chile. A holder of Enel Generación ADSs who wishes to exercise statutory dissenters’ withdrawal rights must cancel such holder’s Enel Generación ADSs and must be a registered holder of Enel Generación Shares (i) on the date on which the results of the Offers are published and (ii) continuously until the date the statutory dissenters’ withdrawal rights are exercised. See “The Offers—Procedures for Participating in the U.S. Offer—Appraisal/Statutory Dissenters’ Withdrawal Rights.”

Material U.S. Federal Income Tax Consequences of the U.S. Offer

For U.S. federal income tax purposes, (i) the tender by a U.S. Holder participating in the U.S. Offer of Enel Generación Shares (or Enel Generación ADSs) for only cash and (ii) the subsequent, mandatory subscription by such U.S. Holder for Enel Chile Shares (or Enel Chile ADSs) should be treated as a single transaction in which such U.S. Holder exchanges Enel Generación Shares (or Enel Generación ADSs) for a combination of cash and Enel Chile Shares (or Enel Chile ADSs). Notwithstanding the fact that the U.S. Offer is a cash tender offer subject to the Enel Chile U.S. Share/ADS Subscription Condition, the following discussion assumes, for U.S. federal income tax purposes only, that a U.S. Holder of Enel Generación Shares (or Enel Generación ADSs) that tenders Enel Generación Shares (or Enel Generación ADSs) in the U.S. Offer would be considered to have done so in exchange for a combination of cash and Enel Chile Shares (or Enel Chile ADSs).

The receipt of Enel Chile Shares or Enel Chile ADSs and cash pursuant to the U.S. Offer will be a taxable transaction for U.S. federal income tax purposes to U.S. Holders.

A U.S. Holder who receives Enel Chile Shares or Enel Chile ADSs and cash pursuant to the U.S. Offer will generally recognize gain or loss equal to the difference between such U.S. Holder’s amount realized and such U.S. Holder’s tax basis for the Enel Generación Shares (or Enel Generación ADSs) tendered. If a Chilean tax is withheld on such disposition, a U.S. Holder’s amount realized will include the gross amount of the proceeds of the disposition before deduction of the Chilean tax, and so will equal the sum of the amount of cash received (or deemed received) and the fair market value of the Enel Chile Shares or Enel Chile ADSs received (or deemed received) in exchange for the Enel Generación Shares (or Enel Generación ADSs) tendered by such U.S. Holder, including any amount withheld in respect of Chilean withholding (see “Material Chilean Tax Consequences—Chilean Tax Consequences of Ownership of Enel Chile Shares or Enel Chile ADSs by Foreign Holders—Taxation on Capital Gains” below for more information on Chilean withholding taxes). That gain or loss generally will constitute capital gain or loss. The deductibility of capital losses is subject to limitations. See “Material United States Tax Consequences” for a more complete discussion of certain U.S. federal income tax consequences of the U.S. Offer.

This tax treatment may not apply to all shareholders. Determining the actual tax consequences of the U.S. Offer to you can be complicated. They will depend on your specific situation and on variables not within our control. You should consult your own tax advisor for a full understanding of the tax consequences of the U.S. Offer to you.

Security Ownership by Enel Filing Persons, Enel Generación and their Respective Directors and Officers

As of November 28, 2017, Mr. Raúl Arteaga, the Chief Financial Officer of Enel Generación, and Mr. Bernardo Canales, the Engineering and Construction Officer of Enel Generación, owned 11,603 and 5,181 Enel Generación Shares, respectively. Messrs. Arteaga and Canales both intend to vote their Enel Generación

 



 

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Shares in favor of the Reorganization-related matters and to tender all of their Enel Generación Shares in the Offers.

Except as set forth elsewhere in this prospectus and except with respect to Messrs. Arteaga and Canales, to the best of the knowledge of each of the Enel Filing Persons and Enel Generación, none of Enel, Enel Chile and Enel Generación or any of the persons listed in or incorporated by reference into Annex A to this prospectus, or any majority-owned subsidiary of Enel, Enel Chile or Enel Generación or any of the persons so listed beneficially owns or has a right to acquire any Enel Generación Shares or Enel Generación ADSs.

To the best of the knowledge of each of the Enel Filing Persons and Enel Generación, none of Enel, Enel Chile and Enel Generación or any majority-owned subsidiary of Enel, Enel Chile and Enel Generación has effected any transaction in Enel Generación Shares or Enel Generación ADSs during the past sixty (60) days.

To the best of the knowledge of each of the Enel Filing Persons and Enel Generación, none of the Enel Filing Persons or Enel Generación or any executive officer, director, affiliate or subsidiary of any of the Enel Filing Persons or Enel Generación, other than Messrs. Arteaga and Canales, currently intends to tender or sell Enel Generación Securities that are owned or held by that person in the Offers.

Interests of Certain Persons That are Different from Your Interests

Messrs. Herman Chadwick Piñera, Giulio Fazio, Vincenzo Ranieri, Salvatore Bernabei, Fernán Gazmuri Plaza (a member of the Directors’ Committee of the Board of Directors of Enel Chile) and Pablo Cabrera Gaete (a member of the Directors’ Committee of the Board of Directors of Enel Chile), each a director of Enel Chile elected by Enel as the controlling shareholder, declared that they have an interest in the Reorganization under Article 147 of the Chilean Corporations Act.

Messrs. Giuseppe Conti, Francesco Giorgianni, Mauro Di Carlo, Umberto Magrini, Luca Noviello and Julio Pellegrini Vial (a member of the Directors’ Committee of the Board of Directors of Enel Generación), each a director of Enel Generación elected by Enel Chile as the controlling shareholder, declared that they have an interest in the Reorganization under Article 147 of the Chilean Corporations Act. Mr. Fabrizio Barderi declared that he is an employee of Enel Trade S.p.A., a company affiliated with Enel, and in that circumstance, he had an interest in the Reorganization under Article 147 of the Chilean Corporations Act. Messrs. Di Carlo, Noviello and Magrini also declared that they own shares of Enel.

To the best of the knowledge of each of the Enel Filing Persons and Enel Generación, there are no agreements among the Enel Filing Persons, Enel Generación or any of their respective executive officer or directors on one hand, and any other party on the other, with respect to the Enel Generación Securities.

Ownership of Enel Chile and Enel Generación After the Reorganization

After completion of the Reorganization, Enel Chile is expected to remain a majority owner of Enel Generación. Enel, through its majority ownership in Enel Chile, is expected to remain the majority owner and ultimate parent of Enel Generación.

Assuming Enel Chile’s ownership of Enel Generación ranges between approximately 75% and 100% following the completion of the Offers and no Enel Chile shareholders exercise preemptive rights in the Capital Increase, following the completion of the Reorganization, Enel, which is currently the controlling shareholder of Enel Chile and the sole shareholder of EGPL, is expected to hold an ownership interest in Enel Chile ranging from approximately 65% to 60% and shareholders of Enel Generación that tender in the Offers are expected to hold, in the aggregate, an ownership interest in Enel Chile ranging from approximately 5% to 13%. See “Special Factors—Ownership of Enel Chile and Enel Generación After the Reorganization.”

 



 

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Plans for Enel Generación Following the Offers; Management and Operations After the Offers

Once the Offers are completed, the number of Enel Generación Shares and Enel Generación ADSs that are publicly held may be significantly reduced and there may no longer be an active trading market for Enel Generación Shares or Enel Generación ADSs or the liquidity of any such market may be significantly reduced. If Enel Generación Shares lose the “sufficient stock market liquidity” (presencia bursátil) status (as defined in “Material Chilean Tax Consequences—Material Chilean Tax Consequences of the U.S. Offer to Foreign Holders—The U.S. Offer”) in the Chilean Stock Exchanges, certain holders of Enel Generación Shares would lose a capital gains tax exemption under Chilean law.

It is possible that the Enel Generación Shares and Enel Generación ADSs will fail to meet the criteria for continued listing on Chilean Stock Exchanges and the NYSE after the completion of the Offers. If this were to happen, the Enel Generación Shares or Enel Generación ADSs could be delisted from one or more of these exchanges by action taken by the relevant exchange. In addition, we may decide to cause Enel Generación to delist from the NYSE, terminate the deposit agreement for the Enel Generación ADSs and deregister the Enel Generación Shares and the Enel Generación ADSs under the Exchange Act, which will suspend Enel Generación’s obligation to file reports under the Exchange Act. The decision would depend on, among other factors, the results of the Offers and on our management’s evaluation of the public float, trading volumes and liquidity of the Enel Generación ADSs after completion of the Offers. In the event Enel Generación Securities are delisted, the value of any Enel Generación Securities not tendered in the Offers could decrease to a price per share significantly less than the consideration offered in the Offers. In addition, AFPs may no longer be able to invest in Enel Generación at the levels permitted under Title XII of DL 3,500 following the Offers because Enel Generación will no longer be subject to Title XII of DL 3,500 due to the condition of the Offers that requires the removal of the 65% stock ownership limit applicable to any shareholder that was included in Enel Generación’s bylaws in accordance with Title XII of DL 3,500 and other related restrictions. As a result, AFPs who have not tendered their Enel Generación Shares in the Offers may be required to divest some of their Enel Generación Shares if they are above the permitted level and the liquidity of Enel Generación Securities may be further reduced and the value of Enel Generación Securities not tendered in the Offers could further decrease. See “Risk Factors—Risks Related to the Offers—Those holders who do not tender their Enel Generación Securities in the Offers will continue to be minority shareholders and ADS holders of Enel Generación. The value of any Enel Generación Securities not tendered in the Offers could decrease, and there may not be a liquid market for the Enel Generación Securities following the completion of the Offers.”

Following the completion of the Offers, it is anticipated that Enel Generación will continue to conduct business substantially as it is being conducted, with the members of the Board of Directors and management of Enel Generación continuing in their current roles, subject to the regular election and appointment process of Enel Generación. As of the date of this prospectus, the Enel Filing Persons and Enel Generación have no current plans or proposals, and is not engaged in any negotiations, which relate to or would result in an extraordinary transaction involving the business or management of Enel Generación or any of its subsidiaries, such as a merger, reorganization, liquidation, relocation of any operations, or sale or transfer of a material amount of assets, or the incurrence of any indebtedness, except as described in this prospectus. The Enel Filing Persons and Enel Generación currently do not have any plans to change the dividend policy of Enel Generación following the consummation of the Offers. Following the Offers, the Enel Filing Persons and Enel Generación will continuously evaluate and review the business and operations of Enel Generación and may propose or develop new plans and proposals which it considers to be in the best interests of the Enel Filing Persons, Enel Generación and their respective shareholders, including engaging in acquisitions of new businesses or assets or dispositions of existing businesses or assets, the movement of businesses or assets within the Enel corporate structure, the alteration of the mix of assets held by Enel Generación, changing the board of directors or management of Enel Generación or any of the types of extraordinary transactions described above.

 



 

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Comparative Per Share Market Price Information

On November 28, 2017, the closing prices of Enel Chile Shares and Enel Chile ADSs were Ch$70.67 per Enel Chile Share and US$5.53 per Enel Chile ADS, respectively, and the closing prices of Enel Generación Shares and Enel Generación ADSs were Ch$538.39 per Enel Generación Share and US$25.31 per Enel Generación ADS, respectively. For historical comparative market price data, see “Comparative Market Price Data.”

The market price of Enel Chile Securities and Enel Generación Securities will likely fluctuate prior to the Offers, while the subscription prices for Enel Generación Securities in connection with the Offers will be fixed. You should obtain current stock price quotations for Enel Chile Securities and Enel Generación Securities.

Listing of Enel Chile Shares

Enel Chile Shares, including Enel Chile Shares to be issued in connection with Offers, are listed and traded on the Chilean Stock Exchanges under the trading symbol “ENELCHILE” and Enel Chile ADSs, including Enel Chile ADSs to be issued in connection with Offers, are listed and traded on the NYSE under the trading symbol “ENIC.”

Regulatory Approvals

“Going Private” Transaction

Because we and Enel are affiliates of Enel Generación for the purposes of Rule 13e-3 under the Exchange Act, the U.S. Offer constitutes a “going private” transaction pursuant to Rule 13e-3. Rule 13e-3 requires, among other things, that certain financial information concerning Enel Generación and certain information relating to the fairness of the “going private” transaction be filed with the SEC. We have provided such information in this prospectus, and we and Enel have provided such information in the combined Schedule TO and Schedule 13E-3, together with the exhibits thereto, filed with the SEC pursuant to Rule 14d-3 under the Exchange Act. The Schedule TO and Schedule 13E-3, including the exhibits and any amendments and supplements thereto, may be examined, and copies may be obtained, at the same places and in the same manner set forth in “Incorporation of Certain Information by Reference.”

Statutory Exemption from Certain U.S. Tender Offer Requirements

The Offers are expected to qualify as a “Tier II” offer in accordance with Rule 14d-1(d) under the Exchange Act and will be, as a result, exempt from certain provisions of otherwise applicable U.S. statutes and rules relating to tender offers. U.S. and Chilean law and practice relating to tender offers are inconsistent in a number of ways. We intend to rely on the Tier II exemption from Rule 14e-1(c) on prompt payment and from Rule 14e-1(d) on the procedures for giving notices of any extensions of the length of the U.S. Offer, where we will follow Chilean law and practice.

Antitrust and Regulatory Laws

Under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), certain acquisitions may not be consummated unless certain information has been furnished to the Federal Trade Commission and the Antitrust Division of the Department of Justice and certain waiting period requirements have been satisfied. Because Enel Chile already owns more than 50% of the outstanding voting shares or Enel Generación, Enel Chile believes that the HSR Act is not applicable to the purchase of the Enel Generación Shares and/or the Enel Generación ADSs pursuant to the Offers and that such purchase will not violate such antitrust laws.

 



 

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There are no requirements under Chilean law that the Chilean Antitrust Prosecution Office (Fiscalía Nacional Económica, or the “CAA”) be notified of the Offers or the Merger. The CAA does, however, have broad authority to investigate any intended transaction that the CAA determines is likely to cause an adverse effect on, or lessen, competition. Although it is not anticipated that the CAA will investigate the Offers or the Merger, no assurance can be given that the CAA will not determine that the Offers or the Merger are anticompetitive or are subject to prior review of the CAA.

Accounting Treatment

The Offers will be accounted for as an acquisition by Enel Chile of non-controlling interests in Enel Generación. Enel Chile believes that the accounting treatment of the U.S. Offer is not material to the decision of holders of Enel Generación Shares or Enel Generación ADSs whether to tender their Enel Generación Shares or Enel Generación ADSs into the U.S. Offer because Enel Chile already consolidates Enel Generación’s financial results into its consolidated financial statements.

 



 

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Summary Historical Financial Information

We are providing the following summary financial information to help you analyze certain financial aspects of the Offers. We derived this information from the historical consolidated financial statements of each company. The information should be read together with their respective historical consolidated financial statements and related notes contained in the annual reports and other information that they have filed with the Securities and Exchange Commission. See “Where You Can Find More Information” and “Incorporation of Certain Information by Reference.”

You should also read all of the financial information we provide in the following tables together with the pro forma financial information we provide in this prospectus, which you can find under “Unaudited Pro Forma Consolidated Financial Information.”

Enel Chile

The following summary historical consolidated financial information as of December 31, 2016 and 2015 and for each year in the three-year period ended December 31, 2016 was derived from the audited consolidated financial statements of Enel Chile included in the Enel Chile 2016 Form 20-F, which is incorporated by reference into this prospectus. The summary historical consolidated financial information as of December 31, 2014 and 2013 and for each year in the two-year period ended December 31, 2014 was derived from audited consolidated financial statements of Enel Chile not included or incorporated by reference into this prospectus. The summary historical consolidated financial information as of June 30, 2017 and for the six months ended June 30, 2017 and 2016 have been derived from the unaudited consolidated interim financial statements of Enel Chile included in the Enel Chile October 2017 Form 6-K, which is incorporated by reference into this prospectus. In April 2016, Enel Chile was spun-off from Enersis S.A. to hold the Chilean energy generation and distribution business of Enersis S.A. Pursuant to transitional relief granted by the SEC in respect of first time application of IFRS, summary historical consolidated financial information as of and for the year ended December 31, 2012 have been omitted. The summary historical consolidated financial information should be read in conjunction with Enel Chile’s Operating and Financial Review and the consolidated financial statements and notes thereto incorporated by reference into this prospectus.

 



 

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The following table sets forth Enel Chile’s summary historical consolidated financial information for the periods indicated:

 

    As of and for the six months ended June 30,     As of and for the year ended December 31,  
          2017(1)                 2017                 2016           2016     2015     2014     2013  
    (unaudited)     (unaudited)        
    (US$ millions,
except share
and per share
amounts)
    (Ch$ millions, except share
and per share amounts)
    (Ch$ millions, except share and per share
amounts)
 

Summary Consolidated Statement of Comprehensive Income Information

             

Revenues and other operating income

    1,822       1,210,477       1,281,060       2,541,567       2,399,029       2,049,065       1,738,083  

Operating costs(2)

    (1,480     (983,293     (985,639     (1,973,778     (1,873,540     (1,666,315     (1,346,460

Operating income

    342       227,184       295,421       567,789       525,489       382,750       391,623  

Financial results(3)

    (15     (10,069     393       (20,483     (97,869     (67,045     (56,363

Other non-operating income

    165       109,859       101       121,490       20,056       70,893       14,528  

Share of profit (loss) of associates and joint ventures accounted for using the equity method

    (1     (778     5,471       7,878       8,905       (54,353     24,309  

Income before income taxes

    491       326,196       301,386       676,674       456,581       332,245       374,097  

Income tax expenses

    (120     (79,457     (41,847     (111,403     (109,613     (132,687     (61,712

Net income

    371       246,739       259,539       565,271       346,968       199,558       312,385  

Net income attributable to the parent Company

    255       169,660       176,643       384,160       251,838       162,459       229,527  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to non-controlling interests

    116       77,079       82,896       181,111       95,130       37,099       82,858  

Total basic and diluted earnings per average number of shares (Ch$/US$ per share)

    0.01       3.46       3.60       7.83       5.13       3.31       5.08  

Total basic and diluted earnings per average number of ADSs (Ch$/US$ per ADS)

    0.26       172.79       179.91       391.26       256.49       165.46       253.79  

Cash dividends per share (Ch$/US$ per share)(4)

    0.005       3.23       2.09       2.09       —         —         —    

Cash dividends per ADS (Ch$/US$ per ADS)(4)

    0.24       161.72       104.65       104.65       —         —         —    

Weighted average number of shares of common stock (millions)

      49,093       49,093       49,093       49,093       49,093       45,219  

Summary Consolidated Statement of Financial Position Information

             

Total assets

    7,938       5,272,847       5,329,043       5,398,711       5,325,469       5,126,735       4,820,392  

Non-current liabilities

    1,754       1,165,434       1,320,963       1,178,471       1,270,006       1,122,585       826,478  

Equity attributable to the parent Company

    4,317       2,868,011       2,636,673       2,763,391       2,592,682       2,472,201       2,438,837  

Equity attributable to non-controlling interests

    1,105       733,863       647,821       699,602       609,219       611,864       626,947  

Total equity

    5,422       3,601,874       3,284,493       3,462,994       3,201,901       3,084,066       3,065,784  

Capital stock

    3,356       2,229,109       2,229,109       2,229,109       2,229,109       2,229,109       2,238,169  

Other Consolidated Financial Information

             

Capital expenditures (CAPEX)(5)

    206       137,052       70,851       222,386       309,503       196,932       128,239  

Depreciation, amortization and impairment losses(6)

    119       79,328       83,367       197,587       150,147       141,623       127,720  

 

(1) Solely for the convenience of the reader, Chilean peso amounts have been converted into U.S. dollars at the exchange rate of Ch$664.29 per US$1.00, as of June 30, 2017.
(2) Operating costs represent raw materials and supplies used, other work performed by the entity and capitalized, employee benefits expenses, depreciation and amortization expenses, impairment losses recognized in the period’s profit or loss and other expenses.
(3) Financial results represent (+) financial income, (-) financial expenses, (+/-) foreign currency exchange differences and net gains/losses from indexed assets and liabilities.

 



 

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(4) For 2016, cash dividends correspond to a payout ratio of 50% based on our 2016 annual consolidated net income as reported to the SVS, based on 10 months of results starting as of our date of formation on March 1, 2016, which therefore differs from the twelve months of net income included in the Enel Chile 2016 Form 20-F.
(5) Capital expenditures (CAPEX) figures represent cash flows used for purchases of property, plant and equipment and intangible assets for each year.
(6) For further detail, please refer to Note 28 of the Notes to the Enel Chile unaudited consolidated interim financial statements included in the Enel Chile October 2017 Form 6-K, which is incorporated by reference into this prospectus.

Enel Generación

The following summary historical consolidated financial information as of December 31, 2016 and 2015 and for each year in the three-year period ended December 31, 2016 was derived from the audited consolidated financial statements of Enel Generación included in the Enel Generación 2016 Form 20-F, which is incorporated by reference into this prospectus. The summary historical consolidated financial information as of December 31, 2014 and 2013 and for each year in the two-year period ended December 31, 2014 was derived from audited consolidated financial statements of Enel Generación not included or incorporated by reference into this prospectus. The summary consolidated financial information as of June 30, 2017 and for the six months ended June 30, 2017 and 2016 have been derived from the unaudited consolidated interim financial statements of Enel Generación included in the Enel Generación October 2017 Form 6-K which is incorporated by reference into this prospectus. In April 2016, Enel Generación completed the spin-off of its non-Chilean energy generation business as Endesa Américas S.A. The summary historical consolidated financial information for all periods has been restated to reflect the Endesa Américas S.A. business as discontinued operations. Pursuant to transitional relief granted by the SEC, summary historical consolidated financial information as of and for the year ended December 31, 2012 have been omitted as such information cannot be provided on a restated basis to reflect the spin-off of Endesa Américas S.A. without unreasonable effort or expense. The summary historical consolidated financial information should be read in conjunction with Enel Generación’s Operating and Financial Review and the consolidated financial statements and notes thereto incorporated by reference into this prospectus.

 



 

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The following table sets forth Enel Generación’s summary historical consolidated financial information for the periods indicated:

 

    As of and for the six months ended June 30,     As of and for the year ended December 31,  
          2017(1)                 2017                 2016           2016     2015     2014     2013  
    (unaudited)     (unaudited)        
    (US$ millions,
except share
and per share
amounts)
   

(Ch$ millions,

except share

and per share

amounts)

   

(Ch$ millions,

except share

and per share

amounts)

 

Summary Consolidated Statement of Comprehensive Income Information

             

Revenues and other operating income

    1,155       766,990       848,484       1,659,727       1,543,810       1,230,975       970,037  

Operating costs(2)

    (915     (608,117     (614,406     (1,228,341     (1,141,991     (978,713     (700,715

Operating income from continuing operations

    239       158,873       234,078       431,386       401,819       252,262       269,322  

Financial results(3)

    (25.4     (16,882     (6,852     (35,679     (114,252     (77,345     (73,995

Other gains

    165       109,707       114       121,491       4,015       42,652       2,514  

Share of profit (loss) of associates and joint ventures accounted for using the equity method

    (1     (778     5,471       7,878       8,905       (54,353     24,309  

Income from continuing operations before income taxes

    378       250,919       232,811       525,077       300,487       163,216       222,150  

Income tax expense, from continuing operations

    (94     (62,766     (30,863     (83,217     (76,656     (94,058     (36,995

Net income from continuing operations

    283       188,153       201,948       441,860       223,831       69,158       185,155  

Profit after tax from discontinued operations

    —         —         79,572       79,572       411,190       489,919       378,351  

Net income for the year

    283       188,153       281,520       521,432       635,021       559,077       563,506  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to the parent Company

    278       184,995       237,448       472,558       392,868       276,027       353,927  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to non-controlling interests

    5       3,158       44,072       48,874       242,153       283,050       209,579  

Basic and diluted earnings per share from continuing operations (Ch$/US$ per share).

    0.03       22.56       24.10       52.77       25.89       6.81       21.11  

Basic and diluted earnings per share from continuing operations (Ch$/US$ per share).

    1.02       676.67       723.10       1,583.10       776.70       204.30       633.30  

Total Basic and diluted earnings per share (Ch$/US$ per share)

    0.03       22.56       28.95       57.62       47.90       33.49       43.15  

Total Basic and diluted earnings per ADS (Ch$/US$ per ADS)

    1.02       676.67       868.53       1,728.50       1,437.00       1,004.70       1,294.50  

Cash dividends per share (Ch$/US$ per share)

    0.04       28.81       14.58       14.58       20.39       21.58       14.29  

Cash dividends per ADS (Ch$/US$ per ADS)

    1.3       864.3       437.4       437.4       611.7       647.4       428.7  

Number of shares of common stock (millions)

      8,202       8,202       8,202       8,202       8,202       8,202  

Summary Consolidated Statement of Financial Position Information

             

Non-current assets and disposal groups held for sale or distribution to owners

    4,301.6       2,857,520       2,894,797       12,993       3,889,706       7,979       —    

Total assets

    4,915       3,265,298       3,432,338       3,399,682       7,278,770       7,237,672       6,762,125  

Non-current liabilities

    1,662.4       1,104,323       1,262,997       1,114,145       1,207,005       2,321,048       1,935,919  

Liabilities associated with disposal groups held for sale or distribution to owners

    —         —         —         —         1,851,784       5,490       —    

Equity attributable to the parent company

    2,693       1,788,710       1,572,250       1,700,962       2,648,190       2,700,280       2,651,968  

Equity attributable to non-controlling interests

    42       27,754       31,543       28,798       895,700       823,606       935,846  

Total equity

    2,734       1,816,464       1,603,793       1,729,760       3,543,890       3,523,886       3,587,814  

Capital stock(4)

    961       638,289       638,289       638,289       1,537,723       1,537,723       1,537,723  

Other Consolidated Financial Information

             

Capital expenditures (CAPEX)(5)

    155       103,086       75,639       194,880       537,805       421,314       292,017  

Depreciation, amortization and impairment losses(6)

    89       58,869       66,021       163,386       115,042       113,766       92,577  

 



 

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(1) Solely for the convenience of the reader, Chilean peso amounts have been converted into U.S. dollars at the exchange rate of Ch$664.29 per US$1.00, as of June 30, 2017.
(2) Operating costs represent raw materials and supplies used, other work performed by the entity and capitalized, employee benefits expenses, depreciation and amortization expenses, impairment loss recognized in the period’s profit or loss and other expenses.
(3) Financial results represent (+) financial income, (-) financial expenses, (+/-) foreign currency exchange differences and net gains/losses from indexed assets and liabilities.
(4) Capital stock represents issued capital plus share premium.
(5) Capital expenditures (CAPEX) figures represent cash flows used for purchases of property, plant and equipment and intangible assets for each year.
(6) For further detail, please refer to Notes 8C and 27 of the Notes to the Enel Generación unaudited consolidated interim financial statements included in the Enel Generación October 2017 Form 6-K, which is incorporated by reference into this prospectus.

EGPL

The following summary historical consolidated financial information as of December 31, 2016 and 2015 and for each year in the two-year period ended December 31, 2016 was derived from the audited consolidated financial statements of EGPL included in the Enel Chile October 2017 Form 6-K (EGPL), which is incorporated by reference into this prospectus. The summary consolidated financial information as of June 30, 2017 and for the six months ended June 30, 2017 and 2016 and income statement information for the year ended December 31, 2014 have been derived from the unaudited consolidated financial statements of EGPL included in the Enel Chile October 2017 Form 6-K (EGPL), which is incorporated by reference into this prospectus. Pursuant to Item 3.A.1 of Form 20-F, summary historical consolidated financial information as of and for the years ended December 31, 2013 and 2012 have been omitted as such information cannot be provided without unreasonable effort or expense. The summary historical consolidated financial information should be read in conjunction with EGPL’s consolidated financial statements and notes thereto included in the Enel Chile October 2017 Form 6-K (EGPL), which is incorporated by reference into this prospectus.

The following table sets forth EGPL’s summary historical consolidated financial information for the periods indicated:

 

     For the six months ended June 30,     For the year ended December 31,  
               2017                         2016               2016     2015     2014  
     (unaudited)                 (unaudited)  
     (US$ thousands)     (US$ thousands)  

Summary Consolidated Statement of Comprehensive Income Information

          

Revenues and other operating income

     177,784       121,935       307,740       203,791       146,814  

Operating costs(1)

     (120,883     (85,868     (200,205     (140,545     (98,149

Operating income

     56,901       36,067       107,535       63,246       48,665  

Financial results(2)

     (40,422     (26,520     (99,536     (42,697     (15,972

Other gains

     67       5,687       8,167       —         —    

Income before income taxes

     16,546       15,234       16,166       20,549       32,693  

Income tax expense

     6,185       46,577       6,576       (23,787     (22,050

Net income

     22,731       61,811       22,742       (3,238     10,643  

Net income attributable to the parent Company

     21,427       58,281       20,411       (1,878     8,788  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to non-controlling interests

     1,304       3,530       2,331       (1,360     1,855  

Other Consolidated Financial Information

          

Capital expenditures (CAPEX)(4)

     136,420       380,086       532,486       218,883       274,301  

Depreciation, amortization and impairment losses(5)

     52,858       32,206       81,993       50,695       22,861  

 



 

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     As of
June 30, 2017
     As of December 31,  
              2016                    2015                    2014        
     (unaudited)                    (unaudited)  
     (US$ thousands)      (US$ thousands)  

Summary Consolidated Statement of Financial Position Information

           

Total assets

     2,570,303        2,521,090        1,947,616     

Non-current liabilities

     1,273,415        1,174,500        1,195,851     

Equity attributable to the parent company

     999,539        228,782        205,329     

Equity attributable to non-controlling interests

     147,536        146,163        142,171     

Total equity

     1,147,075        374,945        347,500     

Capital stock(3)

     827,205        77,280        77,280     

 

(1) Operating costs represent raw materials and supplies used, other work performed by the entity and capitalized, employee benefits expenses, depreciation and amortization expenses, impairment loss recognized in the period’s profit or loss and other expenses.
(2) Financial results represent (+) financial income, (-) financial expenses, (+/-) foreign currency exchange differences and net gains/losses from indexed assets and liabilities.
(3) Capital stock represents issued capital.
(4) Capital expenditures (CAPEX) figures represent cash flows used for purchases of property, plant and equipment and intangible assets for each year.
(5) For further detail, please refer to Note 27 of the Notes to the EGPL unaudited consolidated interim financial statements included in the Enel Chile October 2017 Form 6-K (EGPL), which is incorporated by reference into this prospectus.

 



 

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Summary Pro Forma Consolidated Financial Information

The following summary pro forma consolidated financial information give effect to the Offers and the Merger and should be read in conjunction with the Unaudited Pro Forma Consolidated Financial Information and related notes incorporated by reference into this prospectus. For accounting purposes, the Offers will be accounted for as acquisitions of minority interests and the Merger will be accounted for as a combination of entities under common control. The historical financial information set forth below has been derived from, and is qualified by reference to, the consolidated financial statements of Enel Chile, Enel Generación and EGPL, and should be read in conjunction with those financial statements and notes thereto incorporated herein by reference. The Unaudited Pro Forma Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014 give effect to the Offers and the Merger as if they had been consummated on January 1, 2014, and the Unaudited Pro Forma Consolidated Statement of Financial Position as of June 30, 2017 gives effect to the Offers and the Merger as if they had been consummated on June 30, 2017. You should not rely on this summary unaudited pro forma consolidated information as being indicative of the results that would actually have been obtained if the Offers and the Merger had been consummated for the above-mentioned periods or the future results of Enel Chile. See “Where You Can Find More Information” and “Unaudited Pro Forma Consolidated Financial Information.”

 

     For the six
months ended

June 30, 2017
    For the year ended December 31,  
     2016     2015     2014  
   (in thousands of Ch$, except share and per share amounts)  

Pro Forma Consolidated Statement of Comprehensive Income Information:

  

Revenues and other operating income

     1,242,579,709       2,612,018,524       2,455,302,875       2,074,923,468  

Operating Income

     264,744,050       640,503,283       566,896,374       410,478,010  

Income before taxes from continuing operations

     302,662,762       618,695,963       401,124,723       281,964,243  

Income tax expense, continuing operations

     (66,588,519     (90,418,248     (109,981,456     (130,779,422

Net income from continuing operations

     236,074,243       528,277,715       291,443,267       151,184,821  

Net income attributable to Enel Chile

     232,169,537       518,889,614       282,180,804       135,387,580  

Net income attributable to non-controlling interests

     3,904,706       9,388,101       9,262,463       15,797,241  

Basic and diluted earnings per share:

        

Basic and diluted earnings per share from continuing operations

     3.24       7.25       3.94       1.89  

Basic and diluted earnings per share

     3.24       7.25       3.94       1.89  

Weighted average number of shares of common stock (thousands)

     69,754,349.33       69,754,349.33       69,754,349.33       69,754,349.33  

 

     As of the six months ended June 30, 2017  
     (in thousands of Ch$)  

Pro Forma Consolidated Statement of Financial Position Information:

  

Total Assets

     6,985,088,190  

Total non-current liabilities

     3,173,273,129  

Total current liabilities

     590,588,426  

Equity attributable to parent company

     3,105,199,037  

Total equity

     3,221,226,635  

 



 

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Comparative Historical and Pro Forma Per Share Information

The following table reflects: (i) the historical net income, cash dividends and book value per Enel Chile Share; (ii) the historical net income, cash dividends and book value per Enel Generación Share; (iii) the pro forma net income, cash dividends and book value per Enel Chile Share after giving effect to the proposed Offers and the Merger; and (iv) the equivalent pro forma net income, cash dividends and book value per share attributable to 2.87805 Enel Chile Shares which is the number of Enel Chile Shares to be subscribed for in respect of each Enel Generación Share validly tendered in the Offers pursuant to the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition based on 40% of the cash tender offer consideration being allocated to subscribe for Enel Chile Shares or Enel Chile ADSs, as applicable, at a subscription price of Ch$82 per Enel Chile Share or Ch$4,100 per Enel Chile ADS. The information presented in this table should be read in conjunction with, and is qualified in its entirety by, the Unaudited Pro Forma Consolidated Financial Information, the unaudited consolidated financial statements for the six months ended June 30, 2017 and the audited consolidated financial statements for the year ended December 31, 2016, of Enel Chile, Enel Generación and EGPL incorporated by reference into this prospectus.

 

     Six Months Ended
June 30, 2017
     Year Ended
December 31, 2016
 
     (Ch$)  

Historical—Enel Chile

     

Basic and diluted net income per share

     3.46        7.83  

Cash dividends per share(1)

     3.23        2.09  

Book value per share (at period end)(2)

     58.42        56.29  

Historical—Enel Generación

 

Basic and diluted net income from continuing operations per share

     22.56        52.77  

Cash dividends per share(1)

     28.81        14.58  

Book value per share (at period end)(2)

     218.09        207.39  

Pro Forma Consolidated(3)

 

Basic and diluted net income from continuing operations per share(4)

     3.24        7.25  

Cash dividends per share(5)

     3.62        1.97  

Book value per share (at period end)(6)

     43.36        34.28  

Pro Forma Equivalent—Enel Generación(7)

 

Basic and diluted net income from continuing operations per share(4)

     9.32        20.87  

Cash dividends per share(5)

     10.42        5.67  

Book value per share (at period end)(6)

     124.79        98.66  

 

(1) Historical cash dividends per share paid in 2017 is calculated based on 2016 historical net income attributable to shareholders multiplied by the dividend policy of 50%.
(2) Historical book value per share is computed by dividing shareholders’ equity by the number of shares of common stock outstanding at the end of the period.
(3) See Unaudited Pro Forma Consolidated Financial Information incorporated by reference into this prospectus.
(4) Pro forma consolidated basic and diluted net income per share is computed using the weighted-average number of shares of common stock outstanding, after the issuance of the Enel Chile Shares in the Capital Increase.
(5) Pro forma consolidated cash dividends per share paid in 2017 is calculated based on 2016 pro forma consolidated net income attributable to shareholders of Enel Chile multiplied by the dividend policy of 50%.
(6) The pro forma consolidated book value per share is computed by dividing pro forma shareholders’ equity, including the effect of pro forma adjustments, by the pro forma number of Enel Chile Shares which would have been outstanding had the Offers been consummated as of June 30, 2017.

 



 

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(7) The Enel Generación pro forma equivalent consolidated per share amounts are computed by multiplying the pro forma consolidated per share amounts by 2.87805, the number of Enel Chile Shares to be subscribed for in respect of each Enel Generación Share validly tendered pursuant to the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition, at a subscription price of Ch$82 per Enel Chile Share and Ch$4,100 per Enel Chile ADS, based on 40% of the cash tender offer consideration being allocated to subscribe for Enel Chile Shares or Enel Chile ADSs, as applicable.

 



 

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RISK FACTORS

In deciding whether to tender your Enel Generación Securities in the Offers, you should read this prospectus carefully and the documents to which we refer you. You should also carefully consider the following risk factors related to the Offers together with the risk factors set forth in the Enel Chile 2016 Form 20-F and the Enel Generación 2016 Form 20-F.

Risks Related to the Offers

The value of the Enel Chile Securities, including Enel Chile Shares represented by Enel Chile ADSs, and the value of the tender offer consideration being offered may vary due to fluctuations in market prices and exchange rates.

The tender offer consideration being offered is determined in Chilean pesos and there will be no adjustment to the tender offer consideration being offered or the subscription prices for the Enel Chile Securities for changes in the market price of either Enel Generación Securities, on the one hand, or Enel Chile Securities, on the other, or for movements in exchange rates. Accordingly, the market value of the Enel Chile Securities that holders of Enel Generación Securities will receive upon completion of the U.S. Offer and the exchange rate between the Chilean peso and the U.S. dollar at the time could vary significantly from the market value of Enel Chile Securities and the Chilean peso to U.S. dollar exchange rate on the date of this prospectus or on the date the Offers were first announced. That market price and foreign exchange risk is borne entirely by the holders of Enel Generación Securities. The market value of the Enel Chile Securities and the Chilean peso to U.S. dollar exchange rate will also continue to fluctuate after completion of the Offers. You should obtain current market quotations for Enel Generación Securities and Enel Chile Securities.

Those holders who do not tender their Enel Generación Securities in the Offers will continue to be minority shareholders and ADS holders of Enel Generación. The value of any Enel Generación Securities not tendered in the Offers could decrease, and there may not be a liquid market for the Enel Generación Securities following the completion of the Offers.

Following the completion of the Offers, those holders who do not tender their Enel Generación Securities will continue to be minority shareholders and ADS holders in Enel Generación with a limited (if any) ability to influence the outcome of any matters that are or can be subject to shareholder approval, including the appointment of directors, acquisition or disposition of substantial assets, the issuance of capital stock and other securities and the payment of dividends on Enel Generación Securities. Furthermore, the market for Enel Generación Securities may become illiquid after the Offers. As a result, any future sale of the Enel Generación Securities could be at a price per share or ADS significantly less than the offer price in the Offers. In addition, the potential lack of market liquidity after completion of the Offers could also increase the difficulty of selling Enel Generación Securities in large blocks without adversely affecting their price. Furthermore, Enel Generación Shares may lose the “sufficient stock market liquidity” (presencia bursátil) status in the Chilean Stock Exchanges, which would result in loss of a capital gains tax exemption for certain holders of Enel Generación Shares under Chilean law.

It is possible that after completion of the Offers, the Enel Generación Securities will fail to meet the criteria for continued listing on Chilean Stock Exchanges and the NYSE. If this were to happen, the Enel Generación Securities could be delisted from one or more of these exchanges. In addition, Enel Chile may decide to cause Enel Generación ADSs to be delisted from the NYSE, terminate the deposit agreement for the Enel Generación ADSs and deregister the Enel Generación Securities under the Exchange Act. The decision would depend on, among other factors, the results of the Offers and on the evaluation of Enel Chile’s management of the public float, trading volumes and liquidity of the Enel Generación ADSs after completion of the Offers.

In the event Enel Generación Securities are delisted, the value of any Enel Generación Securities not tendered in the Offers could decrease to a price per share significantly less than the consideration offered in the Offers.

 

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In addition, AFPs may no longer be able to invest in Enel Generación at the levels permitted under Title XII of DL 3,500 following the Offers because Enel Generación will no longer be subject to Title XII of DL 3,500 due to the condition of the Offers that requires the removal of the 65% stock ownership limit applicable to any shareholder that was included in Enel Generación’s bylaws in accordance with Title XII of DL 3,500 and other related restrictions. As a result, AFPs who have not tendered their Enel Generación Shares in the Offers may be required to divest some of their Enel Generación Shares if they are above the permitted level and the liquidity of Enel Generación Securities may be further reduced and the value of Enel Generación Securities not tendered in the Offers could further decrease.

The trading prices of Enel Chile Shares and Enel Chile ADSs will be affected by factors in addition to those factors affecting the price of Enel Generación Shares and Enel Generación ADSs. The price of Enel Chile Shares and Enel Chile ADSs may decline following the Offers.

Upon consummation of the Offers, holders of Enel Generación Shares and Enel Generación ADSs that participated in the Offers will become holders of Enel Chile Shares and Enel Chile ADSs, respectively. Enel Chile currently owns 60.0% of the aggregate number of outstanding Enel Generación Shares, and for the year ended December 31, 2016, Enel Chile derived approximately 73% of its operating income from Enel Generación. Enel Chile also owns and operates other businesses, such as the electricity distribution business of Enel Distribución S.A. Accordingly, Enel Chile’s results of operations and business, as well as the trading price of Enel Chile Shares and Enel Chile ADSs, will be affected by factors in addition to those affecting Enel Generación’s results of operations and business and the price of Enel Generación Shares and Enel Generación ADSs. The price of Enel Chile Securities may decline after Enel Chile completes the Offers.

The evaluation opinions and valuation reports obtained will not be updated to reflect any developments or changes in circumstances occurring after the dates of those reports.

Enel Chile and Enel Generación each appointed independent evaluators (evaluadores independientes) to evaluate the Reorganization as a related party transaction under Chilean law and provide opinions in accordance with Article 147 of the Chilean Corporations Act. In addition, in connection with the Merger and in accordance with Chilean law, Enel Chile and EGPL each retained an independent appraiser (perito independiente) to prepare reports on the values of Enel Chile and EGPL and the merger exchange ratio in connection with the Merger in accordance with Articles 156 and 168 of the Chilean Corporate Regulations (Reglamento de Sociedades Anónimas). See “Position of Enel Generación as to the Fairness of the Reorganization; Recommendation” and “Position of Enel Chile and the Enel Entities as to the Fairness of the Reorganization.”

The reports and opinion to be obtained from such independent appraisers and independent evaluators will not be updated and will not address the economic value of the Enel Generación Shares at the time the Offers will be completed. In addition, the valuation reports will rely on certain assumptions and forward-looking statements that will be provided to the independent appraisers and independent evaluators by Enel Chile, Enel Generación or EGPL, as applicable.

If holders of Enel Chile Shares exercise preemptive rights and subscribe for new Enel Chile Shares in excess of the limit required in order to have a sufficient number of Enel Chile Shares to satisfy the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition, then the Offers will not be consummated.

Enel Chile is expected to conduct the Capital Increase in order to obtain new Enel Chile Shares to be issued in connection with the Offers to satisfy the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition, as applicable. Under Chilean law, in connection with the Capital Increase, existing holders of Enel Chile Shares have preemptive rights to subscribe for additional Enel Chile Shares pro rata to their interest in Enel Chile. If holders of Enel Chile Shares exercise preemptive rights and subscribe for new Enel Chile Shares in excess of the limit required in order to have a sufficient number of Enel Chile Shares to

 

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satisfy the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition, then the Offers will not be consummated. See “Summary—Conditions of the Offers” and “The Capital Increase.”

As long as there are minority shareholders in Enel Generación, potential conflicts of interests between Enel Generación and EGPL may continue to exist after the Reorganization.

The proposed Reorganization would increase the controlling interest of Enel as the ultimate controlling shareholder of Enel Generación. However, as long as there are minority shareholders in Enel Generación, this increase in the controlling interest may not necessarily eliminate the potential conflicts of interests of Enel in the investment vehicles through which it operates in Chile.

Risks Related to Enel Generación’s Business

You should read and consider the risk factors specific to Enel Generación’s business. These risks are described the Enel Generación 2016 Form 20-F and in other documents that are incorporated by reference into this prospectus. See “Where To Obtain More Information” for more detail on the information incorporated by reference into this prospectus.

Risks Related to Enel Chile’s Business

You should read and consider the risk factors specific to Enel Chile’s business. These risks are described the Enel Chile 2016 Form 20-F and in other documents that are incorporated by reference into this prospectus. See “Where To Obtain More Information” for more detail on the information incorporated by reference into this prospectus.

Risks Related to Enel Chile’s Business Following the Offers and the Merger

We may fail to realize the business growth opportunities, revenue benefits, cost savings and other benefits anticipated from, or may incur unanticipated costs associated with, the Reorganization and our results of operations, financial condition and the price of our shares may suffer.

The Reorganization, including our acquisition of EGPL in the Merger and the Offers for Enel Generación Securities, may not achieve the business growth opportunities, revenue benefits, cost savings and other benefits we anticipate. However, these benefits may not develop and other assumptions upon which the offer consideration was determined may prove to be incorrect.

Under any of these circumstances, the business growth opportunities, revenue benefits, cost savings and other benefits anticipated by us to result from the completion of the Reorganization may not be achieved as expected, or at all, or may be delayed. To the extent that we incur higher integration costs or achieve lower revenue benefits or fewer cost savings than expected, our results of operations and financial condition may suffer.

The potential integration of Enel Chile and EGPL may be difficult and expensive.

The Merger involves the integration of a mature business, as is the case of our conventional energy business, which Enel Chile develops through Enel Generación Chile, with EGPL’s non-conventional renewable energy business. Our goal in integrating the operations is to increase the revenues and earnings of the combined businesses through cost savings, and, as a combined company, to increase Enel Chile’s ability to satisfy the demands of its customers. In so doing, we may encounter substantial difficulties in integrating our operations, and could even incur substantial costs as a result of, among other things:

 

    inconsistencies in standards, controls, procedures and policies, business cultures and compensation structures between Enel Chile and EGPL and the need to implement, integrate and harmonize various business-specific operating procedures and systems, as well as the financial, accounting, information and other systems of Enel Chile and EGPL;

 

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    diversion of management’s attention from their other responsibilities as a result of the need to deal with integration issues;

 

    failure to retain customers and suppliers of Enel Chile and EGPL; and

 

    difficulties in achieving full utilization of assets and resources of Enel Chile and EGPL.

The diversion of management attention and any difficulties encountered from the Merger could increase costs or reduce revenues, earnings and operating results of Enel Chile following completion of the Merger. Any delays encountered in the integration process of EGPL and Enel Chile, could have an adverse effect on the revenues, level of expenses, operating results and financial condition of the Enel Chile, which may adversely affect the value of the Enel Chile Securities after the completion of the Offers.

Enel Chile following the Merger may not be able to retain key employees or efficiently manage the larger and broader organization, which could negatively affect our operations and financial condition.

The success of Enel Chile following the Merger, will depend in part on the ability of Enel Chile to retain key employees of both Enel Chile and EGPL and successfully manage the larger and broader organization resulting from the Merger. In this context, key employees may depart because of issues relating to the uncertainty and difficulty of integration or a general desire not to remain with Enel Chile. Furthermore, we will face challenges inherent in efficiently managing an increased number of employees. Accordingly, no assurance can be given that Enel Chile will be able to retain key employees or successfully manage the larger and more diverse combined organization, which could result in disruption to the combined company’s business and negatively impact the combined company’s operations and financial condition.

The Merger will be a statutory merger and there is no merger agreement entered into between Enel Chile and EGPL or Enel, as the sole shareholder of EGPL; therefore, none of the parties involved in the Merger will have any contractual protections against each other post-closing.

The Merger will be a statutory merger under Article 99 of the Chilean Corporations Act. Under Chilean law, no merger agreement is required, provided that the shareholders of the merging corporations are presented with a document containing the terms and conditions of the merger. No merger agreement has been or will be entered into between Enel Chile and EGPL or Enel in connection with the Merger. However, the terms and conditions of the Merger are included in as part of the General Terms of the Reorganization presented to shareholders of Enel Chile and EGPL in connection with the ESMs. The General Terms of the Reorganization do not include representations and warranties or covenants regarding the merging entities. In the absence of a merger agreement providing contractual rights between the parties to the Merger, any rights of the parties to the Merger to seek indemnification or other recovery for any losses with respect to the Merger will be based solely on the protections of the Chilean Corporations Act.

 

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SPECIAL FACTORS

Background of the Offers

Historical Background

The relationship between Enel Chile and Enel Generación traces back to the acquisition by Enersis S.A. (“Enersis”), from which Enel Chile was spun-off, of interests in Empresa Nacional de Electricidad S.A. (“Endesa Chile”), the predecessor of Enel Generación, in April 2016.

Starting in the early 1990s, Enersis gradually acquired equity stakes in Endesa Chile, increasing its ownership stake to 25.3% in 1995. Enersis has consolidated Endesa Chile since the early 1990s, well before reaching majority control of the shares, by virtue of nominating the majority of the Board of Directors and exerting a presumption of control.

In 1999, Enersis obtained a 60% controlling stake in Endesa Chile through a cash tender offer in which it acquired an additional 34.7% of the Endesa Chile shares. Since that time, Enersis periodically evaluated the possibility of increasing its ownership stake in Endesa Chile, its most significant subsidiary, through a tender offer for the outstanding shares and ADSs owned by non-affiliated minority investors. These evaluations contemplated the possibility of Endesa Chile becoming a wholly owned subsidiary of Enersis. Minority shareholders of both Enersis and Endesa Chile also proposed that the companies consider similar transactions. For example, in the context of the Enersis capital increase completed on March 28, 2013, the Chilean pension funds that owned shares of Endesa Chile suggested to management of Enersis that they would view favorably the possibility of a tender offer or an exchange offer whereby the Chilean pension funds would decrease their equity participation in Endesa Chile and proportionally increase their participation at the holding company level. Investment banks also advised that Enersis’ holding company discount would decrease substantially to the extent that Enersis could acquire all or substantially all of Endesa Chile’s minority shares. A similar strategy was suggested and successfully implemented in connection with Enersis’ ownership and control over Chilectra S.A. (“Chilectra” and currently known as Enel Distribución Chile S.A. or “Enel Distribución”), which increased from 72% to 99% as a result of several tender offers commencing in 2000.

In 2016, as part of a reorganization intended to separate the Chilean and non-Chilean businesses of Enersis and its consolidated subsidiaries, Endesa Chile spun-off its non-Chilean energy generation business as Endesa Américas S.A. and Endesa Chile became Enel Generación Chile S.A. Similarly, Enersis spun-off Enel Chile, which currently owns and operates electricity generation and distribution businesses in Chile, including Enel Generación, formerly held by Enersis, and Enersis transitionally became Enersis Américas S.A. and in December 2016, Enel Américas . In the spin-offs, Enel Chile was allocated ownership of 60% of Enel Generación.

Since its spin-off from Enersis, Enel Chile has continued to consider the possibility of increasing its ownership interest in Enel Generación, its most significant subsidiary, consistent with the factors historically considered by its predecessor, Enersis, with respect to Endesa Chile, principally: to consolidate its control over Enel Generación and increase its share of Enel Generación’s income and to reduce Enel Chile’s holding company discount. However, during the 2016 Reorganization described below, Enel Chile did not take any action to analyze or pursue any specific transaction.

Endesa, S.A., a Spanish company (“Endesa Spain”), was the ultimate controlling company of Enersis from 1999 to 2007 and was also the ultimate parent of Endesa Chile through its ownership of Enersis. In 2007, Enel and Acciona S.A., a Spanish construction company unrelated to Enel (“Acciona”), jointly acquired a 92.1% interest in Endesa Spain, which owned 60.6% of Enersis at the time. As a result of this acquisition, Enel held 67.1% of Endesa Spain through Enel Energy Europe S.r.l., a wholly owned subsidiary of Enel, and Acciona held 25% of Endesa Spain. In 2009, Acciona sold all of its equity interest in Endesa Spain to Enel Energy Europe S.r.l. (which later changed its name to Enel Iberoamérica S.r.l.), thereby making Enel the ultimate parent of Enersis and Endesa Chile.

 

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In 2014, Enel separated its Latin American businesses from its Iberian businesses and Endesa Spain transferred its direct 20.3% and indirect 40.3% interests in Enersis to Enel Iberoamérica S.r.l. Following the transaction, Enel continued to beneficially own 60.6% of Enersis, separate from the other businesses of Endesa Spain.

In 2017, Enel Iberoamérica S.r.l. implemented a cross-border demerger to separate the Iberian and Latin American businesses of Enel Iberoamérica S.r.l. The demerger resulted in the formation and spin-off of Enel South America S.r.l., a new Italian company wholly owned by Enel, holding among other things, the 60.6% ownership interest in Enel Chile. Enel South America S.r.l. is expected to merge into Enel effective November 2017, resulting in Enel directly holding the 60.6% ownership interest in Enel Chile.

Background of the Reorganization, the Offers and the Merger

Over the course of their ownership of Enersis, Endesa Spain and Enel invested in energy generation, transmission and distribution businesses in Latin America outside of Chile through vehicles other than Enersis and Endesa Chile. As a result, Enel’s Latin American energy business was dispersed and located at numerous levels within the company group.

From time to time, Enel reviews the corporate structure of its subsidiaries and affiliates with the goal of creating a more efficient and focused structure that may enhance shareholder value. In 2012, Enel, through Endesa Spain, proposed that Enersis conduct a capital increase as part of the effort to streamline the group corporate structure by geography and consolidate Enel’s Latin American energy businesses (other than the non-conventional renewable assets held by Enel Green Power S.p.A. (“Enel Green Power”)), under Enersis. In the capital increase completed on March 28, 2013, Enersis received an in-kind contribution from Endesa Spain of approximately US$3.6 billion of equity interests in 25 companies that conduct business in five South American countries (Argentina, Brazil, Chile, Colombia and Peru) and approximately US$2.4 billion in cash from minority shareholders. In addition, Enel and Endesa Spain also committed to use Enersis as the sole vehicle for conducting business in the conventional energy sector in South America. The capital increase did not change Enel’s or Endesa Spain’s ownership interest in Enersis because the capital increase was fully subscribed.

In 2015, a corporate reorganization process was initiated to separate Enel’s businesses and assets held by Enersis, Endesa Chile and Chilectra in Chile from those in Argentina, Brazil, Colombia and Peru so that the Chilean businesses and the non-Chilean businesses could be grouped by geographic area (the “2016 Reorganization”). The 2016 Reorganization, which was completed in December 2016, involved three major transactions:

 

    the spin-offs by Enersis, Endesa Chile and Chilectra of Enersis Chile (currently Enel Chile), Endesa Américas and Chilectra Américas S.A. (“Chilectra Américas”), respectively;

 

    the tender offers by Enersis Américas for all outstanding shares and ADSs of Endesa Américas; and

 

    the merger of Endesa Américas and Chilectra Américas into Enersis Américas, which was renamed Enel Américas.

During the 2016 Reorganization, Enel committed that as long as Enel remained the majority shareholder of Enel Américas and Enel Chile, it would use Enel Américas and Enel Chile (as successors to the Enersis businesses) as the Enel group’s sole investment vehicles in South America in generation, distribution and sale of electricity, except for renewable energy investments then currently being developed by Enel or any other company within the Enel group (including Enel Green Power), reaffirming the commitment made by Enel during the 2013 capital increase. However, there were concerns that there could be potential conflicts of interest between Enel Green Power and Enel Generación given that Enel Generación has contractual relationships with EGPL, a wholly owned subsidiary of Enel Green Power, pursuant to which Enel Generación purchases energy from certain EGPL subsidiaries under power purchase contracts, as disclosed in “—Related Party Transactions.”

 

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In addition, there is a potential conflict of interest due to the fact that both Enel Generación and EGPL compete in the energy generation sector in Chile, though using different energy generation technologies. EGPL is Enel’s non-conventional renewable energy investment vehicle in Chile while Enel’s conventional energy investment vehicle in Chile is Enel Generación, through Enel’s ownership interest in Enel Chile. Furthermore, Enel Generación is required under Chilean regulations to produce a portion of its energy generation using non-conventional renewable energy technologies. As a result, Enel Generación and EGPL may directly compete in current or future developments of renewable energy in Chile as they both seek to expand their renewable energy generation businesses.

In order to address such concerns, in a November 23, 2015 letter from Mr. Giulio Fazio, Head of Legal and Corporate Affairs of Enel, to Mr. Borja Acha B., the Chairman of the Board of Enersis S.A., Enel committed to negotiate with Enel Generación regarding the joint development of renewable energy projects in Chile if all of the transactions contemplated in the 2016 Reorganization were consummated. Enel reaffirmed such commitment through another letter sent by Mr. Fazio to Mr. Acha on December 17, 2015, and further offered Enel Generación the right to participate in future non-conventional renewable energy projects in Chile wholly owned and developed by Enel Green Power, through the acquisition of up to 40% of the capital in one or more project companies created for such purpose, at a price equivalent to the cost of the project. It was contemplated that providing Enel Generación the opportunity to jointly develop renewable energy projects in Chile with EGPL would reduce the potential conflicts of interest between Enel Generación and EGPL by enabling the companies to cooperate with each other and align their interests, rather than competing against each other in the energy generation sector in Chile.

During 2016, the executive officers and the Board of Directors of Enel Generación, as well as the Directors’ Committee of Enel Generación, each held periodic meetings to review the commitment from Enel. The Directors’ Committee of Enel Generación is a standing committee required under the Chilean Corporations Act, consisting of a majority of independent directors (as defined by Chilean law), and was not specifically formed for purposes of the Reorganization. The Directors’ Committee also serves as the independent Audit Committee of Enel Generación and is required to review all related party transactions and issue a report to the Board of Directors regarding such transaction, which must be sent to the Board of Directors and presented at the board meeting in which the related party transaction is to be approved, in accordance with the Chilean Corporations Act. See “Special Factors—Position of Enel Generación as to the Fairness of the Reorganization; Recommendation—Summary of Enel Generación Directors’ Committee Report.”

On January 18, 2017, the Directors’ Committee of Enel Generación rejected the option to acquire up to 40% of non-conventional renewable energy projects in Chile, in operation, under construction or still in development by EGP Chile, which was provided by Enel in 2015 in connection with the 2016 Reorganization. Instead, the Directors’ Committee recommended to the Board of Directors of Enel Generación that Enel Generación submit a counterproposal to acquire at least 50.1% of the projects developed and owned by EGP Chile (the “Counterproposal”). On January 25, 2017, the Board of Directors unanimously approved the Directors’ Committee recommendations and the Counterproposal and authorized the officers of Enel Generación to submit the Counterproposal to EGP Chile.

On January 27, 2017, Mr. Moro sent a letter to Mr. Bonilla with the Counterproposal. By a letter to Mr. Moro of Enel Generación on February 24, 2017, EGP Chile notified Enel Generación of its rejection of the Counterproposal. Thereafter, Enel Generación and EGP Chile ceased further negotiations.

Following the breakdown of negotiations between Enel Generación and EGP Chile, Enel Chile began to explore how to consolidate its leadership position in the electricity industry in Chile, especially in the context of Enel Chile’s Open Power strategy that places a high priority on non-conventional renewable energy and better managing any potential conflicts of interests between the operations of Enel Generación and Enel Green Power in Chile. In considering a potential structure to achieve these goals, Enel Chile also incorporated into its analysis

 

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its long-standing consideration of the potential benefits of increasing its ownership interest in Enel Generación described above.

Enel Chile developed the general framework of the corporate reorganization in which Enel’s non-conventional renewable energy generation business in Chile would be brought under the umbrella of the Enel Chile group of companies and Enel Chile would further consolidate its ownership of its conventional energy generation business, bringing together the leading conventional and non-conventional renewable energy generation businesses in Chile and the leading energy distribution business under a single company. While Enel Chile continued to study variations of the structure, such as which Enel Chile entity Enel’s non-conventional renewable energy business in Chile would be merged with and the sequence of the transactions, and taking into account regulatory, tax and antitrust considerations, the basic transaction structure of an acquisition of Enel’s non-conventional renewable energy business by Enel Chile and the tender offer by Enel Chile for Enel Generación Securities not owned by Enel Chile, which are reflected in the Reorganization, remained the same and no other strategic alternatives or business combinations with other parties were considered by Enel, Enel Chile or Enel Generación.

Following a period of analysis, on July 3, 2017, the Board of Directors of Enel Chile held an extraordinary meeting and agreed to send a non-binding proposal to Enel regarding a potential merger of EGPL with Enel Chile, conditioned on the completion of a tender offer by Enel Chile for Enel Generación Shares (including in the form of ADSs). Pursuant to such determination, Mr. Herman Chadwick P., the Chairman of the Board of Directors of Enel Chile, sent a letter dated July 3, 2017 to Mr. Francesco Starace, the Chief Executive Officer of Enel (the “July 2017 Enel Chile Letter”).

Specifically, the July 2017 Enel Chile Letter requested that Enel consider and respond to the following proposed transactions:

 

    a merger of EGPL with Enel Chile, which is conditioned on the completion of the tender offer described below;

 

    a tender offer by Enel Chile for all outstanding shares of Enel Generación (including in the form of ADSs) not owned by Enel Chile for consideration consisting of a combination of cash and Enel Chile Shares, subject to the following conditions: (i) more than 75% of the outstanding shares of Enel Generación are held by Enel Chile after the completion of the tender offer and (ii) execution of an amendment to Enel Generación’s bylaws, resulting in the company ceasing to be bound by Title XII of D.L. 3,500 and the 65% limitation on stock ownership and other restrictions being eliminated from Enel Generación’s bylaws; and

 

    subject to approval by the shareholders of Enel Chile, a capital increase to obtain Enel Chile Shares to be issued in the Offers.

The July 2017 Enel Chile Letter indicated that the proposed merger of EGPL with Enel Chile is expected to result in higher level of organic growth and greater diversification of the portfolio of projects of Enel Chile. In addition, the July 2017 Enel Chile Letter also indicated that in order to ensure that the proposed Reorganization be viable without Enel exceeding the 65% limitation on ownership of Enel Chile in Enel Chile’s bylaws and to optimize cash flow and the capital structure of Enel Chile and enhance earnings per share, Enel Chile should offer the minority shareholders of Enel Generación the opportunity to participate in the Offers and receive Enel Chile Shares.

The inclusion of the condition that Enel Chile holds more than 75% of the outstanding Enel Generación Shares after the completion of the tender offer is consistent with the goal stated in the July 2017 Enel Chile Letter that the proposed Reorganization be conducted in a manner to ensure that Enel would not exceed the 65% limitation on ownership of Enel Chile in the Enel Chile bylaws pursuant to Title XII of DL 3,500 (similar to the provision in the Enel Generación bylaws). Given that Enel already owns 60.6% of Enel Chile and 100% of EGPL, a merger of EGPL with Enel Chile in which Enel acquires additional Enel Chile Shares would have

 

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resulted in an increase of its share ownership in Enel Chile; however, its ownership interest in Enel Chile would be diluted to the extent that holders of Enel Generación Securities tender in the Offers. The requirement that Enel Chile acquire more than 75% of the outstanding Enel Generación Shares in the tender offer is intended, in part, to facilitate Enel’s compliance with the 65% limitation on ownership of Enel Chile in the Enel Chile bylaws following completion of the Reorganization.

On July 4, 2017, Enel Chile submitted the July 2017 Enel Chile Letter to the SVS on a confidential basis through a confidential significant event (hecho esencial reservado) filing.

Enel subsequently sent two letters from Mr. Starace, dated July 13, 2017 and July 25, 2017 (collectively, the “July 2017 Enel Letters”) to Enel Chile, indicating that Enel required more time to analyze and respond to the July 2017 Enel Chile Letter.

On August 25, 2017, Enel sent a letter from Mr. Starace (the “August 2017 Enel Letter”) to Enel Chile, which expressed a favorable view towards the proposed Reorganization but requested the following additional conditions:

 

    the proposed Reorganization must be carried out under market conditions considering the growth perspectives of renewable energy in Chile;

 

    the proposed Reorganization must increase the earnings per share of Enel Chile;

 

    before the consummation of the proposed Reorganization, Enel’s ownership interest in Enel Chile must be similar to its current ownership interests and Enel must at no times lose its controlling shareholder position and remain within the 65% maximum stock ownership limit set forth in Enel Chile’s bylaws; and

 

    after the completion of the proposed Reorganization, Enel Generación must no longer be subject to Title XII of DL 3,500 and the 65% limit on stock ownership and other restrictions must be eliminated from Enel Generación’s bylaws.

The Board of Directors of Enel Chile held an extraordinary meeting on the same day to review the August 2017 Enel Letter and unanimously resolved to initiate work, analysis and steps leading to the execution of the proposed Reorganization. Since such Reorganization would also involve Enel Generación, the Board of Directors of Enel Chile also resolved to communicate the details of the proposed Reorganization contained in the July 2017 Enel Chile Letter and the August 2017 Enel Letter to the Board of Directors of Enel Generación and request that the Board of Directors of Enel Generación also consider the proposed Reorganization. In addition, the Board of Directors of Enel Chile noted that Messrs. Herman Chadwick Piñera, Giulio Fazio, Vincenzo Ranieri, Salvatore Bernabei, Fernán Gazmuri Plaza and Pablo Cabrera Gaete, each a director of Enel Chile elected by Enel as the controlling shareholder, and had an interest in the proposed Reorganization under the Chilean Corporations Act.

Enel Chile first informed the market of the proposed Reorganization on August 25, 2017, including the determination of its Board of Directors at the meeting on August 25, 2017 as well as the July 2017 Enel Chile Letter, the July 2017 Enel Letters and the August 2017 Enel Letter through a significant event (hecho esencial) filing with the SVS.

On August 28, 2017, the Board of Directors of Enel Generación met to review the communication from Enel Chile as well as the July 2017 Enel Chile Letter and the August 2017 Enel Letter. Following its review, the Board of Directors of Enel Generación unanimously resolved to initiate all work and steps leading to an analysis of the proposed Reorganization applicable to Enel Generación. Enel Generación informed the market of such determination through a significant event (hecho esencial) filing with the SVS on the same day. The Board of Directors of Enel Generación also noted that Messrs. Giuseppe Conti, Francesco Giorgianni, Mauro Di Carlo, Umberto Magrini, Luca Noviello and Julio Pellegrini Vial, each a director of Enel Generación elected by Enel Chile as the controlling shareholder, have an interest in the proposed Reorganization under Chilean Corporations

 

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Act. In addition, Mr. Fabrizio Barderi declared that he is an employee of Enel Trade S.p.A., a company affiliated with Enel, and therefore has an interest in the Reorganization as well. Messrs. Di Carlo, Noviello and Magrini also declared that they own shares of Enel.

The transactions that are part of the proposed Reorganization would be regarded as related party transactions under the Chilean Corporations Act. Article 147 of the Chilean Corporations Act provides that a publicly held stock corporation (sociedad anónima abierta) may enter into a related party transaction when it is in the best interest of the company and is entered into under price, terms and conditions prevailing in the market at the time of approval. A related party transaction must meet the additional key terms:

 

    directors and executive officers who have an interest in the related party transaction shall disclose such interest;

 

    a majority of the disinterested Board of Directors or two-thirds of the outstanding voting shares at an ESM must approve the related party transaction; and

 

    the Board of Directors resolutions adopting the related party transaction must be disclosed at the next shareholders meeting along with the identification of the members who approved said transaction.

If an ESM is held to approve the related party transaction, the following requirements must also be met:

 

    the Board of Directors must appoint at least one independent evaluator to report on the conditions, effects and potential impact of the transaction on the company to shareholders;

 

    the Directors’ Committee may appoint an additional independent evaluator;

 

    the opinions of the independent evaluators must be made publicly available; and

 

    each director must make a publicly available statement as to whether the related party transaction is in the best interest of the company as well as disclose any relationship with the counterparty or such director’s interest in the related party transaction.

On August 30, 2017, the Board of Directors of Enel Chile held an extraordinary meeting and unanimously appointed Mr. Oscar Molina as an independent appraiser (perito independiente) to provide a report on the values of Enel Chile and EGPL and the merger exchange ratio in connection with the Merger in accordance with Articles 156 and 168 of the Chilean Corporate Regulations (Reglamento de Sociedades Anónimas). In addition, the Board appointed Larrain Vial Servicios Profesionales Ltda. (“LarrainVial”) to act as an independent evaluator (evaluador independiente) to evaluate the Reorganization as a related party transaction under Chilean law and provide an opinion in accordance with Article 147 of the Chilean Corporations Act. The Directors’ Committee of the Board of Directors of Enel Chile also met on the same date and unanimously appointed Econsult RS Capital S.p.A. (“Econsult”) as an additional independent evaluator to evaluate the Reorganization as a related party transaction under Chilean law and provide a separate opinion in accordance with Article 147 of the Chilean Corporations Act.

Similarly, on September 1, 2017, the Board of Directors Enel Generación held an extraordinary meeting and unanimously appointed Banchile Asesorĺa Financiera S.A. (“Banchile”) as an independent evaluator to evaluate the Reorganization as a related party transaction under Chilean law and provide an opinion in accordance with Article 147 of the Chilean Corporations Act. The Directors’ Committee of the Board of Directors of Enel Generación also met on the same date and unanimously appointed ASSET Chile S.A. (“ASSET Chile”) as an additional independent evaluator to evaluate the Reorganization as a related party transaction under Chilean law and provide a separate opinion in accordance with Article 147 of the Chilean Corporations Act.

 

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On September 20, 2017, the Board of Directors of EGPL held a meeting and unanimously appointed Mr. Felipe Schmidt an independent appraiser to provide a report on the values of Enel Chile and EGPL in connection with the Merger in accordance with Articles 156 and 168 of the Chilean Corporate Regulations. In addition, Enel appointed a financial advisor for EGPL, who was not engaged to prepare or deliver any reports or opinions.

From September 2017 through October 2017, the executive officers and the Boards of Directors of Enel Chile, Enel Generación and EGPL, as well as the Directors’ Committees of Enel Chile and Enel Generación, each held periodic meetings to review the proposed Reorganization. Specifically, Enel Chile considered that the fact that tender offers involving public companies in Chile are generally all cash tender offers and that there was almost no precedent of a tender offer involving a public company target that has a combination of cash and stock consideration. Enel Chile also considered that, under Chilean law, in connection with the Capital Increase (which is required in order to have a sufficient number of Enel Chile Shares available to issue to tendering holders of Enel Generación Securities), the existing shareholders of Enel Chile must be provided with preemptive rights to subscribe for additional Enel Chile Shares on terms that are no less favorable than the terms offered to purchasers of Enel Chile Shares in the proposed tender offer.

If the consideration for Enel Generación Shares in the Offers were a combination of cash and Enel Chile Shares, then, under Chilean law, Enel Chile shareholders must be allowed to exercise preemptive rights to purchase Enel Chile Shares in the Capital Increase by paying (i) cash or (ii) with Enel Generación Shares. If the Offers allow Enel Chile shareholders to exercise preemptive rights using Enel Generación Shares, it would give Enel Chile shareholders who also happen to own Enel Generación Shares a benefit not available to Enel Chile shareholders who do not own Enel Generación Shares.

Therefore Enel Chile considered the possibility of structuring the Offers as an all cash tender offer with the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition, which would result in, for all practical purposes, shareholders of Enel Generación who tender their Enel Generación Securities ultimately receiving consideration consisting of a combination of cash and Enel Chile Securities. By structuring the Offers in this manner, (i) the Enel Chile preemptive rights would be exercisable for cash only, and (ii) all Enel Chile shareholders will be on an equal footing in the preemptive rights offering, while those Enel Chile shareholders that also own Enel Generación Shares can participate in the Offers. Finally, given that the preemptive rights offering period and the tender offer period are expected to overlap to some extent, in a preemptive rights offering in which Enel Chile shareholders could use Enel Generación Shares to exercise their preemptive rights, Enel Chile could be viewed as purchasing Enel Generación Shares in the preemptive rights offering at the same time as it would be purchasing Enel Generación Shares in the Offers, which would be prohibited under Chilean law.

Based on such considerations, Enel Chile submitted an interpretive request letter with the SVS, to confirm that the SVS would not object if the Chilean Offer is structured as a cash tender offer subject to the Enel Chile Share Subscription Condition. On October 13, 2017, the SVS confirmed that SVS would not object if the Chilean Offer is conducted as a cash tender offer subject to the Enel Chile Share Subscription Condition. In addition, Enel Chile also submitted an interpretive request letter to the Chilean Superintendence of Pensions (Superintendencia de Pensiones) (the “Pension Superintendence”) to confirm whether AFPs may agree to apply part of the consideration payable for each Enel Generación Share tendered to subscribe for Enel Chile Shares. On October 24, 2017, the Pension Superintendence confirmed that the AFPs, as shareholders of Enel Generación, may agree to apply part of the consideration payable for each Enel Generación Share tendered to subscribe for Enel Chile Shares, subject to compliance with normal settlement procedures applicable to AFPs. On October 26, 2017, the respective Boards of Directors of Enel Chile and Enel Generación each held meetings to review the responses from the SVS and the Pension Superintendence. Based on such review, the Board of Directors of Enel Chile unanimously decided to clarify that the Offers would be conducted as cash tender offers, subject to the Enel Chile Share Subscription Condition and the Enel Chile U.S. Share/ADS Subscription Condition, as applicable, and such determination was made public through a significant event (hecho esencial) filing with the SVS on the

 

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same date. The Board of Directors of Enel Generación also unanimously acknowledged such clarification. In addition, Enel Generación also received a letter from the SVS on October 26, 2017, reminding Enel Generación that since the Reorganization is a related party transaction under Chilean law, the Reorganization must be approved either (i) by the unanimous approval of the directors of Enel Generación that do not have an interest in the Reorganization, or (ii) in the absence of such unanimous approval described in clause (i), by the shareholders of Enel Generación at an ESM with the approval of two-thirds of the outstanding voting shares.

During September 2017 and October 2017, the respective managements of Enel Chile, Enel Generación and EGPL, pursuant to a “clean team” protocol regarding the exchange of information entered into among Enel Chile, Enel Generación and EGPL, furnished the independent appraisers and independent evaluators involved in the transaction with information about their respective companies and certain financial projections for the five-year period 2018—2022 for Enel Chile, Enel Generación, Enel Distribución and EGPL. On September 26, 2017, Enel Chile, Enel Generación, Enel Distribución and EGPL held management presentations for the independent appraisers and the independent evaluators. None of Enel Chile, Enel Generación, Enel Distribución and EGPL publicly disclose management projections of the type provided to the independent appraisers and independent evaluators in connection with their respective engagements as described above, and such projections were not prepared with a view toward public disclosure. Those projections were based on market and macroeconomic variables that are inherently uncertain and are beyond the control of management, including:

 

    Exchange rates, inflation, and GDP growth;

 

    Commodity prices, including Brent Oil, Henry Hub Gas and Coal API2; and

 

    Market conditions in Chile, such as hydrological conditions, and the increase in electricity demand.

Additionally, the projections were based on a number of business assumptions with regards to regulation, volumes and prices of energy sales and purchases, operating cost, capital expenditures and future divestitures, which represent the management’s best estimates. See “—Projections Summary.”

On October 26, 2017, the Board of Directors of Enel Chile met with the representatives of LarrainVial, the independent evaluator appointed by the Board of Directors, and received the preliminary opinion of LarrainVial. The Board of Directors also met with Mr. Molina, the independent appraiser, and received his preliminary presentation. On the same date, the Directors’ Committee of Enel Chile also met with representatives of Econsult, the additional independent evaluator appointed by the Directors’ Committee, and received its preliminary opinion. These preliminary opinions and presentation were made public on Enel Chile’s website and Enel Chile notified the market of the availability of such preliminary presentation and opinions through a significant event (hecho esencial) filing with the SVS on the same date.

On October 26, 2017, the Board of Directors of Enel Generación met with the representatives of Banchile, the independent evaluator appointed by the Board of Directors, and received the preliminary opinion of Banchile. On the same date, the Directors’ Committee of Enel Generación also met with representatives of ASSET Chile, the additional independent evaluator appointed by the Directors’ Committee, and received its preliminary opinion. These preliminary opinions and presentation were made public on Enel Generación’s website and Enel Generación notified the market of the availability of such preliminary presentation and opinions through a significant event (hecho esencial) filing with the SVS on the same date.

On October 26, 2017, the Board of Directors of EGPL met with Mr. Schmidt, the independent appraiser, as well as a representative from Providence Capital, where Mr. Schmidt serves as Vice President, and received the preliminary report of Mr. Schmidt. Such preliminary report was made public on the website of Enel Green Power.

On November 3, 2017, the Board of Directors of Enel Generación met with the representatives of Banchile and received the final opinion of Banchile, an English translation of which is attached as Annex C to this

 

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prospectus. The Directors’ Committee of Enel Generación also held a separate meeting and met with the representatives of ASSET Chile and received its final opinion, an English translation of which is attached as Annex D to this prospectus. The final opinions of Banchile and ASSET Chile were also made public on Enel Generación’s website. Enel Generación notified the market of the availability of such final opinions through a significant event (hecho esencial) filing with the SVS on the same date.

On November 3, 2017, the Board of Directors of Enel Chile met with the representatives of LarrainVial and Mr. Molina and received their respective final opinion and report. The Directors’ Committee of Enel Chile also held a separate meeting on the same date and met with representatives of Econsult and received its final opinion. The final opinions of LarrainVial and Econsult as well as the final report of Mr. Molina were made public on Enel Chile’s website. Enel Chile notified the market of the availability of such final opinions and reports through a significant event (hecho esencial) filing with the SVS on the same date. The English translations of the final opinions of LarrainVial and Econsult are attached as Annexes E and F to this prospectus. The English translation of the final report of Mr. Molina is attached as Annex G to this prospectus.

On November 3, 2017, the Board of Directors of EGPL received the final report of Mr. Schmidt, an English translation of which is attached as Annex H to this prospectus. Mr. Schmidt’s final report was made public on Enel Green Power’s website.

On November 9, 2017, the Directors’ Committee of the Board of Directors of Enel Chile issued a report with respect to the Reorganization. See “—Position of Enel Chile and Enel as to the Fairness of the Reorganization—Summary of Enel Chile Directors’ Committee Report and Directors’ Statements—Summary of Enel Chile Directors’ Committee Report.” The Directors’ Committee report was made public on Enel Chile’s website. Enel Chile notified the market of the availability of the Directors’ Committee report through a significant event (hecho esencial) filing with the SVS on the same date.

On November 9, 2017, the Directors’ Committee of the Board of Directors of Enel Generación also issued a report with respect to the Reorganization. See “—Position of Enel Generación as to the Fairness of the Reorganization; Recommendation—Summary of Enel Generación Directors’ Committee Reports and Directors’ Statements—Summary of Enel Generación Directors’ Committee Reports.” The Directors’ Committee report was made public on Enel Generación’s website. Enel Generación notified the market of the availability of the Directors’ Committee report through a significant event (hecho esencial) filing with the SVS on the same date.

On November 14, 2017, the Directors’ Committee of Enel Chile held a meeting and reviewed and analyzed the financial statements and pro forma financial information required under Chilean law. On the same date, the Board of Directors of Enel Chile received and reviewed the statements by the individual directors of Enel Chile. The Board of Directors also reviewed the final opinions of the independent evaluators of Enel Chile and Enel Generación issued on November 3, 2017, the final reports of the independent appraisers of Enel Chile and EGPL issued on November 3, 2017, as well as the reports of the Directors’ Committees of Enel Chile and Enel Generación issued on November 9, 2017.

The Board of Directors of Enel Chile then discussed the terms of the Reorganization (the “General Terms of the Reorganization”), including, among other things, the tender offer price in the Offers, the exchange ratios for the Offers (evidencing the cash/stock allocation) and the Merger, the terms of the Capital Increase and the conditions of the Reorganization. In addition, the Board of Directors considered and discussed a number of factors relating to the fairness of the Reorganization, which are described in “—Position of Enel Chile and Enel as to the Fairness of the Reorganization—Position of Enel Chile as to the Fairness of the Reorganization.”

Based on such review and discussion, all of the members of the Board of Directors of Enel Chile (including Mr. Jofré, the only director who did not have an interest in the Reorganization under Chilean law) unanimously (i) determined that the Reorganization is fair and in the best interests of Enel Chile, including its shareholders, (ii) determined that the Board of Directors of Enel Chile believes that the Reorganization is substantively and

 

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procedurally fair to the unaffiliated shareholders of Enel Generación in accordance with Rule 13e-3 under the Exchange Act, (iii) approved and adopted the General Terms of the Reorganization, including the tender offer price of Ch$590 per Enel Generación Share (which was at the high end of the range of prices determined by the independent evaluators of Enel Chile), the subscription price of Ch$82 per Enel Chile Share (which was at the middle of the range of prices determined by the independent evaluators and independent appraiser of Enel Chile) and the 60% cash and 40% Enel Chile stock allocation of the tender offer price (which was at the middle to high end of the range of Enel Chile stock allocation percentages determined by the independent evaluators of Enel Chile), and (iv) summoned an ESM of Enel Chile to be held on December 20, 2017, to approve, among other things, the Reorganization as a related party transaction, the Merger, and the Capital Increase. The Board of Directors issued a public pronouncement of such determinations. Both the public pronouncement of the Board of Directors of Enel Chile and the General Terms of the Reorganization were made public on Enel Chile’s website. There was not an opportunity for Enel Chile and Enel Generación to negotiate nor any actual negotiations between Enel Chile and Enel Generación, with respect to the tender offer price or any other terms of the Reorganization contained in the General Terms of the Reorganization.

On November 14, 2017, the Directors’ Committee of the Board of Directors of Enel Generación also met, received the General Terms of the Reorganization, which contained the specific terms of the Reorganization (including the Offers and the Merger) and statements by the individual directors of Enel Generación and issued an additional report reflecting the General Terms of the Reorganization. At a meeting held on the same date, the Board of Directors of Enel Generación reviewed the additional report of the Directors’ Committee of Enel Generación, the final opinions of the independent evaluators of Enel Chile and Enel Generación issued on November 3, 2017, the final reports of the independent appraisers of Enel Chile and EGPL issued on November 3, 2017, the reports of the Directors’ Committees of Enel Generación issued on November 9, 2017 and November 14, 2017, the individual directors’ statements of Enel Generación issued on November 14, 2017, as well as the General Terms of the Reorganization.

The Board of Directors of Enel Generación discussed the General Terms of the Reorganization proposed by the Board of Directors of Enel Chile including, among other things, the tender offer price of Ch$590, the exchange ratios for the Offers and the Merger and the conditions of the Reorganization. In addition, the Board of Directors considered and discussed a number of factors relating to the fairness of the Reorganization, which are described in “—Position of Enel Generación as to the Fairness of the Reorganization; Recommendation—Position of Enel Generación as to the Fairness of the Reorganization.”

Following such discussion, all of the members of the Board of Directors of Enel Generación (including both Messrs. Atton and Cibié, the two directors who did not have an interest in the Reorganization under Chilean law), unanimously (i) determined that the Reorganization, assuming it is conducted pursuant to the terms proposed by Enel Chile on November 14, 2017, is fair and in the best interests of Enel Generación, including its shareholders, (ii) determined that the Reorganization is substantively and procedurally fair to the unaffiliated shareholders of Enel Generación in accordance with Rule 13e-3 under the Exchange Act, (iii) approved the Reorganization as a related party transaction and approved and adopted the General Terms of the Reorganization, and (iv) summoned an ESM of Enel Generación to be held on December 20, 2017, to provide, among other things, the information regarding the Reorganization and to approve the amendments to the bylaws of Enel Generación, which is a condition to the Offers. The Board of Directors issued a public pronouncement of such determinations and made it public on Enel Generación’s website.

On November 14, 2017, the Board of Directors of EGPL held a meeting at which the directors discussed the terms of the Reorganization proposed by the Board of Directors of Enel Chile, including, among other things, the exchange ratio for the Merger and the conditions of the Reorganization. Based on such review and discussion, all of the members of the Board of Directors of EGPL unanimously (i) determined that the Reorganization is fair and in the best interests of EGPL, including its shareholders, and (ii) summoned an ESM of EGPL to be held on December 20, 2017, to approve (x) the Reorganization as a related party transaction and (y) the Merger.

 

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On November 28, 2017, the Board of Directors of Enel Chile adopted a revised General Terms of the Reorganization. The revised General Terms of the Reorganization, an English translation of which is attached as Annex I to this prospectus, was amended to (i) specify that the Offers are subject to the satisfaction or waiver of the condition that Enel must not cease to be, at any time, the controlling shareholder of Enel Chile and must maintain at all times, more than 50.1% of the voting capital in Enel Chile, (ii) indicate that the Reorganization (except for the amendments to the bylaws of Enel Generación) shall be effective as of the first Chilean business day of the month following the date on which Enel Chile publishes the results notice declaring the Offers successful, and (iii) the amendments to the bylaws of Enel Generación shall be effective as of the date on which Enel Chile publishes the results notice declaring the Offers successful. See “The Reorganization—Conditions of the Reorganization.”

On November 29, 2017, the respective Boards of Directors of Enel Generación and EGPL also adopted the revised General Terms of the Reorganization.

Reasons for the Reorganization

The Offers are part of a proposed Reorganization, which seeks to consolidate Enel’s conventional and non-conventional renewable energy generation businesses in Chile under one company and to increase Enel Chile’s ownership interest in Enel Generación to obtain the potential benefits of such further consolidation of ownership, and must be considered within the context of the Reorganization.

As described above, the specific impetus for Enel Chile’s analysis of a potential transaction structure which led to the proposal regarding the proposed Reorganization was the impasse reached in February 2017 between Enel Green Power and Enel Generación regarding the joint development of renewable energy projects in Chile. Enel Chile, which was spun-off from Enel Américas in connection with the 2016 Reorganization completed at the end of 2016, shares administrative services and personnel with Enel Américas and prior to early 2017, many of those resources were focused on the 2016 Reorganization. However, beginning in February 2017, Enel Chile’s management began to consider the breakdown of the negotiations between Enel Green Power and Enel Generación. In view of the increasing focus on non-conventional renewable energy generation in the Chilean market and Enel Chile’s Open Power strategy that places a high priority on non-conventional renewable energy, it was important to Enel Chile to address Enel Chile’s relationship with Enel’s renewable energy business in Chile, which had historically been kept separate from Enel Chile and held through the Enel Green Power group of Enel. In addition, the impasse left unresolved the potential conflicts of interest between Enel Generación and Enel Green Power in Chile, which was the original reason for the discussions between Enel Generación and EGP Chile regarding the joint development of renewable energy projects in Chile. In considering a potential structure to achieve its goals, Enel Chile also incorporated into its analysis its long-standing consideration of the potential benefits of increasing its ownership interest in Enel Generación, including its desire to reduce Enel Chile’s holding company discount and to consolidate its control over Enel Generación and increase its share of Enel Generación’s income.

Over a period of several months, Enel Chile developed the general framework of the corporate reorganization in which Enel’s non-conventional renewable energy generation business in Chile would be brought under the umbrella of the Enel Chile group of companies and Enel Chile would further consolidate its ownership of its conventional energy generation business, bringing together the leading conventional and non-conventional renewable energy generation businesses in Chile and the leading energy distribution business under a single company. This analysis led to the proposed transaction structure of the Reorganization, which involves three components: (i) the Merger, (ii) the Offers and (iii) the Capital Increase, as proposed to Enel in the July 2017 Enel Chile Letter.

The completion of the Reorganization is expected to provide Enel Chile with the following principal benefits:

 

    Higher market capitalization and liquidity, as a result of the combination of Enel Chile with EGPL.

 

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    Higher and more diversified organic growth through the integration of Chilean renewable activities in Chile currently owned by EGPL, giving Enel Chile shareholders access to a more balanced energy portfolio based on both conventional and non-conventional renewable energy, as well as electricity distribution.

 

    A significantly higher equity stake in Enel Generación, Enel Chile’s principal subsidiary, from its current interest of 60% to an interest exceeding 75%.

 

    Higher share of Enel Generación’s income and a simpler and clearer overall structure aligned with shareholder interests.

 

    Potential reduction of the holding company discount.

See also “Position of Enel Chile and Enel as to the Fairness of the Reorganization.”

Enel, as controlling shareholder of Enel Chile and of EGPL, received Enel Chile’s proposal set forth in the July 2017 Enel Chile Letter and analyzed the proposed Reorganization during July and August 2017. In August 2017, Enel responded to the July 2017 Enel Chile Letter and indicated that it would support the proposed Reorganization provided that it satisfied certain conditions, including, among others, the conditions that the Reorganization must increase the earnings per share of Enel Chile and Enel must maintain its controlling shareholder position at all times while remaining within the 65% maximum stock ownership limit set forth in Enel Chile’s bylaws. See “—Background of the Offers—Background of the Reorganization, the Offers and the Merger.” The completion of the Reorganization is expected to allow Enel, as the controlling shareholder of Enel Chile, to share in many of the same benefits that Enel Chile would enjoy, as described above. See also “Position of Enel Chile and Enel as to the Fairness of the Reorganization.”

Enel Generación received the proposal from Enel Chile, its controlling shareholder, in August 2017 and the Board of Directors of Enel Generación unanimously resolved to initiate all work and steps leading to an analysis of the proposed Reorganization as it related to Enel Generación. After conducting an analysis of the Reorganization with the assistance of independent evaluators and also reviewing the proposed terms of the Reorganization that Enel Chile made available on November 14, 2017, the Board of Directors of Enel Generación (including both non-interested directors) unanimously approved the Reorganization as a related party transaction under Chilean law on November 14, 2017. The Board of Directors believed that the Reorganization, if conducted pursuant to the terms proposed by Enel Chile on November 14, 2017, would benefit Enel Generación and its shareholders mainly for the following reasons: (i) Enel Generación shareholders who participate in the Offers may capture the value of their ownership position in Enel Generación by becoming shareholders of Enel Chile; (ii) the alignment of interests of Enel Generación shareholders that tender in the Offers with the interests of the controlling shareholder; and (iii) the potential reduction of conflicts of interest between Enel Generación and EGP Chile following the consummation of the Reorganization. See “—Background of the Offers—Background of the Reorganization, the Offers and the Merger” and “—Position of Enel Generación as to the Fairness of the Reorganization; Recommendation.”

Plans for Enel Generación Following the Offers; Management and Operations after the Offers

Enel Chile intends to retain all of the Enel Generación Shares acquired upon the consummation of the Offers and to cancel all Enel Generación ADSs acquired upon consummation of the U.S. Offers and retain the underlying Enel Generación Shares. Once the Offers are completed, the number of Enel Generación Shares and Enel Generación ADSs that are publicly held may be significantly reduced and there may no longer be an active trading market for Enel Generación Shares or Enel Generación ADSs or the liquidity of any such market may be significantly reduced. If Enel Generación Shares lose the “sufficient stock market liquidity” (presencia bursátil) status (as defined in “Material Chilean Tax Consequences—Material Chilean Tax Consequences of the U.S. Offer to Foreign Holders—The U.S. Offer”) in the Chilean Stock Exchanges, certain holders of Enel Generación Shares would lose a capital gains tax exemption under Chilean law.

 

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It is possible that the Enel Generación Shares and Enel Generación ADSs will fail to meet the criteria for continued listing on Chilean Stock Exchanges and the NYSE after the completion of the Offers. If this were to happen, the Enel Generación Shares or Enel Generación ADSs could be delisted from one or more of these exchanges by action taken by the relevant exchange. In addition, we may decide to cause Enel Generación to delist from the NYSE, terminate the deposit agreement for the Enel Generación ADSs and deregister the Enel Generación Shares and the Enel Generación ADSs under the Exchange Act, which will suspend Enel Generación’s obligation to file reports under the Exchange Act. The decision would depend on, among other factors, the results of the Offers and on our management’s evaluation of the public float, trading volumes and liquidity of the Enel Generación ADSs after completion of the Offers. In the event Enel Generación Securities are delisted, the value of any Enel Generación Securities not tendered in the Offers could decrease to a price per share significantly less than the consideration offered in the Offers.

In addition, AFPs may no longer be able to invest in Enel Generación at the levels permitted under Title XII of DL 3,500 following the Offers because Enel Generación will no longer be subject to Title XII of DL 3,500 due to the condition of the Offers that requires the removal of the 65% stock ownership limit applicable to any shareholder that was included in Enel Generación’s bylaws in accordance with Title XII of DL 3,500 and other related restrictions. As a result, AFPs who have not tendered their Enel Generación Shares in the Offers may be required to divest some of their Enel Generación Shares if they are above the permitted level and the liquidity of Enel Generación Securities may be further reduced and the value of Enel Generación Securities not tendered in the Offers could further decrease. See “Risk Factors—Risks Related to the Offers—Those holders who do not tender their Enel Generación Securities in the Offers will continue to be minority shareholders and ADS holders of Enel Generación. The value of any Enel Generación Securities not tendered in the Offers could decrease, and there may not be a liquid market for the Enel Generación Securities following the completion of the Offers.”

Following the completion of the Offers, it is anticipated that Enel Generación will continue to conduct business substantially as it is being conducted, with the members of the Board of Directors and management of Enel Generación continuing in their current roles, subject to the regular election and appointment process of Enel Generación. As of the date of this prospectus, the Enel Filing Persons and Enel Generación have no current plans or proposals, and is not engaged in any negotiations, which relate to or would result in an extraordinary transaction involving the business or management of Enel Generación or any of its subsidiaries, such as a merger, reorganization, liquidation, relocation of any operations, or sale or transfer of a material amount of assets, or the incurrence of any indebtedness, except as described in this prospectus. The Enel Filing Persons and Enel Generación currently do not have any plans to change the dividend policy of Enel Generación following the consummation of the Offers. Following the Offers, the Enel Filing Persons and Enel Generación will continuously evaluate and review the business and operations of Enel Generación and may propose or develop new plans and proposals which it considers to be in the best interests of the Enel Filing Persons, Enel Generación and their respective shareholders, including engaging in acquisitions of new businesses or assets or dispositions of existing businesses or assets, the movement of businesses or assets within the Enel corporate structure, the alteration of the mix of assets held by Enel Generación, changing the board of directors or management of Enel Generación or any of the types of extraordinary transactions described above.

Certain Effects of the Offers and the Merger

Upon consummation of the Offers, holders of Enel Generación Securities that are acquired by Enel Chile pursuant to the Offers will cease to have direct equity interest in Enel Generación and will not have any right to vote on Enel Generación’s corporate matters or to directly participate in Enel Generación’s future earnings. However, as a result of subscribing for Enel Chile Securities, such holders will have the opportunity to participate in the future earnings, profits and growth of Enel Chile and will have the right to vote on Enel Chile’s corporate matters. In addition, following the consummation of the Reorganization, due to Enel Chile’s ownership of Enel Generación and its Chilean electricity distribution business through Enel Distribución and the merger of EGPL’s renewable energy business into Enel Chile, holders of Enel Generación Securities that become holders of Enel Chile Securities pursuant to the Enel Chile U.S. Share/ADS Subscription Condition or the Enel Chile

 

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Share Subscription Condition of the Offers, as applicable, will have the opportunity to participate directly in the future earnings, profits and growth of the businesses of Enel Chile and indirectly in the future earnings, profits and growth of the businesses of Enel Generación as well as Enel Distribución and the renewable business currently conducted by EGPL and will indirectly face the risk of losses or the risk of a decline in the value of Enel Generación, Enel Distribución, or the renewable business currently conducted by EGPL following consummation of the Reorganization.

To the extent that Enel Chile’s percentage ownership of Enel Generación is increased pursuant to the Offers, its interests in the net book value and net earnings of Enel Generación will increase correspondingly to up to 100% if all the outstanding Enel Generación Securities were acquired pursuant to the Offers. As a result, Enel Chile will receive a greater benefit from any income generated by Enel Generación’s operations and any increase in the value of Enel Generación following the Offers. Similarly, Enel Chile will bear a greater portion of the losses generated by Enel Generación’s operations and any decrease in the value of Enel Generación after completion of the Offers.

To the extent that Enel Chile merges with EGPL, subject to the satisfaction of the conditions described herein (see “The Merger—Conditions of the Merger”), Enel Chile will receive the benefit from any income generated by the operations of EGPL and any increase in the value of EGPL following the Offers. Similarly, Enel Chile will bear all the losses generated by EGPL and any decrease in the value of EGPL after completion of the Offers.

The table below sets forth the direct and indirect interests of the Enel Filing Persons in the net book value and net earnings of Enel Generación prior to and immediately after the Offers and the Merger, based upon the net book value of Enel Generación at June 30, 2017 and net income of Enel Generación for the six months ended June 30, 2017.

Prior to the Offers and the Merger

 

     Interest in Enel
Generación’s

Net Book Value
     Interest in Enel
Generación’s

Net Income
 
Name    Ch$
(in thousands)
     %      Ch$
(in thousands)
     %  

Enel Chile

     1,072,868,421        59.98        110,960,175        59.98  

Enel S.p.A.(1)

     650,375,055        36.36        67,264,287        36.36  

Immediately after the Offers and the Merger

 

     Interest in Enel
Generación’s
Net Book Value
     Interest in Enel
Generación’s
Net Income
 
Name    Ch$
(in thousands)
     %      Ch$
(in thousands)
     %  

Enel Chile

     1,788,710,271        100.00        184,995,290        100.00  

Enel S.p.A.(1)

     1,069,827,613        59.81        110,645,683        59.81  

 

(1) Enel currently has a 60.6% direct ownership interest in Enel Chile. Based on the assumption that 40% of the cash consideration in the Offers is applied to subscribe for Enel Chile Securities and based on valuation of EGPL at market value, Enel is expected to have an approximately 59.8% ownership interest in Enel Chile immediately after the Offers and the Merger. Prior to the merger of Enel South America S.r.l., a wholly owned subsidiary of Enel, into Enel, effective November 16, 2017, Enel held its ownership interest in Enel Chile through Enel South America S.r.l. As a result of the merger, Enel currently holds its ownership interest in Enel Chile directly.

 

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Ownership of Enel Chile and Enel Generación After the Reorganization

After completion of the Reorganization, Enel Chile is expected to remain a majority owner (between more than 75% and 100%) of Enel Generación. Enel, through its majority ownership of Enel Chile, is expected to remain the majority owner and ultimate parent of Enel Generación. The table below sets forth the expected ownership structure of Enel Chile following the completion of the Reorganization based on the assumptions set forth below.

Ownership Structure of Enel Chile after the Reorganization

 

Enel Chile’s Percentage

Ownership in Enel Generación

after the Offers

   Enel(1)     Tendering Enel
Generación
Shareholders
    Existing Enel Chile
Shareholders
 

75%(2)

     65     5     30

100%(3)

     60     13     27

 

 

(1) Enel is currently the controlling shareholder of Enel Chile and the sole shareholder of EGPL and will be diluted to the extent Enel Chile Shares are subscribed for by tendering Enel Generación shareholders in connection with the Offers and will acquire additional Enel Chile Shares in the Merger.
(2) Assumes that (i) approximately 3.5 billion and 13.1 billion new Enel Chile Shares will be issued in the Offers and the Merger, respectively, based on the proposed implied exchange ratio of 2.87805 Enel Chile Shares per Enel Generación Share for the Enel Chile Shares subscribed for in the Offers and the exchange ratio of 15.8 Enel Chile Shares per EGPL share in the Merger, and (ii) none of the existing shareholders of Enel Chile will exercise preemptive rights in the Capital Increase.
(3) Assumes that (i) approximately 9.4 billion and 13.1 billion new Enel Chile Shares will be issued in the Offers and the Merger, respectively, based on the proposed implied exchange ratio of 2.87805 Enel Chile Shares per Enel Generación Share for the Enel Chile Shares subscribed for in the Offers and the exchange ratio of 15.8 Enel Chile Shares per EGPL share in the Merger, and (ii) the existing shareholders of Enel Chile will exercise preemptive rights in the Capital Increase for newly issued Enel Chile Shares up to the maximum threshold that would leave, after the completion of the preemptive rights offering, a sufficient number of Enel Chile Shares available to issue in connection with the subscriptions in the Offers.

Tax Consequences

Material U.S. Tax Consequences

For U.S. federal income tax purposes, (i) the tender by a U.S. Holder (as defined in “Material United States Tax Consequences”) participating in the U.S. Offer of Enel Generación Shares (or Enel Generación ADSs) for only cash and (ii) the subsequent, mandatory subscription by such U.S. Holder for Enel Chile Shares (or Enel Chile ADSs) should be treated as a single transaction in which such U.S. Holder exchanges Enel Generación Shares (or Enel Generación ADSs) for a combination of cash and Enel Chile Shares (or Enel Chile ADSs). Notwithstanding the fact that the U.S. Offer is a cash tender offer subject to the Enel Chile U.S. Share/ADS Subscription Condition, the following discussion assumes, for U.S. federal income tax purposes only, that a U.S. Holder of Enel Generación Shares (or Enel Generación ADSs) that tenders Enel Generación Shares (or Enel Generación ADSs) in the U.S. Offer would be considered to have done so in exchange for a combination of cash and Enel Chile Shares (or Enel Chile ADSs).

The receipt of Enel Chile Shares or Enel Chile ADSs and cash pursuant to the U.S. Offer will be a taxable transaction for U.S. federal income tax purposes to U.S. Holders.

A U.S. Holder who receives Enel Chile Shares or Enel Chile ADSs and cash pursuant to the U.S. Offer will generally recognize gain or loss equal to the difference between such U.S. Holder’s amount realized and such U.S. Holder’s tax basis for the Enel Generación Shares (or Enel Generación ADSs) tendered. If a Chilean tax is withheld on such disposition, a U.S. Holder’s amount realized will include the gross amount of the proceeds of the disposition before deduction of the Chilean tax, and so will equal the sum of the amount of cash received (or

 

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deemed received) and the fair market value of the Enel Chile Shares or Enel Chile ADSs received (or deemed received) in exchange for the Enel Generación Shares (or Enel Generación ADSs) tendered by such U.S. Holder, including any amount withheld in respect of Chilean withholding (see “Material Chilean Tax Consequences—Chilean Tax Consequences of Ownership of Enel Chile Shares or Enel Chile ADSs by Foreign Holders—Taxation on Capital Gains” below for more information on Chilean withholding taxes). That gain or loss generally will constitute capital gain or loss. The deductibility of capital losses is subject to limitations. See “Material United States Tax Consequences” for a more complete discussion of certain U.S. federal income tax consequences of the U.S. Offer.

This tax treatment may not apply to all shareholders. Determining the actual tax consequences of the U.S. Offer to you can be complicated. They will depend on your specific situation and on variables not within our control. You should consult your own tax advisor for a full understanding of the tax consequences of the U.S. Offer to you.

Material Chilean Tax Consequences

Any gain or loss recognized by a Foreign Holder (as defined in “Material Chilean Tax Consequences”) upon the sale of the Enel Generación ADSs pursuant to the U.S. Offer will not be subject to Chilean taxation.

Gains recognized by a Foreign Holder upon the sale of Enel Generación Shares will not be subject to Chilean taxes provided that all the following mandatory requirements are met:

(a) Enel Generación Shares have a “sufficient stock market liquidity” (presencia bursátil) status (as defined in “Material Chilean Tax Consequences—Material Chilean Tax Consequences of the U.S. Offer to Foreign Holders—The U.S. Offer”) in the Chilean Stock Exchanges;

(b) the sale of Enel Generación Shares must be made in (1) any of the Chilean Stock Exchanges authorized by the SVS, (2) a tender offer for Enel Generación Shares conducted under Title XXV of the Chilean Securities Market Law (which the Chilean portion of the Offers would be), or (3) as a consequence of a contribution to a fund as regulated in Section 109 of Chilean Income Tax Law;

(c) Enel Generación Shares must have been originally acquired (1) in any of the Chilean Stock Exchanges authorized by the SVS, (2) in a tender offer for Enel Generación Shares conducted under Title XXV of the Chilean Securities Market Law, (3) in an initial public offering of Enel Generación Shares during the formation of Enel Generación or a subsequent capital increase of Enel Generación, (4) upon conversion of convertible bonds of Enel Generación, or (5) due to the redemption of a fund’s quota as regulated in Section 109 of Chilean Income Tax Law; and

(d) Enel Generación Shares must have been acquired after April 19, 2001.

If the Enel Generación Shares do not qualify for the above exemption, capital gains on their sale could be subject to the general tax regime, with a 27% Chilean corporate income tax (“CIT”), the rate applicable during 2018, and a 35% Chilean withholding tax, the former being creditable against the latter.

No Chilean stamp, issue, registration or similar taxes or duties will apply to the sale of Enel Generación Shares or Enel Generación ADSs pursuant to the U.S. Offer.

For a more complete discussion of the material Chilean income tax consequences of the Offers, see “Material Chilean Tax Consequences.”

Enel Generación shareholders are strongly encouraged to consult their own tax advisors as to the specific tax consequences of the Offers in light of their personal tax situation, including the applicability and effects of federal, state, local and foreign income and other tax laws.

 

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The Offers as a Related Party Transaction Under Chilean Law

The Offers do not require the approval by the holders of Enel Chile Shares or Enel Generación Shares as a separate matter. However, since the Offers are part of the Reorganization, which is deemed to be a related party transaction under Chilean law, the Offers will not be launched or consummated without the approval by shareholders or the Board, as applicable, of Enel Chile, Enel Generación and EGPL of the Reorganization (including the Offers) as a related party transaction. See “The Reorganization—Shareholder Approvals” for a description of the matters to be approved by the shareholders of Enel Chile, Enel Generación and EGPL at their respective ESMs schedule to be held on December 20, 2017.

Position of Enel Generación as to the Fairness of the Reorganization; Recommendation

The Offers are deemed to be a “going private” transaction under Rule 13e-3 and the related rules under the Exchange Act, which requires Enel Generación to express its belief as to the fairness of the Offers, which are part of the Reorganization, to the unaffiliated shareholders of Enel Generación. Enel Generación is making the statements as to the fairness of the Reorganization (including the Offers, as well as the Capital Increase and the Merger) to the unaffiliated shareholders of Enel Generación included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and the related rules under the Exchange Act. Enel Generación believes that the Reorganization is substantively and procedurally fair to the unaffiliated shareholders of Enel Generación.

Position of Enel Generación as to the Fairness of the Reorganization

The Board of Directors of Enel Generación reviewed the Reorganization, including the various reports, opinions and presentations it received in connection with the Reorganization. After consideration, the Board of Directors of Enel Generación unanimously resolved that the Reorganization (including the Offers and the Merger) is substantively and procedurally fair to the unaffiliated shareholders of Enel Generación that participate in the Offers.

In reaching its fairness determination on behalf of Enel Generación, the Board of Directors considered, reviewed and adopted the following opinions and reports:

 

    Opinion of Banchile, the independent evaluator (evaluador independiente) appointed by the Board of Directors of Enel Generación;

 

    Opinion of ASSET Chile, the independent evaluator appointed by the Directors’ Committee of the Board of Directors of Enel Generación;

 

    Opinion of LarrainVial, the independent evaluator appointed by the Board of Directors of Enel Chile;

 

    Opinion of Econsult, the independent evaluator appointed by the Directors’ Committee of the Board of Directors of Enel Chile;

 

    Report of Oscar Molina, the independent appraiser (perito independiente) appointed by the Board of Directors of Enel Chile; and

 

    Report of Felipe Schmidt, the independent appraiser appointed by the Board of Directors of EGPL.

Each of these opinions and reports has been made public by the respective companies on their websites and was filed with the SEC prior to the fairness determination by the Board of Directors of Enel Generación. Each of the independent evaluators was engaged by Enel Generación and Enel Chile, as applicable, to evaluate the Reorganization as a related party transaction under Chilean law and provide opinions in accordance with Article 147 of the Chilean Corporations Act. Each of the independent appraisers was engaged by Enel Chile and EGPL to provide a report in accordance with Articles 156 and 168 of the Chilean Corporate Regulations (Reglamento de Sociedades Anónimas) on the valuations of Enel Chile (which includes Enel Generación) and EGPL and the merger exchange ratio in connection with the Merger.

 

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The Board of Directors of Enel Generación also considered the following reports and statements, which were prepared in accordance with Chilean law: (i) the reports of the Directors’ Committee of the Board of Directors of Enel Generación issued on November 9, 2017 and November 14, 2017; and (ii) the statements of the individual directors of Enel Generación, each of which were prepared in accordance with Chilean law.

In reaching its determination with respect to the substantive and procedural fairness of the Reorganization to the unaffiliated shareholders of Enel Generación, the Board of Directors of Enel Generación considered a number of factors, including, without limitation, the following:

 

    Knowledge of Enel Chile’s Business—The Board of Directors considered its knowledge of Enel Chile’s business, financial condition, results of operations, industry, competitors and prospects, and knowledge of Enel Chile’s management due to the existing relationships between Enel Generación and Enel Chile.

 

    The Enel Chile U.S. Share/ADS Subscription Condition and Enel Chile Share Subscription Condition—The Board of Directors considered the fact that the unaffiliated shareholders of Enel Generación who tender their Enel Generación Securities in the Offers will become shareholders of Enel Chile pursuant to the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition, as applicable. As a result, the unaffiliated shareholders of Enel Generación have an opportunity to participate as shareholders in Enel Chile, which includes both Enel Generación and Enel Distribución and will also include EGPL after the Merger.

 

    Potential Benefits—The Board of Directors considered the fact that the potential benefits of the Reorganization to Enel Chile will also benefit unaffiliated shareholders of Enel Generación who tender their Enel Generación Securities in the Offers and become shareholders of Enel Chile. These potential benefits include:

 

    Enel Chile will consolidate conventional and renewable electricity generation and electricity distribution businesses under one company following the Reorganization;

 

    The growth potential of EGPL’s renewable business in Chile;

 

    The potential reduction of conflicts of interest between EGPL and Enel Generación;

 

    The potential reduction of Enel Chile’s holding company discount;

 

    The increased liquidity of Enel Chile shares due to the larger Enel Chile capitalization following the Reorganization; and

 

    A more optimal Enel Chile capital structure, incorporating more debt.

 

    Rights of Shareholders Substantially Consistent—The Board of Directors noted that unaffiliated shareholders of Enel Generación who tender their Enel Generación Securities in the Offers and become shareholders of Enel Chile will have substantially equivalent shareholder rights in Enel Chile following the consummation of the Offers, except that such former shareholders of Enel Generación will not have (i) statutory merger dissenters’ rights in the Merger because they will not be shareholders of Enel Chile at the time of the Enel Chile shareholder vote on the Merger or (ii) the benefit of guaranteed access to the foreign exchange markets under Chapter XXVI of the former Compendium of Foreign Exchange Regulations (the “Compendium”) (which has no practical benefit in the current foreign exchange environment) because Enel Chile is subject to Chapter XIV of the Compendium rather than Chapter XXVI.

 

    Financial Terms of the Offers

 

    Current market prices—The closing trading price of Enel Generación Shares on the Santiago Stock Exchange was Ch$540.58 per share on November 13, 2017, such that the tender offer price of Ch$590 per Enel Generación Share represents a premium of approximately 9.1% over the current market price.

 

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    Historical market prices—The closing trading price of Enel Generación Shares on the Santiago Stock Exchange was Ch$488 per share on August 25, 2017, the date of the announcement of the Reorganization, such that the tender offer price represents a premium of approximately 21% over the pre-announcement market price.

 

    Net book value—Enel Generación’s business is generally valued at or near book value and the tender offer price represents a premium of approximately 154% over the net book value per share of approximately Ch$232 per share as of September 30, 2017.

 

    Going concern value of Enel Generación—The Board of Directors did not establish a specific going concern value of Enel Generación and did not believe that there is a single method for determining going concern value. However, in reaching its fairness determination, the Boards of Directors considered, reviewed and adopted the valuation analyses of the independent appraisers of Enel Chile and EGPL and the independent evaluators of Enel Chile and Enel Generación, and determined that such valuations represent reasonable valuations of Enel Generación as it continues to operate its business.

 

    Liquidation value—The Board of Directors did not consider liquidation value because it considered Enel Generación to be a viable going concern.

 

    Purchase prices paid in previous purchases in previous two years—As there have not been any firm offers for the merger or consolidation of Enel Generación into another company, the sale or transfer of all or any substantial part of the assets of Enel Generación to another company, or the purchase of a controlling stake in Enel Generación by another company, other than the Offers, in the previous two years. Therefore the Board of Directors did not consider this as a factor in its determination.

 

    Alternative offers—The Board of Directors did not seek to contact potential alternative bidders because the Offers are part of a larger internal corporate reorganization and the Board of Directors believed that the Offers are not the type of transaction that would result in another bidder submitting a bid to acquire Enel Generación.

In addition, the Board of Directors of Enel Generación considered a number of factors relating to procedural safeguards in connection with the Reorganization including those discussed below, each of which it believed supported its decision and provided assurance of the procedural fairness of the Reorganization to the unaffiliated shareholders of Enel Generación. Specifically, in making its determination regarding procedural fairness, the Board of Directors took into consideration the following factors:

 

    Independence of the Directors’ Committee and the Board of Directors of Enel Generación

 

    None of the directors of Enel Generación, including members of the Directors’ Committee, are employees of Enel Generación.

 

    All three members of the Directors’ Committee meet the independence requirements under both U.S. and Chilean laws and regulations.

 

    Two of the three members of the Directors’ Committee are unaffiliated with the Enel Filing Persons and were determined not to have an interest in the Reorganization under Article 147 of the Chilean Corporations Act. Mr. Julio Pellegrini Vial, the member of the Directors’ Committee who was deemed to have an interest in the Reorganization under the Chilean Corporations Act, was deemed to have interest solely due to the fact that he was elected as a director of Enel Generación by Enel. However, Mr. Pellegrini is not an employee of the Enel Filing Persons or their affiliates.

 

   

The Board of Directors was aware of and identified the directors that are deemed to have an interest in the Reorganization for purposes of Article 147 of the Chilean Corporations Act. Specifically, seven of the nine members of the Board of Directors were deemed to have an interest

 

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in the Reorganization because (i) six of such directors were elected as directors of Enel Generación by Enel Chile, (ii) one director is an employee of an affiliate of Enel, and (iii) three of the six directors described in clause (i) also own shares of Enel. However, no director owns any Enel Generación Securities and no director is party to any arrangements with the Enel Filing Persons or Enel Generación that provide for any pay or benefits that are based on or otherwise relate to the Reorganization.

 

    Determination of the Directors’ CommitteeAll of the members of Directors’ Committee of the Board of Directors of Enel Generación, unanimously concluded that the Reorganization is in the best interest of Enel Generación, including its shareholders (which the Board believes includes all unaffiliated shareholders of Enel Generación). See “—Summary of Enel Generación Directors’ Committee Reports and Directors’ Statements—Summary of Enel Generación Directors’ Committee Reports.”

 

    Appointment of Independent EvaluatorsThe Board of Directors and Directors’ Committee of Enel Generación each retained an independent evaluator, who provided their opinions on, among other things, the valuations of the companies party to the Reorganization and the fairness of the Reorganization to Enel Generación and the shareholders of Enel Generación (which the Board of Directors believes includes all unaffiliated shareholders of Enel Generación) in accordance with Article 147 of the Chilean Corporations Act, each of which was made publicly available.

 

    Shareholder ApprovalAlthough the Offers do not require shareholder approval by a majority vote of unaffiliated shareholders, unaffiliated shareholders of Enel Generación have an ability to veto the Offers because:

 

    The Reorganization is regarded as a related party transaction under the Chilean Corporations Act and, therefore, the Reorganization requires the affirmative vote of two-thirds of the outstanding voting shares of Enel Generación (including the 60.0% ownership interest of Enel Chile); and

 

    The Offers are conditioned on the amendment of the bylaws of Enel Generación, which requires the affirmative vote of 75% of the outstanding voting shares of Enel Generación.

 

    Compliance with Chilean Corporations ActThe Reorganization is regarded as a related party transaction under the Chilean Corporations Act and as such, all the procedural safeguards required for related party transactions under the Chilean Corporations Act have been implemented, including, among other things:

 

    The obligations of Enel Chile and Enel Generación to each appoint at least one independent evaluator whose task is to issue an opinion indicating whether the Reorganization is in the best interest of the respective companies, including their respective shareholders, and whether the Reorganization is being conducted on an arms’ length basis (e.g., whether the terms of the Reorganization correspond to the terms, price and conditions that prevail in the market at the time of the approval of the transaction). This obligation was satisfied by the appointment of Econsult and LarrainVial by Enel Chile and the appointment of ASSET Chile and Banchile by Enel Generación.

 

    The obligations of Enel Chile and EGPL to each appoint an independent appraiser whose task is to provide a report in accordance with Articles 156 and 168 of the Chilean Corporate Regulations regarding the valuation of Enel Chile (which includes Enel Generación) and EGPL, as well as the merger exchange ratio. This obligation was satisfied by the appointment of Mr. Molina by Enel Chile and the appointment of Mr. Schmidt by EGPL.

 

   

The obligations of the Directors’ Committees of Enel Chile and Enel Generación to issue a report regarding the Reorganization. This obligation was satisfied by the respective Directors’ Committees of Enel Chile and Enel Generación. See “—Position of Enel Chile and Enel as to the Fairness of the Reorganization—Summary of Enel Chile Directors’ Committee Report and

 

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Directors’ Statements—Summary of Enel Chile Directors’ Committee Report” and “—Summary of Enel Generación Directors’ Committee Reports and Directors’ Statements—Summary of Enel Generación Directors’ Committee Reports.”

 

    The obligation of each director of Enel Chile and Enel Generación to issue an individual statement, in which each director must express his or her opinion regarding whether the Reorganization is in the best interest of the respective companies, including their respective shareholders, and whether its terms are equivalent to market conditions or not. This obligation was satisfied by the individual directors of Enel Chile and Enel Generación. See “—Position of Enel Chile and Enel as to the Fairness of the Reorganization—Summary of Enel Chile Directors’ Committee Report and Directors’ Statements—Summary of Enel Chile Directors’ Statements” and “—Summary of Enel Generación Directors’ Committee Reports and Directors’ Statements—Summary of Enel Generación Directors’ Statements.”

 

    The SVS informed Enel Generación, through a letter dated October 26, 2017, that pursuant to Article 147(4) of the Chilean Corporations Act, the Reorganization as a related party transaction must be approved either (i) by the unanimous approval of the directors of Enel Generación that do not have an interest in the Reorganization, or (ii) in the absence of such unanimous approval described in clause (i), by the shareholders of Enel Generación at an extraordinary shareholders’ meeting with the approval of two-thirds of the outstanding voting shares. This requirement was satisfied by the unanimous approval of the Reorganization by the Directors’ Committee of Enel Generación (which included both directors without an interest in the Reorganization) on November 14, 2017.

 

    Statutory Merger—The Merger is a statutory merger under the Chilean Corporations Act and, therefore, the manner in which the merger will occur is prescribed by the Chilean Corporations Act. As such, the material terms of the Merger, other than the merger exchange ratio, the conditions to the Merger and changes to the surviving company’s bylaws (estatutos), were not negotiated. See “The Merger—No Merger Agreement; Statutory Merger.”

The Board of Directors of Enel Generación also considered a variety of risks and other potentially negative factors concerning the Reorganization, including, without limitation, the following:

 

    Voting Requirement—The Offers do not require shareholder approval by majority of unaffiliated shareholders of Enel Generación. However, the Reorganization is regarded as a related party transaction under the Chilean Corporations Act and requires the affirmative vote of two-thirds of the outstanding voting shares of Enel Generación. In addition, the amendment of the bylaws of Enel Generación, which is one of the conditions of the Offers, requires the affirmative vote of 75% of the outstanding voting shares of Enel Generación.

 

    Subscription Price—The subscription price of Enel Chile Shares in connection with the Offers are fixed and the market value of Enel Chile Shares may decrease between setting of the price and the consummation of the Offers and subscription.

 

    Negative impacts on Unaffiliated Shareholders of Enel Generación Not Tendering in the Offers—Following the consummation of the Offers, the unaffiliated shareholders of Enel Generación that do not tender in the Offers may experience negative impacts, including:

 

    Reduced liquidity for Enel Generación Securities;

 

    Risk that the Enel Generación Securities may be delisted from the NYSE or deregistered with the SEC under the Exchange Act;

 

    Limited veto rights for future shareholder votes;

 

    Loss of status as a company qualified under Title XII of Decree No. 3,500 of 1980 (the Chilean law that regulates pension fund investments), which would restrict AFPs from directly investing in Enel Generación; and

 

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    Potential loss of capital gains tax exemption due to loss of “sufficient stock market liquidity” (presencia bursátil) status under Chilean law.

 

    Potential Delay or Failure to Consummate—There is a possibility that the Reorganization may not be completed, or that completion may be unduly delayed, for reasons beyond the control of the Enel Filing Persons.

 

    Negative Impacts on Enel Generación if Reorganization is Not Consummated—If the Reorganization is not consummated, there may be negative effect on the trading prices of Enel Generación Securities, a potential diversion of management attention, and a potential negative effect on Enel Generación’s business and existing relationships.

 

    Failure to Realize Benefits—There is a risk that the anticipated benefits of the Reorganization may not be realized.

 

    Potentially Divergent Interests—Certain of Enel Generación’s directors and executive officers may ultimately have interests in the Reorganization that may be different from, or in addition to, the unaffiliated shareholders of Enel Generación given their affiliation with the Enel Filing Persons and their affiliates.

In reaching its determination, the Board of Directors did not consider it necessary to retain an unaffiliated representative to act solely on behalf of unaffiliated shareholders of Enel Generación for purposes of negotiating the terms of the Reorganization and/or preparing a report concerning the fairness of the Reorganization given that the Reorganization is being conducted in compliance with the requirements for related party transactions under the Chilean Corporations Act as described above.

This discussion of the information and factors considered by each of the Directors’ Committee of the Board of Directors of Enel Generación and the Board of Directors of Enel Generación includes the material positive and negative factors considered by the Directors’ Committee of the Board of Directors of Enel Generación and the Board of Directors of Enel Generación, but is not intended to be exhaustive and may not include all of the factors considered by the Directors’ Committee of the Board of Directors of Enel Generación and the Board of Directors of Enel Generación, or any individual. Given the complexity of the factors considered, neither the Directors’ Committee of the Board of Directors of Enel Generación and the Board of Directors of Enel Generación undertook to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, and did not quantify or assign any relative or specific weights to the various factors that it considered in making its ultimate determination as to its belief that the Offers are substantively and procedurally fair and in the best interest of Enel Generación and the unaffiliated shareholders of Enel Generación. Rather, each of the Directors’ Committee of the Board of Directors of Enel Generación and the Board of Directors of Enel Generación conducted an overall analysis of the factors described above. In addition, the individual directors of Enel Generación may have given different weight to different factors.

Recommendation of the Enel Generación Board of Directors

Although under Chilean law the Board of Directors of Enel Generación, as a body, is not required to make a recommendation to its shareholders whether to accept or reject the Offers, the Board of Directors of Enel Generación intends to take action to determine the recommendation of the Board with respect to the Offers as required to be disclosed by Rule 14e-2 under the Exchange Act. Enel Generación must file a Solicitation/Recommendation Statement on Schedule 14D-9 within 10 business days of the date of the launch of the U.S. Offer that includes a statement by the Board of Directors of Enel Generación as to whether it recommends that Enel Generación shareholders accept or reject the U.S. Offer.

Pursuant to Chilean law, each individual member of the Board of Directors of Enel Generación must express in writing his or her statement as to whether the Reorganization would be in the interest of Enel Generación,

 

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including Enel Generación’s shareholders. See “—Summary of Enel Generación Directors’ Committee Reports and Directors’ Statements—Summary of Enel Generación Directors’ Statements” below.

Summary of Enel Generación Directors’ Committee Reports and Directors’ Statements Required By Chilean Law

Summary of Enel Generación Directors’ Committee Reports

In accordance with Chilean law, the Directors’ Committee of Enel Generación issued two reports with respect to whether or not the Reorganization: (i) contributes to the best interest of Enel Generación, including its shareholders, and (ii) is in line with prevailing market prices, terms and conditions at the time of its approval.

The initial report was issued on November 9, 2017, which stated that the Directors’ Committee found that the Reorganization contributes to the best interest of Enel Generación. In addition, the Directors’ Committee of Enel Generación unanimously concluded that the range of exchange ratios included in the opinions of ASSET Chile and Banchile to be reasonable for the Reorganization. However, as the Directors’ Committee had not received the final terms and conditions of the Reorganization, it could not opine as to whether the Reorganization is in line with prevailing market prices, terms and conditions at the time of its approval.

Following the determination of the final terms of the Reorganization by the Board of Directors of Enel Chile on November 14, 2017, the Directors’ Committee of the Board of Directors of Enel Generación issued a supplemental report (the “Supplemental Directors’ Committee Report”), which unanimously concluded that the Reorganization (i) contributes to the best interest of Enel Generación, and (ii) is in line with prevailing market prices, terms and conditions at the time of its approval.

Copies of both Directors’ Committee reports were made available to each of the individual directors of Enel Generación. In connection with the Directors’ Committee reports, the members of the Directors’ Committee each reviewed the independent evaluator opinions, each dated November 3, 2017, prepared by each of ASSET Chile and Banchile (collectively, the “Enel Generación Reports”). The Directors’ Committee’s conclusions were supported by the following analysis:

Contribution to Best Interest of Enel Generación

In both reports, the Directors’ Committee of Enel Generación unanimously concluded that the Reorganization contributes to the best interest of Enel Generación, including its shareholders, based on the following factors:

 

    The Reorganization represent an opportunity for the shareholders of Enel Generación who tender in the Offers to capture the entire value of their ownership position in Enel Generación, and potentially with a premium.

 

    The Reorganization will align the interests of the shareholders of Enel Generación who tender in the Offers to those of the controlling shareholder;

 

    Shareholders of Enel Generación who tender in the Offers will be able to, among other things:

 

    Invest in a company that combines both generation (conventional and renewable) and electricity distribution assets;

 

    Gain exposure to the attractive renewable sector in Chile through EGP Chile, the largest non-conventional renewable generation company in Chile that has a portfolio of advanced greenfield projects, which could support growth in the medium and long term; and

 

    Gain the benefits from a reduction in Enel Chile’s holding company discount.

 

    The Reorganization would potentially reduce the conflicts of interest between Enel Generación and EGP Chile.

 

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Market Conditions

In the Supplemental Directors’ Committee Report, the Directors’ Committee of Enel Generación unanimously concluded that the Reorganization is in line with prevailing market prices, terms and conditions based on the following factors:

 

    The proposed tender offer price of Ch$590 per Enel Generación Share is in the upper range estimated by the independent evaluators of Enel Generación and is reasonable.

 

    The valuation of Enel Generación that was used by the Board of Directors of Enel Chile is in the upper end of the ranges estimated by the independent evaluators of Enel Generación, while the value assigned to Enel Chile and EGPL are in the middle of the ranges estimated by the independent evaluators of Enel Generación.

 

    The price, term and conditions for the Reorganization as proposed by the Board of Directors of Enel Chile are within the ranges proposed by the independent evaluators of Enel Generación.

Summary of Enel Generación Directors’ Statements

In order to comply with Chilean law, each of the directors of Enel Generación issued an individual statement in his capacity as a director of Enel Generación as to whether or not the Reorganization: (i) contributes to the best interest of Enel Generación, including its shareholders, and (ii) is in line with prevailing market prices, terms and conditions at the time of its approval. Although no two statements were identical, each director individually concluded that the Reorganization contributed to the best interest of Enel Generación, including its shareholders, and is in line with prevailing market prices, terms and conditions at the time of its approval. In connection with their individual statements, the directors each reviewed the Enel Generación Reports and the reports of the Directors’ Committee of Enel Generación. Each director placed varying degrees of emphasis on the factors he considered in his individual statement. The directors’ conclusions were supported by the following analysis:

Contribution to Best Interest of Enel Generación

Each of the directors of Enel Generación concluded that the Reorganization contributes to the best interest of Enel Generación. Factors that were considered by one or more individual directors include, among others:

 

    The Reorganization represent an opportunity for the shareholders of Enel Generación who tender in the Offers to capture the entire value of their ownership position in Enel Generación, and potentially with a premium.

 

    Shareholders of Enel Generación who tender in the Offers will be able to gain benefits, such as the ability to invest in a company that combines both generation (conventional and renewable) and electricity distribution assets.

 

    The Reorganization would potentially reduce the conflicts of interest between Enel Generación and EGP Chile.

Market Conditions

Each of the directors of Enel Generación concluded that the Reorganization was in line with prevailing market prices, terms and conditions. Factors that were considered by one or more individual directors include, among others:

 

    The proposed tender offer price of Ch$590 per Enel Generación Share is in the upper range estimated by the independent evaluators of Enel Generación and is reasonable.

 

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    The valuation of Enel Generación that was used by the Board of Directors of Enel Chile is in the upper end of the ranges estimated by the independent evaluators of Enel Generación, while the value assigned to Enel Chile and EGPL are in the middle of the ranges estimated by the independent evaluators of Enel Generación.

 

    The price, term and conditions for the Reorganization as proposed by the Board of Directors of Enel Chile are within the ranges proposed by the independent evaluators of Enel Generación.

Summary of Opinion of Independent Evaluator of Enel Generación (Banchile)

On September 1, 2017, the Board of Directors of Enel Generación designated Banchile Asesoría Financiera S.A. (“Banchile”) as an independent evaluator (evaluador independiente) to evaluate the Reorganization as a related party transaction under Chilean law and provide an opinion in accordance with Article 147 of the Chilean Corporations Act. Banchile was chosen by the Board of Directors as an independent evaluator based on the fact that Banchile has been a leading financial service provider in Chile and has a proven track record in energy related transactions in Chile. At the November 3, 2017 meeting of the Board of Directors of Enel Chile, Banchile delivered its written opinion (the “Banchile Opinion”), which does not constitute a recommendation of action with respect Reorganization.

A copy of the complete Banchile Opinion is attached as Annex C to this prospectus. The Banchile Opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Banchile in rendering its opinion. The description of the Banchile Opinion set forth below is qualified in its entirety by reference to the full text of the Banchile Opinion. Holders of Enel Generación shares are urged to read the entire Banchile Opinion carefully in connection with their consideration of the proposed Reorganization.

The Banchile Opinion has been prepared to be used exclusively for the purposes of the Reorganization and the consideration of Enel Generación and, therefore, must be used exclusively in such context, and cannot be used for any other purpose without Banchile’s prior and written consent.

Recommendations and conclusions represent the best opinion of Banchile regarding the assessment of the Reorganization at the time of preparation of the Banchile Opinion, considering the work methodology employed and the available information. However, conclusions could change if another background or information is considered or a different valuation criteria not considered in the development of the Banchile Opinion is used. Banchile shall have no obligation to communicate such variations as well as whenever the opinions or information contained herein, or the assumptions on which the Banchile Opinion was prepared, are modified.

In rendering the Banchile Opinion, Banchile performed a variety of financial analyses. The summary below is not a complete description of the analyses underlying the Banchile Opinion, but is a summary of all material analyses performed and presented by Banchile. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of an opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances.

For the preparation of Banchile Opinion, Banchile used only public information and information provided by Enel Generación which Banchile has assumed, without independent verification, its full and complete truthfulness, integrity, accuracy, sufficiency, consistency, and reasonableness. In the case of estimates, projections, reports or forecasts, Banchile has assumed and is confident that those have been prepared in good faith and reasonably, based on assumptions that reflect the best available estimates and judgments by the respective management, advisor or expert, about expected results in the future. Therefore, Banchile assumes no responsibility in this regard or for the conclusions that may be derived from information that is false, erroneous or incomplete.

 

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Likewise, the conclusions of the Banchile Opinion may be based on assumptions that may be subject to significant market and economic uncertainties and/or contingencies such as flows, projections, and estimates, among others, in which the occurrence may be difficult to predict and that could be outside the scope of the respective company, so that there is no certainty as to the degree of fulfillment of such assumptions. Under no circumstances the use or incorporation of such flows, projections or estimates, among others, may be considered as a representation, warranty or forecast of Banchile with respect to its occurrence, as well as of the underlying assumptions thereof.

Banchile assumes no obligation or liability for any potential results or consequences of the Reorganization or its non-consummation. Future results may be substantially different from what is supposed, assumed or suggested in the Banchile Opinion. Therefore, Banchile assumes no liability or obligation to indemnify in the event that future results are different from the estimates, forecasts or projections contained in the Banchile Opinion.

Banchile has not assumed any obligation or commitment to provide legal, accounting or tax consultancy services nor to perform due diligence of the companies subject matter of the Reorganization. Therefore, the Banchile Opinion should not be considered, used or interpreted as legal, accounting or tax advice and any content in the Banchile Opinion that refers directly or indirectly to legal, accounting or tax aspects should be understood as a review of general aspects that Banchile has deemed relevant to support its own analysis.

Finally, Banchile has not been asked for, nor has Banchile provided any advice regarding the design, selection or structuring of the transactions that are part of the Reorganization, nor with respect to the terms or conditions or any other aspect thereof, nor services other than the preparation of the Banchile Opinion were requested. Therefore, Banchile has not stated an opinion in the Banchile Opinion and will not issue any opinion on the possibility that an alternative transaction or a different configuration of the companies subject to the Reorganization may or may not result in greater profits for Enel Generación and its shareholders.

The Banchile Opinion has been prepared by Banchile at the request of the Board of Directors of Enel Generación in accordance with the requirements of Article 147 of the Chilean Corporations Act and the Banchile Opinion cannot be construed as a fairness opinion as such term is typically understood in the United States.

Banchile was engaged as independent evaluator to evaluate the Reorganization as a related party transaction under Chilean law. No portion of the fees payable to Banchile is contingent on the consummation of the Reorganization.

Banchile during the last two years has not been engaged by Enel Generación or its affiliates on any transaction. Banchile has not received, and it is not contemplated to receive, any compensation from Enel Generación or its affiliates as a result of a relationship between them other than the consideration for Banchile’s engagement as an independent evaluator of Enel Generación in connection with the Reorganization. Banco de Chile, Banchile’s parent company, provides customary banking services to Enel Generación, Enel Distribución and Enel Chile, including among others: cash management services, traditional loans, working capital facilities, foreign exchange and derivatives transactions. None of these operations are, in the aggregate, financially material to Banco de Chile. Banco de Chile has not received, and it is not contemplated to receive, any compensation from Enel Generación or its affiliates as a result of a relationship between them other than considerations for the provision of such customary banking services.

Scope of Engagement

The Board of Directors of Enel Generación appointed Banchile to act as its independent evaluator in accordance with the requirements of Article 147 of the Chilean Corporations Act and Banchile’s scope of work

 

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was equivalent to the scope contemplated in the Title XVI of the Chilean Corporations Act. Specifically, Banchile’s scope of work included:

 

    Describing the proposed Reorganization.

 

    Analyzing the rationale of Reorganization rationale and potential impacts to Enel Generación’s shareholders.

 

    Assessing the considerations and potential risks related to the execution of the Reorganization.

 

    Performing a valuation of Enel Generación , Enel Chile and EGPL in the context of the Reorganization in order to:

 

    Determine a range for the share exchange ratio for the Merger between Enel Chile and EGPL

 

    Determine a range for the terms and conditions of the Offers, comparing them with fundamental and market valuations

 

    Verifying the conditions precedent set by Enel.

Bases of Analysis

In preparing the Banchile Opinion, Banchile reviewed and considered, among other documents:

 

    Historical financial information of Enel Chile, Enel Generación and EGPL as of and for the year ended December 31, 2016 and as of September 30, 2017.

 

    Information regarding the companies participating in the Reorganization, including, among others:

 

    Financial projections and business plans for Enel Generación and its subsidiaries, Enel Distribución and Enel Chile, for the 2017-2022 period, as well as the extended business plan for EGPL and its subsidiaries for the 2017-2026 period.

 

    Projections of the main operational variables for Enel Generación and EGPL for the 2018-2045 period that contain expected energy production, contract and merchant energy prices, contracted energy, energy purchases and generation costs.

 

    Operational projections for Enel Distribución for the 2018-2022 period.

 

    Normalized maintenance capital expenditures (CAPEX) and replacement CAPEX for Enel Generación and its subsidiaries and EGPL and its subsidiaries.

 

    Terminal value calculation methodology for Enel Distribución, Enel Generación and EGP Chile.

 

    Summaries of contracts between [EGP Chile] and Enel Generación, including summaries of the main power purchase agreements (“PPAs”) and a legal due diligence report describing the risks associated with the PPAs.

 

    In the Banchile Opinion, Banchile has assumed that these contracts and agreements will remain as in effect in the context of the Reorganization, particularly and fundamentally with regards to prices and contracted generation. In addition, Banchile has assumed that there are no renegotiation nor early termination clauses that may significantly affect valuations.

 

    Broker research reports.

 

    Legal, tax and preliminary technical due diligence reports on EGPL.

 

    Other public documents of interest.

Methodology

Banchile first examined the strategic considerations for the Reorganization, including analysis of the potential benefits, the potential impacts on Enel Generación shareholders, overview of EGPL, and execution

 

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considerations. Consequently Banchile completed a valuation analysis. The valuation methodology and approach used by Banchile included discounted cash flows (DCF), brokers outlooks, cost to replace assets, valuation based on price multiples (both comparable companies and precedent transactions), and review of the appraisers’ valuations and trading values of the traded companies in connection with the previous reorganization of Enel Américas S.A. Finally, the valuations of Enel Chile, Enel Generación and EGPL were used to estimate exchange ratio ranges with respect to Enel Chile and Enel Generación in the Offers, and respect to Enel Chile and EGPL in the Merger.

Valuation Considerations

To calculate the DCF, Banchile used operating and financial projections by company, macroeconomic information, corporate tax rates and regulatory and market assumptions per company provided by each of Enel Chile, Enel Generación, Enel Distribución and EGPL. The terminal value calculations were based on adjusted perpetuity cash flows, took into consideration inflation rates, energy prices and replacement capital expenditure for generation assets and limited projections to the end of a concession term for selected assets. Banchile also calculated different weighted average cost of capital (WACC) depending on different types of business and countries.

Banchile used multiples of enterprise value based on next twelve month EBITDA as well as estimated 2018 EBITDA to calculate trading and transaction multiples for each individual asset under consideration. Comparable companies and comparable precedent transactions were selected based on country and business segment.

Overall Conclusion and Valuation Results

Banchile believes that the Reorganization would contribute to the best interest of Enel Generación shareholders that participate in the Offers, assuming that the terms of the Reorganization are within Banchile’s recommended valuation ranges.

Strategic Considerations

Enel Generación shareholders that participate in the Reorganization would receive several benefits:

 

    Diversification: Ability to invest in a company that combines both generation (conventional and renewable) and distribution assets.

 

    Growth: Gain access to the attractive renewable sector through EGPL, the largest non-conventional renewable generation company in Chile that has a relevant portfolio of advanced greenfield projects, which could support growth in the medium and long term.

 

    Governance: Reduce potential conflicts of interest between Enel Generación and EGPL.

 

    Holding discount: If Enel Generación shareholders’ acceptance level of the Offers is high, the Enel Chile holding company discount (estimated by Banchile to be between Ch$8.5 and Ch$9.2 per Enel Chile share) could potentially decline and Enel Generación shareholders that participate in the Offers and become shareholders of Enel Chile will also receive the benefit of such reduction in the holding company discount. However, the probability of such scenario and the magnitude of the reduction are unpredictable.

However, Banchile believes that the Reorganization is not neutral to Enel Generación’s shareholders that do not participate in the Offers. Shareholders that remain in Enel Generación might be affected mainly by:

 

    Deteriorated liquidity of Enel Generación Shares after the Offers.

 

    Enel Generación’s controlling shareholder will obtain additional corporate governance rights (i.e., super-majority voting power).

 

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    A potential loss of tax benefits if Enel Generación Shares lose their “sufficient stock market liquidity” (presencia bursátil) status, which allows some taxpayers a tax exemption from capital gains, depending on how they acquired their Enel Generación Shares.

Execution Considerations

Banchile believes that the fact that the Offers and the Capital Increase will be executed simultaneously minimizes the execution risks for Enel Generación’s shareholders. In addition, the fact that the approval of terms and conditions of the Reorganization will occur concurrently (e.g., amendments to the bylaws, related party transactions approvals, the terms of the Offers and the Merger) minimizes uncertainties for Enel Generación’s shareholders.

However, the level of subscription of Enel Chile’s minority shareholders in the Capital Increase might impact the execution of the Reorganization (e.g., dilute Enel’s interest in Enel Chile). Enel Chile may reduce this impact by setting as condition precedent a maximum level of subscription and/or increase the size of the capital increase to an amount higher than the maximum expected consideration in the Offers.

Recommended Valuation Ranges for Enel Chile, Enel Generación and EGPL

Based on Banchile’s assessment of the information provided, the following valuation ranges reflect prevailing market conditions for each company in the context of the Reorganization:

 

LOGO

Equity Values and Share Prices (in US$ mm and Ch$, respectively)

Enel Generación valuation ranges imply a share price 10.7%—18.3% higher than the share price prior to the announcement (price of Ch$489 per Enel Generación Share as of August 24, 2017). This implied premium would represent an additional incentive for Enel Generación shareholders to tender their shares in the Offers.

Banchile’s recommended valuation ranges imply the following the exchange ratios:

LOGO

Exchange Ratios (in times)

Verification of Enel’s Conditions Precedent

In order to analyze the fulfillment of the conditions precedent set for the Reorganization under the recommended valuation ranges, two key additional assumptions need to be considered:

 

    Cash consideration percentage in the Offers (mix of cash and shares): Banchile has assumed 60%- 65%.

 

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    Enel Chile’s pro forma credit profile: Banchile assumed a threshold of 2.0x-2.5x net debt / EBITDA based on Enel Chile’s guidance.

Under the recommended valuation ranges and assumptions set forth in the Banchile Opinion:

 

    Assuming 60%-65% cash consideration, if Enel Generación shareholders’ acceptance in the Offers is high (e.g., >85% participation), the conditions would be satisfied under most scenarios.

 

    If Enel Generación shareholders’ acceptance in the Offers is low, the fulfillment of the conditions will depend on the definitive exchange ratios and additional factors approved at the extraordinary shareholders’ meetings.

Preliminary Presentations by Banchile

In addition to the Banchile Opinion described above, which included financial information as of September 30, 2017, Banchile also presented a preliminary opinion to the Board of Enel Generación on October 26, 2017, which included financial information as of June 30, 2017. The preliminary Banchile opinion consisted of various summary data and analyses that Banchile utilized in formulating its preliminary perspective on the Reorganization and were for discussion purposes only. The only opinion in which Banchile presented its findings with respect to the advisability of the Reorganization and exchange ratios was the Banchile Opinion described above. The preliminary opinion contained substantially similar analyses as described above in connection with the delivery of Banchile Opinion, except that the financial information used in the Banchile Opinion was updated to September 30, 2017.

A copy of the October 26, 2017 preliminary opinion has been filed as an exhibit to the Schedule TO/13E-3 filed with the SEC in connection with the Offers and is available on Enel Generación’s website and will be made available for inspection and copying at the principal offices of Enel Generación during its regular business hours by any interested holders of Enel Generación, EGPL or Enel Chile shares or representative who has been so designated in writing. Copies may be obtained by requesting them in writing from Enel Generación at the address provided in the section titled “Incorporation of Certain Information by Reference” of this prospectus.

Summary of Opinion of the Additional Independent Evaluator of Enel Generación (ASSET Chile)

On September 1, 2017, the Directors’ Committee of the Board of Directors of Enel Generación designated ASSET Chile S.A. (“ASSET Chile”) as an additional independent evaluator to evaluate the Reorganization as a related party transaction under Chilean law and provide an opinion in accordance with Article 147 of the Chilean Corporations Act, which requires that the Reorganization be beneficial to the corporate interest of the company participating in the transaction. ASSET Chile was chosen by the Directors’ Committee as the independent evaluator based on ASSET Chile’s experience of over 35 years of leadership in corporate finance and asset management.

ASSET Chile acted as an additional independent evaluator of Enel Generación in connection with the Reorganization. At the meeting of the Directors’ Committee held on November 3, 2017, ASSET Chile delivered its final written opinion (the “ASSET Chile Opinion”) that the Reorganization would be in the best corporate interest of Enel Generación if the definitive terms and conditions of the Reorganization fall within the range of values described in the ASSET Chile Opinion, which are terms and conditions consistent with the prevailing market conditions. A copy of the complete ASSET Chile Opinion is attached as Annex D to this prospectus. The ASSET Chile Opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by ASSET Chile in rendering its opinion. The description of the ASSET Chile Opinion set forth below is qualified in its entirety by reference to the full text of the ASSET Chile Opinion. Holders of Enel Generación Shares are urged to read the entire ASSET Chile Opinion carefully in connection with their consideration of the proposed Offers and Reorganization.

 

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In rendering the ASSET Chile Opinion, ASSET Chile performed a variety of financial analyses. The summary below is not a complete description of the analyses underlying ASSET Chile’s opinion or the presentation made by ASSET Chile to the Directors’ Committee of the Board of Enel Generación, but is a summary of all material analyses performed and presented by ASSET Chile. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of an opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description and must be considered as a whole, and selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Additionally, no company included in ASSET Chile’s comparative analyses described below is identical to Enel Generación and no transaction is identical to the proposed Reorganization. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of Enel Generación and the companies to which it is being compared. In arriving at its opinion, ASSET Chile did not attribute any particular weight to any analysis or factor that it considered. Rather, ASSET Chile made its determination in respect of the proposed Reorganization in accordance with the requirements of Article 147 of the Chilean Corporations Act on the basis of its experience and professional judgment after considering the results of all its analyses taken as a whole.

Except in connection with the ASSET Chile Opinion, ASSET Chile or its affiliates did not provide any services to Enel Generación or any of its associated or affiliated entities during the past two years. ASSET Chile was engaged as independent evaluator to evaluate the Reorganization as a related party transaction under Chilean law. No portion of the fees payable to ASSET Chile is contingent on the consummation of the Reorganization.

Scope of Engagement

ASSET Chile has been retained by the Directors’ Committee of Enel Generación to act as their independent evaluator and to issue an opinion regarding the proposed Reorganization. Under Title XVI of the Chilean Corporations Act, the opinion must include ASSET Chile’s opinion as to whether:

 

    the Reorganization benefits the company and/or its shareholders; and

 

    the price, terms and conditions that define the Reorganization and whether they are at market conditions at the time the Reorganization is approved.

At the November 3, 2017 meeting of the Directors’ Committee of Enel Generación, ASSET Chile delivered the ASSET Chile Opinion, which does not constitute a recommendation to with respect Reorganization.

Bases of Analysis

To perform its analyses, ASSET Chile had access to, among other things, financial statements of the companies, operational and financial projections for the operating companies, written questions and answers with the operating companies’ management teams, management meetings, and legal, technical and tax due diligence reports on EGPL from independent consultants. ASSET Chile did not perform on-site due diligence, nor conduct on its own or through consultants any further due diligence on the companies.

ASSET Chile was allowed to have meetings with other appraisers and evaluators involved in the Reorganization.

 

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Methodology

The valuation methodology and approach used by ASSET Chile included discounted cash flows (DCF), multiples of both comparable companies and comparable transactions, sell-side market analysts’ views, and trading values of the two publicly traded companies.

Enel Chile was valued using a sum-of-the-parts (SOTP) methodology and considering its current market capitalization, its holding company discount is approximately 17.0%. Given the market reaction to the announcement of the Reorganization, this holding company discount is not necessarily representative.

Valuation Considerations

The applicable exchange ratios are a function of a number of different variables, one of them and the most relevant, is the relative value of the underlying assets. The others can be divided into two groups: (i) assumptions that are to be defined and then become inputs for the determination of the exchange ratios offered, such as the holding company discount at the Enel Chile level; the mix of cash and Enel Chile Shares to be received in exchange for Enel Generación Shares in the Offers; and the tender offer premium on Enel Generación Shares; and (ii) variables that are unknown and will be a result of the Reorganization, such as the percentage of acceptance of the Offers by shareholders of Enel Generación; the percentage of Enel Chile shareholders that exercise their preemptive rights to subscribe for Enel Chile Shares in the Capital Increase; and the number of Enel Chile shareholders that exercise their statutory merger dissenters’ withdrawal rights in connection with the Merger.

ASSET Chile’s analysis included the following assumptions:

 

    The holding company discount should be considered at 10%, similar to the trailing twelve months holding company discount of Enel Chile and, to avoid speculation, and for conservative reasons, it should not be considered that the holding company discount will vary (as a percentage) as a consequence of the Reorganization.

 

    A tender offer premium of between 10-14% over the Market Price (defined by Title XXV of the Chilean Securities Market Act (Law No. 18,045) as the weighted average of the trading price between the 90th and the 30th trading day prior to the tender offer acquisition date, which is approximately Ch$518 per Enel Generación Share) being adequate for these types of transactions, meaning that the consideration offered in the Offers should be in the range of Ch$570-Ch$590 per Enel Generación Share.

 

    No Enel Chile minority shareholder will exercise preemptive rights for Enel Chile Shares in the Capital Increase or exercise statutory merger dissenters’ withdrawal rights.

 

    ASSET Chile performed a sensitivity analysis for different relative valuations, different percentages of acceptance, and different combinations of cash and shares in the Offers.

Strategic Considerations

ASSET Chile analyzed the following strategic considerations:

 

    Simplification of the corporate structure—by analyzing the impact on decision-making processes, information flow, efficiency and centralization of corporate functions.

 

    Alignment of interests, business diversification and organic growth—by analyzing the investment strategy of Enel in Chile in relation to conventional and renewable power.

 

    Optimization of capital structure—by analyzing the potential benefit of issuing debt at the Enel Chile level.

 

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    Impact on stock liquidity and market capitalization of Enel Generación and Enel Chile—by analyzing the possibility of increasing liquidity, market capitalization, and trading volume of Enel Chile, and its potential impact on value.

 

    Alignment with Resolution No. 667/2002 of the Honorable Resolution Commission (the former Chilean antitrust authority)—by analyzing the impact of such resolution on the final structure of Enel Chile.

 

    Reduction of the holding company discount—by analyzing the potential reduction of the holding company discount at the Enel Chile level after the Reorganization.

 

    Other restrictions—by analyzing the restrictions defined by Enel to support the Reorganization (i.e., the transaction is carried out on market terms, increase of earnings per share of Enel Chile, maintaining the credit rating of Enel Chile, Enel Generación removing the 65% share ownership limit in its bylaws, and Enel maintaining a similar controlling shareholder position before and after the Reorganization is consummated).

 

    Impact on credit rating—by analyzing the impact on Enel Chile’s credit rating.

Overall Conclusion and Valuation Results

ASSET Chile’s valuation results for Enel Generación, Enel Distribución and EGPL, were as follows:

 

     Enel Generación
(Ch$ billion)
     Enel
Distribución

(Ch$ billion)
     EGPL
(US$ million)
 
     Low      Medium      High      Medium      Low      Medium      High  

Enterprise Value

     5,246        5,353        5,595        1,694        2,834        2,899        2,991  

Equity Value

     4,417        4,524        4,766        1,599        1,578        1,643        1,735  

EV/EBITDA 2018E

     9.0x        9.2x        9.6x        8.5x        10.6x        10.8x        11.2x  

Share Price

     538        552        581        1,390        1.91        1.99        2.10  

The following charts show ASSET Chile’s estimates of the exchange ratios for the Enel Generación in the Offers and for EGPL in the Merger, assuming that the tender offer consideration is paid 100% with Enel Chile stock.

 

LOGO    LOGO

Graph 1: EGC and EGPL Exchange Ratios

Therefore, ASSET Chile believes that the Reorganization exchange ratios, assuming that the Offers and the Merger are paid 100% with shares of Enel Chile in exchange for shares of Enel Generación and EGPL, would be as indicated in the table below:

 

Enel Chile Shares per 1 share of:

    

Enel Generación

   7.2 - 8.5

EGPL

   15.1 - 19.0

 

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Depending on final definitions of the assumptions for determining the exchange ratios, there are several and multiple scenarios combining different tender offer mix and percentage of tender offer acceptance that comply with the restriction and conditions defined by Enel for the Reorganization.

Market Terms and Benefit to Enel Generación and/or its Shareholders:

Market Terms:

 

    The final proposal and its specific terms—especially regarding price, composition, and exchange ratios—have not yet been offered by Enel Chile to the different parties, so ASSET Chile could not specifically render an opinion on those terms. However, ASSET Chile noted that if the final offer is within the abovementioned value ranges, it is understood that the Reorganization would be within market terms for a transaction of this kind.

Benefit to Enel Generación and/or its Shareholders:

 

    Regarding Enel Generación’s ordinary course of business, ASSET Chile indicated that it believes that the Reorganization will have no or minimal impact.

 

    For those shareholders of Enel Generación who decide to accept the Offers and assuming the terms of the Reorganization are within the ranges discussed earlier (i.e., on market terms), ASSET Chile believes this as an opportunity to capture the full value of such shareholders’ current holding plus a premium and to fully align their interest with the controlling shareholder, Enel Chile. Therefore, ASSET Chile believes that the Reorganization is positive for the shareholders.

 

    ASSET Chile also noted that certain shareholders of Enel Generación may decide not to accept the Offers, regardless of the fact they may face the risk of a liquidity discount after the Offers are consummated. ASSET Chile assumes these shareholders may prefer to remain as direct shareholders of Enel Generación because of risk selection or focus (i.e., Chilean conventional power generation business only), portfolio diversification and/or different views regarding the value of the underlying assets going forward, all of which are plausible and legitimate reasons and a reflection of their preference given their option to choose freely otherwise.

 

    ASSET Chile indicated that that for Enel Generación shareholders, the Reorganization – if executed on market terms—would be either neutral or positive.

In conclusion, the Reorganization is, in ASSET Chile’s view, to the benefit of Enel Generación and its shareholders.

Preliminary Presentations of the Additional Independent Appraiser of Enel Generación

In addition to the ASSET Chile Opinion described above, which was based on financial information as of September 30 2017, ASSET Chile also presented a preliminary opinion to the Directors Committee of the Board of Directors Enel Generación on October 26, 2017, which was based on financial information as of June 30, 2017. The preliminary ASSET Chile opinion consisted of various summary data and analyses that ASSET Chile utilized in formulating its preliminary perspective on the Reorganization, were for discussion purposes only, and did not present any definitive findings or make any recommendations or constitute its opinion, or any part of its opinion, of ASSET Chile with respect to the advisability of the Reorganization exchange ratios. The only presentation in which ASSET Chile presented its findings with respect to the advisability of the Reorganization exchange ratios was the ASSET Chile Opinion described above. The preliminary ASSET Chile opinion contained substantially similar analyses as described above in connection with the delivery of the ASSET Chile Opinion, except the financial information used in the ASSET Chile Opinion was updated to September 30, 2017.

A copy of the October 26, 2017 preliminary ASSET Chile opinion has been filed as an exhibit to the Schedule TO/13E-3 filed with the SEC in connection with the Offers, and is available on Enel Generación’s

 

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website and will be made available for inspection and copying at the principal offices of Enel Generación during its regular business hours by any interested holders of Enel Generación, EGPL or Enel Chile shares or representative who has been so designated in writing. Copies may be obtained by requesting them in writing from Enel Generación at the address provided in the section titled “Incorporation of Certain Information by Reference” of this prospectus.

Position of Enel Chile and Enel as to the Fairness of the Reorganization

Under SEC rules, the Offers are deemed to be a “going private” transaction. Therefore, the Enel Filing Persons are required to express their belief as to the fairness of the Offers, which are part of the Reorganization, to the unaffiliated shareholders of Enel Generación. The Enel Filing Persons are making the statements as to the fairness of the Reorganization (including the Offers, as well as the Capital Increase and the Merger) to the unaffiliated shareholders of Enel Generación included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and the related rules under the Exchange Act. However, the views of the Enel Filing Persons as to the fairness of the Reorganization to the unaffiliated shareholders of Enel Generación should not be construed as a recommendation to any holder of Enel Generación Securities as to how whether or not such holder should tender their Enel Generación Securities in the Offers.

The Enel Filing Persons did not enter into the transaction with a goal of obtaining terms that were fair to the shareholders of Enel Generación. The Enel Filing Persons did not participate in the deliberations of the Board of Directors or the Directors’ Committee of Enel Generación, and did not receive fairness opinions as to, the fairness of the Reorganization to the unaffiliated shareholders of Enel Generación. However, the Enel Filing Persons are familiar with Enel Generación’s business, financial condition, results of operations, industry, competitors and prospects as a standalone company, and have knowledge of Enel Generación’s management due to the fact that Enel Generación is Enel Chile’s most significant consolidated subsidiary. Based on such knowledge and the factors described below, the Enel Filing Persons believe that the Reorganization is substantively and procedurally fair to the unaffiliated shareholders of Enel Generación.

In reaching its fairness determination, the Enel Filing Persons considered, reviewed and adopted the following opinions and reports:

 

    Opinion of Banchile, the independent evaluator (evaluador independiente) appointed by the Board of Directors of Enel Generación;

 

    Opinion of ASSET Chile, the independent evaluator appointed by the Directors’ Committee of the Board of Directors of Enel Generación;

 

    Opinion of LarrainVial, the independent evaluator appointed by the Board of Directors of Enel Chile;

 

    Opinion of Econsult, the independent evaluator appointed by the Directors’ Committee of the Board of Directors of Enel Chile;

 

    Report of Oscar Molina, the independent appraiser (perito independiente) appointed by the Board of Directors of Enel Chile; and

 

    Report of Felipe Schmidt, the independent appraiser appointed by the Board of Directors of EGPL.

Each of these opinions and reports has been made public by the respective companies on their websites and was filed with the SEC prior to the fairness determination by the Enel Filing Persons. Each of the independent evaluators was engaged by Enel Generación and Enel Chile, as applicable, to evaluate the Reorganization as a related party transaction under Chilean law and provide opinions in accordance with Article 147 of the Chilean Corporations Act. Each of the independent appraisers was engaged by Enel Chile and EGPL to provide a report in accordance with Articles 156 and 168 of the Chilean Corporate Regulations on the valuations of Enel Chile (which includes Enel Generación) and EGPL and the merger exchange ratio in connection with the Merger.

 

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The Enel Filing Persons also considered (i) the reports of the Directors’ Committee of the Board of Directors of Enel Chile and Enel Generación issued on November 9, 2017; and (ii) the statements of the individual directors of Enel Chile, each of which was prepared in accordance with Chilean law.

Position of Enel Chile as to the Fairness of the Reorganization

With respect to substantive fairness of the Reorganization to the unaffiliated shareholders of Enel Generación, Enel Chile considered a number of factors that relate to the structure and potential consequences of the Reorganization, including the following:

 

    Potential benefits of the Reorganization to Enel Chile will also benefit unaffiliated shareholders of Enel Generación who tender their Enel Generación Securities in the Offers and become shareholders of Enel Chile:

 

    Enel Chile will consolidate conventional and renewable electricity generation and electricity distribution businesses under one company following the Reorganization;

 

    The growth potential of EGPL’s renewable business in Chile;

 

    The potential reduction of conflicts of interest between EGPL and Enel Generación;

 

    The potential reduction of Enel Chile’s holding company discount;

 

    The increased liquidity of Enel Chile shares due to the larger Enel Chile capitalization following the Reorganization; and

 

    A more optimal Enel Chile capital structure, incorporating more debt.

 

    The structure of the Offers, which requires shareholders of Enel Generación who tender their Enel Generación Securities to become shareholders of Enel Chile pursuant to the Enel Chile U.S. Share/ADS Subscription Condition and the Enel Chile Share Subscription Condition, as applicable. As a result, by tendering their Enel Generación Securities in the Offers, the unaffiliated shareholders of Enel Generación will have an opportunity to participate as a shareholders in Enel Chile, which includes both Enel Generación and Enel Distribución and will include EGPL after the Merger.

 

    Unaffiliated shareholders of Enel Generación who tender their Enel Generación Securities in the Offers will have substantially equivalent shareholder rights in Enel Chile, except that such former shareholders of Enel Generación will not have (i) statutory merger dissenters’ rights in the Merger because they will not be shareholders of Enel Chile at the time of the Enel Chile shareholder vote on the Merger or (ii) the benefit of guaranteed access to the foreign exchange markets under Chapter XXVI of the Compendium (which has no practical benefit in the current foreign exchange environment) because Enel Chile is subject to Chapter XIV of the Compendium rather than Chapter XXVI.

Enel Chile also considered the financial terms of the Offers, including:

 

    Current market prices—The closing trading price of Enel Generación Shares on the Santiago Stock Exchange was Ch$540.58 per share on November 13, 2017, such that the tender offer price of Ch$590 per Enel Generación Share represents a premium of approximately 9.1% over the current market price.

 

    Historical market prices—The closing trading price of Enel Generación Shares on the Santiago Stock Exchange was Ch$488 per share on August 25, 2017, the date of the announcement of the Reorganization, such that the tender offer price represents a premium of approximately 21% over the pre-announcement market price.

 

    Net book value—Enel Generación’s business is generally valued at or near book value and the tender offer price represents a premium of approximately 154% over the net book value per share of approximately Ch$232 per share as of September 30, 2017.

 

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    Going concern value—Enel Chile did not establish a specific going concern value of Enel Generación. However, in reaching its fairness determination, Enel Chile considered, reviewed and adopted the valuation analyses of the independent appraisers of Enel Chile and EGPL and the independent evaluators of Enel Chile and Enel Generación, and determined that such valuations represent reasonable valuations of Enel Generación as it continues to operate its business.

 

    Liquidation value—Enel Chile did not consider liquidation value because it considered Enel Generación to be a viable going concern.

 

    Purchase prices paid in previous purchases in previous two years—As there have not been any firm offers for the merger or consolidation of Enel Generación into another company, the sale or transfer of all or any substantial part of the assets of Enel Generación to another company, or the purchase of a controlling stake in Enel Generación by another company, other than the Offers, in the previous two years, this was not considered as a factor in the determination by Enel Chile.

Enel Chile considered a number of factors relating to procedural safeguards in connection with the Reorganization including those discussed below, each of which it believed supported its decision and provided assurance of the procedural fairness of the Reorganization to the unaffiliated shareholders of Enel Generación. Specifically, in making its determination regarding procedural fairness, Enel Chile took into consideration the following factors:

 

    The Directors’ Committee of Enel Generación, all of whom meet the independence requirements under both U.S. and Chilean laws and regulations, unanimously concluded that the Reorganization is in the best interest of Enel Generación, including its shareholders.

 

    Two of the three members of the Directors’ Committee of Enel Generación are unaffiliated with the Enel Filing Persons and were determined not to have an interest in the Reorganization under Article 147 of the Chilean Corporations Act. Mr. Julio Pellegrini Vial, the member of the Directors’ Committee of Enel Generación who was deemed to have an interest in the Reorganization under the Chilean Corporations Act, was deemed to have interest solely due to the fact that he was elected as a director of Enel Generación by Enel. However, Mr. Pellegrini is not an employee of the Enel Filing Persons or their affiliates.

 

    None of the directors of Enel Generación, including members of the Directors’ Committee of Enel Generación, are employees of Enel Generación.

 

    Directors of Enel Generación that are deemed to have an interest in the Reorganization for purposes of Article 147 of the Chilean Corporations Act were identified and publicly disclosed. Specifically, seven of the nine members of the Board of Directors of Enel Generación were deemed to have an interest in the Reorganization because (i) six of such directors were elected as directors of Enel Generación by Enel Chile, (ii) one director is an employee of an affiliate of Enel, and (iii) three of the six directors described in clause (i) also own shares of Enel. However, no director of Enel Generación owns any Enel Generación Securities and no director of Enel Generación is party to any arrangements with the Enel Filing Persons or Enel Generación that provide for any pay or benefits that are based on or otherwise relate to the Reorganization.

 

    The Board of Directors and Directors’ Committee of Enel Generación each retained an independent evaluator, who provided their opinions on, among other things, the valuations of the companies party to the Reorganization and the fairness of the Reorganization to Enel Generación and the shareholders of Enel Generación (which Enel Chile believes includes all unaffiliated shareholders of Enel Generación) in accordance with Article 147 of the Chilean Corporations Act, each of which was made publicly available and which Enel Chile reviewed.

 

    The Board of Directors of Enel Generación unanimously approved the Reorganization on November 14, 2017.

 

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    The Offers do not require shareholder approval by a majority vote of unaffiliated shareholders. However, unaffiliated shareholders of Enel Generación have an ability to veto the Offers because:

 

    The Reorganization is regarded as a related party transaction under the Chilean Corporations Act and, therefore, the Reorganization requires the affirmative vote of two-thirds of the outstanding voting shares of Enel Generación (including the 60.0% interest owned by Enel Chile); and

 

    The Offers are conditioned on the amendment of the bylaws of Enel Generación, which requires the affirmative vote of 75% of the outstanding voting shares of Enel Generación.

 

    The Reorganization is regarded as a related party transaction under the Chilean Corporations Act and as such, all the procedural safeguards required for related party transactions under the Chilean Corporations Act have been implemented, including, among other things:

 

    The obligations of Enel Chile and Enel Generación to each appoint at least one independent evaluator whose task is to issue an opinion indicating whether the Reorganization is in the best interest of the respective companies, including their respective shareholders, and whether the Reorganization is being conducted on an arms’ length basis (e.g., whether the terms of the Reorganization correspond to the terms, price and conditions that prevail in the market at the time of the approval of the transaction). Enel Chile appointed Econsult and LarrainVial and Enel Generación appointed ASSET Chile and Banchile in satisfaction of these obligations.

 

    The obligations of Enel Chile and EGPL to each appoint an independent appraiser whose task is to provide a report in accordance with Articles 156 and 168 of the Chilean Corporate Regulations regarding the valuation of Enel Chile (which includes Enel Generación) and EGPL, as well as the merger exchange ratio. Enel Chile appointed Mr. Molina and EGPL appointed Mr. Schmidt in satisfaction of these obligations.

 

    The obligations of the Directors’ Committees of Enel Chile and Enel Generación to issue a report regarding the Reorganization. The respective Directors’ Committees of Enel Chile and Enel Generación issued the required reports as described under “—Summary of Enel Chile Directors’ Committee Report and Directors’ Statements—Summary of Enel Chile Directors’ Committee Report” and “—Summary of Enel Generación Directors’ Committee Reports and Directors’ Statements—Summary of Enel Generación Directors’ Committee Reports.”

 

    The obligation of each director of Enel Chile and Enel Generación to issue an individual statement, in which each director must express his or her opinion regarding whether the Reorganization is in the best interest of the respective companies, including their respective shareholders, and whether its terms are equivalent to market conditions or not. The respective directors of Enel Chile and Enel Generación issued their required individual statements as described under “—Summary of Enel Chile Directors’ Committee Report and Directors’ Statements—Summary of Enel Chile Directors’ Statements” and “—Summary of Enel Generación Directors’ Committee Reports and Directors’ Statements—Summary of Enel Generación Directors’ Statements.”

 

    The requirement that the Reorganization as a related party transaction must be approved either (i) by the unanimous approval of the directors of Enel Generación that do not have an interest in the Reorganization, or (ii) in the absence of such unanimous approval described in clause (i), by the shareholders of Enel Generación at an extraordinary shareholders’ meeting with the approval of two-thirds of the outstanding voting shares. Because Enel Chile only has one director who does not have an interest in the Reorganization, Enel Chile shareholders will be asked to approve the Reorganization as a related party transaction at the Enel Chile extraordinary shareholders’ meeting scheduled to be held on December 20, 2017.

 

   

The Merger is a statutory merger under the Chilean Corporations Act and, therefore, the manner in which the merger will occur is prescribed by the Chilean Corporations Act. As such, the material terms

 

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of the Merger, other than the merger exchange ratio, the conditions to the Merger and changes to the surviving company’s bylaws (estatutos), were not negotiated. See “The Merger—No Merger Agreement; Statutory Merger.”

In addition, Enel Chile also considered a variety of risks and other potentially negative factors concerning the Reorganization, including, without limitation, the following:

 

    The Offers do not require shareholder approval by majority of unaffiliated shareholders of Enel Generación. However, the Reorganization is regarded as a related party transaction under the Chilean Corporations Act and requires the affirmative vote of two-thirds of the outstanding voting shares of Enel Generación. In addition, the amendment of the bylaws of Enel Generación, which is one of the conditions of the Offers, requires the affirmative vote of 75% of the outstanding voting shares of Enel Generación.

 

    The subscription price of Enel Chile Shares in connection with Offers are fixed and the market value of Enel Chile Shares may decrease between setting of the price and the consummation of the Offers and subscription.

 

    There is a possibility that the Reorganization may not be completed, or that completion may be unduly delayed, for reasons beyond the control of the Enel Filing Persons.

 

    There is a risk that the anticipated benefits of the Reorganization may not be realized.

 

    Negative impacts on Enel Generación if the Reorganization is not consummated, including the potential effect on the trading prices of Enel Generación Securities, the potential diversion of management attention, and the potential negative effect on Enel Generación’s business and existing relationships.

 

    Negative impacts on the unaffiliated shareholders of Enel Generación who do not tender in the Offers following the consummation of the Offers, including:

 

    Reduced liquidity for Enel Generación Securities;

 

    Risk that the Enel Generación Securities may be delisted from the NYSE or deregistered with the SEC under the Exchange Act;

 

    Limited veto rights for future shareholder votes;

 

    Loss of status as a company qualified under Title XII of Decree No. 3,500 of 1980 (the Chilean law that regulates pension fund investments), which would restrict AFPs from directly investing in Enel Generación; and

 

    Potential loss of capital gains tax exemption due to loss of “sufficient stock market liquidity” (presencia bursátil) status under Chilean law.

The foregoing discussion of the factors considered by Enel Chile is not intended to be exhaustive but is believed to include all material factors considered by Enel Chile in making a determination regarding the fairness of the Reorganization for the purpose of complying with the requirements of Rule 13e-3 and the related rules under the Exchange Act. Enel Chile did not find it practicable to, and did not, quantify or otherwise attach relative weights to the foregoing factors in reaching its position as to the fairness of the Reorganization. Rather, Enel Chile made its fairness determination after considering all of the factors as a whole. Enel Chile believes the foregoing factors provide a reasonable basis for its belief that the Reorganization is fair to the unaffiliated shareholders of Enel Generación.

Position of Enel as to the Fairness of the Reorganization

Enel reviewed and analyzed the opinions of the independent evaluators of Enel Chile and Enel Generación and the reports of the independent appraisers of Enel Chile and EGPL relating to the Reorganization generally,

 

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and the other factors considered by, and the analysis, discussion and resulting conclusions of, Enel Chile described under—Position of Enel Chile as to the Fairness of the Reorganization.” Enel adopted Enel Chile’s conclusion and analysis with respect to the fairness of the Reorganization to the unaffiliated shareholders of Enel Generación, including the factors discussed under “—Position of Enel Chile as to the Fairness of the Reorganization,” and believes that the Reorganization is substantively and procedurally fair to unaffiliated shareholders of Enel Generación based on the factors considered by Enel Chile, including the generally positive and favorable factors, as well as the generally negative and unfavorable factors, and the factors relating to procedural safeguards.

Summary of Enel Chile Directors’ Committee Report and Directors’ Statements Required by Chilean Law

Summary of Enel Chile Directors’ Committee Report

In accordance with Chilean law, the Directors’ Committee of Enel Chile issued a report as to whether or not the Reorganization: (i) contributes to the best interest of Enel Chile and its shareholders and (ii) is in line with prevailing market prices, terms and conditions at the time of its approval. A copy of the Directors’ Committee report was made available to each of the individual directors of Enel Chile. In connection with the Directors’ Committee report, the members of the Directors’ Committee each reviewed an independent appraiser report dated November 3, 2017, prepared by Mr. Oscar Molina and independent evaluator reports, each dated November 3, 2017, prepared by each of LarrainVial and Econsult (collectively, the “Enel Chile Reports”). The Directors’ Committee’s conclusions were supported by the following analysis:

Contribution to Best Interest of Enel Chile

The Directors’ Committee of Enel Chile unanimously concluded that the Reorganization contributes to the best interest of Enel Chile, including its shareholders, based on the following factors:

 

    Creation of a leading electricity company in Chile that diversifies the individual risks of each business;

 

    Improvement in the ability to face future challenges and company growth;

 

    Growth opportunity in Chile through the Merger with EGPL, a non-conventional renewable energy generation company;

 

    Optimization of the Enel Chile’s capital structure through simplification of the organizational structure and reduction of redundancies among related parties.

 

    Alignment of the interests of controlling and unaffiliated shareholders, potential increases income per share, potential reduction of the holding company discount and increase in share liquidity.

Market Conditions

The Directors’ Committee of Enel Chile unanimously concluded that the Reorganization would be in line with prevailing market prices, terms and conditions if the prices and exchange ratios fell within the following ranges:

 

    Consideration for Enel Generación Shares in the Offers: between Ch$570 and Ch$595 per Enel Generación Share.

 

    Ratio to be used for the subscription of Enel Chile Shares in connection with the Offers: between 7.0 and 7.5 Enel Chile Shares for each Enel Generación Share.

 

    Exchange ratio for the Merger: between 14.5 and 17.2 Enel Chile Shares for each EGPL share.

Summary of Enel Chile Directors’ Statements

In accordance with Chilean law, each of the directors of Enel Chile issued an individual statement in his capacity as a director of Enel Chile as to whether or not the Reorganization: (i) contributes to the best interest of

 

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Enel Chile and (ii) is in line with prevailing market prices, terms and conditions at the time of its approval. Although no two statements were identical, each director individually concluded that the Reorganization contributed to the best interest of Enel Chile, including its shareholders, and is in line with prevailing market prices, terms and conditions at the time of its approval. In connection with their individual statements, the directors each reviewed the Enel Chile Reports and the report of the Directors’ Committee of Enel Chile. Each director placed varying degrees of emphasis on the factors he considered in his individual statement. The directors’ conclusions were supported by the following analysis:

Contribution to Best Interest of Enel Chile

Each of the directors of Enel Chile concluded that the Reorganization contributes to the best interest of Enel Chile. Factors that were considered by one or more individual directors include, among others:

 

    Consolidation by Enel Chile of its leadership in the conventional and non-conventional electricity generation and distribution sectors in Chile;

 

    Alignment of interests of the minority shareholders of Enel Chile with the interests of the controlling shareholder of Enel Chile;

 

    Optimization of Enel Chile’s capital structure; and

 

    Potential reduction of the holding company discount of Enel Chile.

Market Conditions

Each of the directors of Enel Chile concluded that the Reorganization was in line with prevailing market prices, terms and conditions, primarily because the company valuations as well as the prices and exchange ratios were consistent with the analyses of the independent evaluators and independent appraiser of Enel Chile.

Summary of Opinion of Independent Evaluator of Enel Chile (LarrainVial)

On August 30, 2017, the Board of Directors of Enel Chile appointed Larraín Vial Servicios Profesionales Ltda. (“LarrainVial”) to act as an independent evaluator with respect to the Reorganization. LarrainVial was chosen by the Board of Directors as the independent evaluator based on the fact that LarrainVial is an independent financial services company with more than 80 years of experience and a strong track record of valuations, energy transactions and knowledge of the energy industry in Chile.

Based on the review of the description of the Reorganization and analyses of the effects and potential impact of the Reorganization on Enel Chile, LarrainVial prepared and delivered its final written opinion (the “LarrainVial Opinion”) at the meeting of the Board of Directors of Enel Chile held on November 3, 2017, which indicated that the Reorganization would contribute to the corporate interest of Enel Chile. However, the LarrainVial Opinion does not constitute a recommendation to the Board of Directors of Enel Chile with respect to the Reorganization.

A copy of the complete LarrainVial Opinion is attached as Annex E to this prospectus. The LarrainVial Opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by LarrainVial in rendering its opinion. The description of the LarrainVial Opinion set forth below is qualified in its entirety by reference to the full text of the LarrainVial Opinion. Holders of Enel Generación Shares are urged to read the entire LarrainVial Opinion carefully in connection with their consideration of the proposed Offers and Reorganization.

During the past two years LarrainVial has not provided any financial advisory service to Enel Chile or its associated and affiliated entities other than it advisory service as independent evaluator with respect to the Reorganization.

 

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Background and Description of the Reorganization; Bases of Analysis

On July 3, 2017, Enel Chile proposed to Enel a corporate reorganization in which Enel Chile would acquire the non-conventional renewable energy generation assets of EGPL in Chile through a merger. The proposal conditioned the consummation of the merger on the successful consummation of a cash and share tender offer by Enel Chile for up to 100% of Enel Generación’s outstanding equity. The tender offer was conditioned on Enel Chile owning more than 75% of the share capital of Enel Generación upon the consummation of the tender offer.

On August 25, 2017, Enel expressed a favorable opinion to the proposed reorganization and provided certain additional conditions, including, among others, the condition that the proposed reorganization should increase the earnings per share (EPS) of Enel Chile and that Enel must maintain a similar ownership percentage in Enel Chile both before and after the proposed reorganization.

As of October 26, 2017, Enel Chile communicated as a significant event (hecho esencial) that the proposed tender offer will be paid entirely in cash, subject to the condition that a portion of the cash must be applied to subscribe and pay for Enel Chile shares. Enel Chile also indicated that the proposed reorganization, include all of the transactions that are part of it, is a single integral transaction and will be subject to Chilean laws that govern related party transactions.

To prepare the LarrainVial Opinion, LarrainVial reviewed publicly available information on the companies that are part of the Reorganization as well as other electricity generation and distribution companies both within and outside Chile and information of the markets in which such companies trade. LarrainVial also had access to a virtual data room with information regarding the Reorganization, Enel Chile and its subsidiaries, as well as EGPL and its subsidiaries.

In addition, LarrainVial participated in face-to-face meetings and telephone calls, including management presentations of Enel Chile, Enel Generación, Enel Distribución and EGPL held on September 26, 2017, as well as work meetings and telephone calls with management and financial advisors of Enel Chile, Enel Generación, Enel Distribución and EGPL. LarrainVial was also able to ask questions to Enel Chile, which were answered through the virtual data room.

Scope of Engagement

LarrainVial has been appointed by the Board of Directors of Enel Chile as an independent evaluator to evaluate the Reorganization as a related party transaction under Chilean law and provide an opinion in accordance with Article 147 of the Chilean Corporations Act, which requires the opinion to include LarrainVial’s opinion as to whether the Reorganization benefits Enel Chile and/or its shareholders.

At the request of the Board of Directors, the LarrainVial Opinion also considers the following:

 

    Description of the proposed Reorganization;

 

    Analysis of the strategic reasons and potential impact of the Reorganization on the value of Enel Chile;

 

    Valuation of Enel Chile, Enel Generación and EGPL in the context of the Reorganization;

 

    The merger exchange ratio; and

 

    Evaluation of the terms and conditions of the Offers that would ensure that the Offers contribute to the corporate interest of Enel Chile and is in line with the conditions set forth by Enel, the ultimate controlling shareholder.

However, the LarrainVial Opinion did not consider an analysis of any transaction structure alternative to the Reorganization as it was not within the scope of engagement.

 

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In addition, the LarrainVial Opinion did not assess whether the price, terms and conditions of the Reorganization are consistent with market terms at the time the Reorganization is approved because no specific proposal had been made by the companies involved in the Reorganization or their respective Board of Directors with respect to the merger exchange ratio, the tender offer price, or the amount of the tender offer price to be applied to subscribe for Enel Chile Securities in connection with the Offers when LarrainVial was preparing the LarrainVial Opinion.

Methodology

LarrainVial first examined the reasons to justify the Reorganization from Enel Chile’s perspective, including strategic reasons, industry and tactical reasons, and financial reasons.

Strategic Reasons

The strategic reasons analyzed by LarrainVial included the following:

 

    The growing role of renewable energy in the global context.

 

    Future challenges in the industry as well as technology and business integration.

Industry and Tactical Reasons

LarrainVial analyzed the following industry and tactical reasons:

 

    High competitiveness and potential for expansion of renewable energy in the Chilean power sector.

 

    Combination of conventional and non-conventional renewable energy technologies. From Enel Chile’s perspective, the Reorganization will allow Enel Chile to have exposure to a mix of conventional and non-conventional technologies and assets and present an opportunity to integrate the know-how of EGPL.

Financial Reasons

With respect to financial reasons, LarrainVial analyzed the following:

 

    Alignment of interests in a single investment vehicle that holds all generation and distribution investments of the Enel group in Chile, which may eliminate potential conflicts of interests in the development of the generation business that currently exist and could affect the minority shareholders of Enel Chile and Enel Generación.

 

    Reduction of holding company discount of Enel Chile.

 

    Increased liquidity of the Enel Chile stock.

 

    Optimization of Enel Chile’s capital structure.

 

    Reduction in operational risk of Enel Chile through technological diversification.

 

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LarrainVial also completed a valuation analysis which individually valued the assets of each of Enel Chile, Enel Generación, and EGPL using a discounted cash flow (DCF) analysis as shown in the chart below:

 

 

LOGO

 

1 Estimated valuation range with WACC +/-0.2% and terminal value growth of +/- 0.2%, except EGP Latam whose range was estimated based on the execution or not of some projects.
2 Holding discount considered: 8%, estimated as 50% of the median daily holding discount for Enel Chile (see Appendix 1 to the LarrainVial Opinion).

For purposes of the DCF analysis, LarrainVial used operating and financial projections provided by each of Enel Chile, Enel Generación, and EGPL. The terminal value calculations were based on market practices which include adjusted perpetuity cash flows, considering replacing capital expenditure for each asset. Weighted average cost of capital (WACC) rates were calculated depending on different types of business.

 

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LarrainVial reviewed the results of the DCF analysis with references to market prices, market analyst’s target prices, comparable companies trading multiples analysis, and implied multiples in comparable precedent transactions. The results of this review is shown in the chart below.

 

 

LOGO

 

1 Detail of comparable companies used in Appendix II to the LarrainVial Opinion.
2 Analyst reports prior to the announcement of the Proposed Transaction by Bci, Bice, Credicorp, Goldman Sachs, Scotiabank and LarrainVial. Median for Enel Gx CLP 520 per share, median for Enel Chile CLP 77.
3 Valuation range of comparable transactions based on the average and median of Iberdrola/Iberdrova Renovables, EDF/EDF Energies Nouvelles and Enel / Enel Green Power (see Appendix III to the LarrainVial Opinion).

The sum-of-the-parts (SOTP) valuations for each of Enel Chile, Enel Generación, and EGPL were used to estimate exchange ratio ranges with respect to Enel Chile and EGPL, and with respect to Enel Chile and Enel Generación. Additionally, a maximum debt for Enel Chile to maintain its credit rating was considered to determine the maximum cash percentage of the Offers.

Finally, two frontier conditions were analyzed among the valuation and exchange ratios ranges: increase in EPS of Enel Chile and similar ownership by Enel in Enel Chile after the Reorganization.

Conclusions and Valuations

Based on the information received and analysis undertaken, the Reorganization, if conducted in accordance with the in the terms described in the LarrainVial Opinion and summarized below, contributes to the corporate interest of Enel Chile and complies with the requirements of Enel.

The market performance of Enel Chile Shares and Enel Generación Shares since the announcement of the Reorganization has been (i) above of comparable Chilean company shares and (ii) above or in line with that of

 

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the Chilean stock market, which are good indicators that confirm the market’s positive view of the Reorganization.

LarrainVial’s estimated price and exchange ratio ranges for the Reorganization are as follows:

 

•      Offers Price:

   between Ch$534 and Ch$586 per Enel Generación Share

•      Price per share for Enel Chile:

   between Ch$80.2 and Ch$ 86.6 per Enel Chile Share

•      Offers Exchange Ratio: (implied)

   between 6.38 and 7.01 Enel Chile Shares for each Enel Generación Share

•      Offers Cash %:

   between 57.0% and 62.6%, determined by the price of the Offers

•      EGPL Equity Value:

   between US$1,633 million and US$1,880 million

•      Merger Exchange Ratio:

   between 15.04 and 17.31 Enel Chile shares for each EGPL share

The result of the Offers are uncertain. However, LarrainVial believes that it is reasonable to assume that the final ownership percentage obtained by Enel Chile in Enel Generación will be higher or lower, depending on whether the final values of the Merger and Offers are more or less favorable for minority shareholders of Enel Generación.

At the same time, considering fixed results for the Offers, there are different combinations of company prices (and therefore of exchange ratios) in which Enel Chile and its shareholders obtain equivalent results in terms of the average EPS for the 2018-2022 period compared to the current scenario.

With regards to the Offers, the greater the percentage of cash to be used, the greater the benefit in terms of EPS for Enel Chile. Assuming a fixed maximum leverage for Enel Chile, the greater the price of the Offers, the lower the percentage of cash would be allowed in the Offers.

Preliminary Presentations by LarrainVial

In addition to the LarrainVial Opinion, which includes financial information as of September 30, 2017, LarrainVial also presented a preliminary opinion to the Board of Directors of Enel Chile on October 26, 2017, which included financial information as of June 30, 2017. The preliminary opinion contained substantially similar analyses as described above in connection with the delivery of the LarrainVial Opinion, except the financial information used was updated to September 30, 2017.

A copy of the October 26, 2017 preliminary opinion has been filed as an exhibit to the Schedule TO/13E-3 filed with the SEC in connection with the Offers, and is available on Enel Chile’s website and will be made available for inspection and copying at the principal offices of Enel Chile during its regular business hours by any interested holders of Enel Generación, EGPL or Enel Chile shares or representative who has been so designated in writing. Copies may be obtained by requesting them in writing from Enel Chile at the address provided in the section titled “Incorporation of Certain Information by Reference” of this prospectus.

Summary of Opinion of Additional Independent Evaluator of Enel Chile (Econsult)

On August 30, 2017, the Directors’ Committee of the Board of Directors of Enel Chile appointed Econsult RS Capital S.p.A. (“Econsult”) to act as an additional independent evaluator with respect to the Reorganization. Econsult was chosen by the Directors’ Committee as an independent evaluator based on the fact that Econsult is a company with extensive experience in providing financial and investment advice to over 400 clients in more than 30 different industries, for more than 30 years becoming one of the most prestigious consultants of the country.

 

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Based on the review of the description of the Reorganization and analyses of the effects and potential impact of the Reorganization on Enel Chile, Econsult prepared and delivered its final written opinion (the “Econsult Opinion”) at the meeting of the Directors’ Committee of Enel Chile on November 3, 2017, which indicated that the Reorganization would contribute to the best interest of Enel Chile. However, the Econsult Opinion does not constitute a recommendation to the Directors’ Committee of Enel Chile with respect to the Reorganization.

A copy of the complete Econsult Opinion is attached as Annex F to this prospectus. The Econsult Opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Econsult in rendering its opinion. The description of the Econsult Opinion set forth below is qualified in its entirety by reference to the full text of the Econsult Opinion. Holders of Enel Generación Shares are urged to read the entire Econsult Opinion carefully in connection with their consideration of the proposed Offers and Reorganization.

During the past two years Econsult or its affiliated entities have not provided any financial advisory service to Enel Chile or its associated and affiliated entities other than it advisory service as independent evaluator with respect to the Reorganization.

Bases of Analysis

To prepare the Econsult Opinion, Econsult had access to a virtual data room with information regarding the Reorganization, Enel Chile and its subsidiaries, as well as EGPL and its subsidiaries. Econsult also reviewed publicly available information about each of these companies, its industry and its peers.

In addition, Econsult participated in face-to-face meetings and telephone calls, including management presentations of Enel Chile, Enel Generación, Enel Distribución and EGPL held on September 26, 2017, as well as meetings and telephone calls with management and financial advisors of Enel Chile, Enel Generación, Enel Distribución and EGPL. Econsult was also able to ask questions to Enel Chile, which were answered through the virtual data room.

Econsult assumed that the information of the virtual data room was true, accurate, sufficient and complete. Econsult did not independently verify the information included in the virtual data room and was not responsible for its accuracy, correctness, completeness or sufficiency. Econsult was not responsible for conducting and did not conduct an independent verification of the information included in the virtual data room.

Scope of Engagement

Econsult was appointed by the Directors’ Committee of Enel Chile as an independent evaluator to evaluate the Reorganization as a related party transaction under Chilean law and provide an opinion in accordance with Article 147 of the Chilean Corporations Act, which requires inclusion of Econsult’s opinion as to whether the Reorganization benefits Enel Chile and/or its shareholders.

In accordance with this role, Econsult was requested to prepare an opinion that includes, among others, the following:

 

  i. A description of the main terms and conditions of the Reorganization.

 

  ii. Analysis of the strategic rationale and potential impacts on value of the Reorganization, in order to determine if it contributes to the best interest of the Company.

 

  iii. Valuations of Enel Chile, Enel Generación and EGPL in the context of the Reorganization.

 

  iv. Assessment on the exchange ratio for the Merger.

 

  v. Assessment on the terms and conditions for the Offers, taking into account that:

 

  a) It contributes to the best interest of Enel Chile.

 

  b) It is in line with minimum conditions set by Enel in its letter sent on August 25, 2017.

 

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However, the Econsult Opinion did not consider an analysis of any transaction structure alternative to the Reorganization as it was not within the scope of engagement.

In addition, the Econsult Opinion did not assess whether the price, terms and conditions of the Reorganization are consistent with market terms at the time the Reorganization is approved because no specific proposal had been made by the companies involved in the Reorganization or their respective Board of Directors with respect to the merger exchange ratio, the price of the Offers, or the amount of the price of the Offers to be applied to subscribe for Enel Chile Securities in connection with the Offers when Econsult was preparing the Econsult Opinion.

Methodology

Econsult conducted a sum-of-the-parts (SOTP) valuation of each of the companies involved in the Reorganization. In order to estimate the value of each one, the discounted cash flow (DCF) methodology was considered as the most appropriate valuation tool for the definition of the Reorganization terms. In order to have additional value references, Econsult also considered four other valuation methodologies, including market value, trading comparables, research analyst target prices, and precedent transactions.

The following chart summarizes the results of Econsult’s analysis based on the different valuation methodologies:

 

 

LOGO

 

(1) Pre transaction announcement 52-week high and low
(2) Selected sample of companies
  I. EGC: Colbun, AES Gener and E-CL
  II. EDC: Aguas Andinas
  III. EGPL: ERG SpA, EDP Renovaveis, Dong Energy and Saeta Yield
(3) Latest recommendations of: Santander, JP Morgan, BICE, MBI, Credicorp, Scotia Capital, Larrain Vial, Renta 4 and Morgan Stanley
(4) DCF considers a 10% discount holding
(5) Range also considers sensitivity on project completion probability
(6) Selected precedent transactions of global renewals and Chilean hydro deals
(7) Latest stock price pre announcement

 

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Note: All market values were converted into US$ dollars using an exchange rate of CLP/US$ 660, consistent with DCF macro assumptions.

Conclusions and Valuations

Econsult believes that a joint execution of the Merger and the Offers would be beneficial for Enel Chile, considering both the strategic rationale of the Reorganization as well as the potential positive impacts on Enel Chile.

From a strategic standpoint, the Reorganization may allow Enel Chile to:

 

    Become the leading player in Chilean power and utility sector, under a structure where the interests are fully aligned with the controlling shareholder;

 

    Improve its competitive positioning and investment thesis by incorporating renewable generation assets with capacity of 1,195 MW and an attractive portfolio of new projects;

 

    Optimize its capital structure as a result of the additional debt related with the execution of the Reorganization;

 

    Reduce its holding company discount to the extent that Enel Chile acquires a lower portion of Enel Generación Shares; and

 

    Increase secondary trading volumes of Enel Chile Shares due to: (i) increase of its free float; (ii) positive impact in its weight in the different relevant equity indexes; and (iii) positioning it as the best power and utility entity to invest in Chile.

With respect to the valuation results for Enel Chile, Enel Generación and EGPL, Econsult’s estimates were as follows:

 

  1) Tender Offer Price and Exchange Ratio

 

Valuation scenarios

   Enel Chile      Enel Generación     Exchange Ratio (Enel
Generación/Enel Chile)
 
   Equity
Value

(US$ m)
     Share
Price
(Ch$)1
     Equity
Value
(US$ m)
     Share
Price
(Ch$)1
     Premium
over pre
announcement
price2
    Holding
Discount

7.5%
     Base Case
Holding
Discount

10.0%
     Holding
Discount

12.5%
 

Low range

     5,892      $ 79        6,674      $ 537        9.8     6.60x        6.78x        6.97x  

Midpoint

     6,148      $ 83        7,015      $ 565        15.5     6.64x        6.83x        7.02x  

High range

     6,428      $ 86        7,390      $ 595        21.6     6.70x        6.88x        7.08x  

 

  2) Merger Exchange Ratio

 

Valuation scenarios

  EGPL     Exchange Ratio (EGPL / Enel Chile)  
    Holding Discount 7.5%     Base Case Holding
Discount 10%
    Holding Discount 12.5%  
  Equity
Value
(US$ m)
    Share
Price
(Ch$)1
    Enel
Chile
Low
Range
    Enel
Chile
Midpoint
    Enel
Chile
High
Range
    Enel
Chile
Low
Range
    Enel
Chile
Midpoint
    Enel
Chile
High
Range
    Enel
Chile
Low
Range
    Enel
Chile
Midpoint
    Enel
Chile
High
Range
 

Low range

    1,584     $ 1,264       15.53x       14.88x       14.23x       15.96x       15.30x       14.63x       16.42x       15.73x       15.05x  

Midpoint

    1,696     $ 1,353       16.62x       15.93x       15.23x       17.08x       16.37x       15.66x       17.57x       16.84x       16.10x  

High range

    1,796     $ 1,433       17.60x       16.87x       16.13x       18.09x       17.33x       16.58x       18.61x       17.83x       17.05x  

 

  LOGO Tender offer price and exchange ratios consistent with Enel Chile’s best interest.

 

1 Enel Chile: 49,092,772,762 outstanding shares; Enel Generación: 8,201,754,580 outstanding shares; EGPL: 827,205,371 outstanding shares. Exchange rate of Ch$660 per US$1 consistent with macro assumptions included in the DCF analysis.

 

2  Pre Announcement Price on August 25, 2017 was Ch$489.

 

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Based on such valuation results, Econsult believes that the exchange ratio for the Merger should be in the range of 14.23 to 17.05 Enel Chile Shares per EGPL share in order for the Reorganization to contribute to the best interest of Enel Chile.

Econsult also believes that in order for the Reorganization to contribute to the best interest of Enel Chile, the value per share of Enel Generación for the Offers should be between Ch$537 and Ch$595 per Enel Generación Share and the implicit exchange ratio should be in the range of 6.60 to 7.08 Enel Chile Shares for each Enel Generación Share, which represent a premium between 9.8% and 21.6% over the closing price of Enel Generación Shares on the date of the announcement of the Reorganization. The proposed exchange ratios are consistent with the historical average of the last twelve months prior to the announcement of the Reorganization.

Based on the analysis performed, Econsult believes that the cash payment of the Offers should be between 60% and 65% of the total consideration. However, in order to minimize dilution and maximize earnings per share of Enel Chile, Econsult believes that it is beneficial for Enel Chile to maximize the cash portion of the tender offer consideration based on its additional debt capacity. Econsult does not expect that there will be significant changes to Enel Chile’s credit ratings that could result in a downgrade to non-investment grade.

Econsult believes that if the Reorganization is consummated on the terms as described above, the minimum conditions established by Enel would also be fulfilled.

Preliminary Presentations by Econsult

In addition to the Econsult Opinion, which includes financial information as of September 30, 2017, Econsult also presented a preliminary opinion to the Directors’ Committee of Enel Chile on October 26, 2017, which included financial information as of June 30, 2017. The preliminary opinion contained substantially similar analyses as described above in connection with the delivery of the Econsult Opinion, except the financial information used in the Econsult Opinion was updated to September 30, 2017.

A copy of the October 26, 2017 preliminary opinion has been filed as an exhibit to the Schedule TO/13E-3 filed with the SEC in connection with the Offers, and is available on Enel Chile’s website and will be made available for inspection and copying at the principal offices of Enel Chile during its regular business hours by any interested holders of Enel Generación, EGPL or Enel Chile shares or representative who has been so designated in writing. Copies may be obtained by requesting them in writing from Enel Chile at the address provided in the section titled “Incorporation of Certain Information by Reference” of this prospectus.

Summary of Report of Independent Appraiser of Enel Chile (Oscar Molina)

On August 30, 2017, the Board of Directors of Enel Chile designated Oscar Molina as an independent appraiser (perito independiente) pursuant to Chilean law, for the purposes of delivering a report as to the estimated value of the merging companies and the estimated appropriate merger exchange ratios in accordance with Articles 156 and 168 of the Chilean Corporate Regulations and SVS instructions. At the November 3, 2017 meeting of the Board of Directors of Enel Chile, Mr. Molina delivered his final report (the “Molina Report”), which does not constitute a recommendation to the Board of Enel Chile with respect to the Merger

Mr. Molina is founding partner and Managing Director for Bansud Capital and has over 19 years of experience in investment banking. In appointing him, the Board of Directors of Enel Chile considered his experience as well as the fact he holds a degree in engineering from the Universidad Católica de Chile, an M.B.A. from INSEAD business school (Fontainebleau, France).

A complete copy of the Molina Report is attached as Annex G to this prospectus. The Molina Report outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Mr. Molina in rendering the Molina Report. The description of the Molina Report set

 

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forth below is qualified in its entirety by reference to the full text of the Molina Report. Holders of Enel Generación shares are urged to read the entire Molina Report carefully in connection with their consideration of the proposed Reorganization (including the Offers). The Molina Report was prepared in Spanish. The attached version is a free English translation of such Molina Report. In the case of doubt as to the proper interpretation or construction of this prospectus, or the English version of the Molina Report, the original Spanish version of the Molina Report shall prevail.

In rendering the Molina Report, Mr. Molina reviewed the estimated economic valuations of Enel Chile and EGPL prepared by Bansud Capital. Bansud Capital performed a variety of financial analyses. The summary below is not a complete description of the analyses underlying the Molina Report, but is a summary of all material analyses performed. The preparation of a report is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis and must be considered as a whole. Additionally, no company included in Bansud Capital’s comparative analyses described in the Molina Report is identical to Enel Chile nor EGPL and no transaction is identical to the proposed Merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values, as the case may be, of the companies to which Enel Chile and EGPL were compared.

Mr. Molina was engaged as independent appraiser to evaluate the Merger under Chilean law. No portion of the fees payable to Mr. Molina is contingent on the consummation of the Merger. During the two years before Mr. Molina was first contacted about his potential engagement by the Board of Enel Chile, neither he nor Bansud Capital had provided any financial advisory services to Enel Chile or its associated and affiliated entities.

Scope of Engagement

The Molina Report was issued in compliance with the provisions of Article 156 of the Chilean Corporate Regulations. Therefore, the Molina Report has been authorized to:

 

  a) Serve as ground for the recommendations that Enel Chile’s directors issue or may issue with regards to the Merger and the merger exchange ratio; and

 

  b) Be made available to the Enel Chile’s shareholders through the means that the Board of Directors of Enel Chile may decide in connection with the calling of the extraordinary shareholders’ meeting to approve the Merger and the Reorganization as a related party transaction under Chilean law and, Enel Chile’s filings with the SEC as required under applicable law.

The Molina Report is issued to serve as information that the Board of Directors of Enel Chile will make available to the shareholders of Enel Chile who are required to make a decision in connection with the Merger within the context of the Reorganization. The foregoing is pursuant to the requirements of Article 156 of the Chilean Corporate Regulations.

The Molina Report was prepared on the basis of the information provided by Enel Chile and EGPL, as well as publicly available information.

No independent verification has been conducted regarding the provided information nor of the public information used in the analyses and conclusions of the Molina Report. Therefore, the Molina Report does not issue nor grant any representation or guarantee of any kind regarding the truthfulness or precision of said information and, consequently, Mr. Molina and Bansud Capital have assumed no liability for any errors or omissions that could exist in the information that was provided to them or that he or Bansud Capital may have accessed, nor the analyses and conclusions directly or indirectly resulting from such errors or omissions.

 

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Likewise, no verification of the terms and conditions of the power purchase agreements (“PPA”) has been conducted, nor a technical revision of the companies’ assets. In the case of PPAs and in accordance with the terms set forth in the preceding paragraph, Bansud Capital has relied on a legal due diligence report it received from Enel Chile’s Chilean counsel (the “Legal Due Diligence Report”).

Bases of Analysis

In the analysis and evaluation process, Mr. Molina and Bansud Capital used both confidential information provided by Enel Chile through its executives and information obtained from private databases to which Bansud Capital has access. Bansud Capital additionally considered information obtained from written and electronic media publicly available on the internet.

The information regarding Enel Chile and EGPL was available through a virtual data room (the “Data Room”), including, among others:

 

    Historical financial statements of Enel Chile and EGPL and their main subsidiaries.

 

    Presentations prepared by Enel Chile’s management regarding Enel Generación, Enel Distribución, Enel Chile and EGPL.

 

    Financial projections for the 2017-2022 period for Enel Generación and its subsidiaries, Enel Distribución, Enel Chile and EGPL, including, among others, balances, income statements, expansion and maintenance expenditures and the main working capital accounts.

 

    Projections of the main operational variables of Enel Generación, Enel Distribución and EGPL, including, among others, prices and quantities for their main revenue sources. In the case of Enel Generación and EGPL, these projections covered the 2017-2045 period.

 

    Estimates of the investments that Enel Generación, Enel Distribución, Enel Chile and EGPL are expected to make in the medium and long term.

 

    Audited financial statements as of September 30, 2017, of Enel Generación, Enel Distribución, Enel Chile and EGPL.

 

    The Legal Due Diligence Report.

 

    Technical Due Diligence Report issued by an international accredited registrar and classification society.

Meetings were also held with the management of Enel Generación, Enel Distribución, Enel Chile and EGPL, and a question and answer process was electronically provided via the Data Room.

Additionally, Mr. Molina and Bansud Capital had access to proprietary and public information, including:

 

    Statistical information, market prices, investment bank reports and information of comparable companies obtained from Bloomberg.

 

    Operational information obtained from the webpage of the Independent Coordinator (Coordinador Eléctrico Nacional).

 

    General news obtained on the internet.

Methodology

Mr. Molina and Bansud Capital applied the following methodologies:

 

    Reviewing the business plans of Enel Chile and EGPL and their main subsidiaries.

 

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    Validating the information with historical results and main future development premises expressed by each administration.

 

    Making inquiries regarding aspects in which there were doubts and, depending on the received responses, adjusting the projections.

 

    Valuing Enel Chile and EGPL through a sum-of-the-parts (SOTP) analysis, making separate valuations for each company in a standalone basis as well as for their main subsidiaries using the discounted cash flows (DCF) methodology.

 

    Corroborating the results obtained through DCF with trading and transaction multiples of comparable companies.

 

    Calculating each company’s equity value, subtracting the net financial debt and other adjustments as of September 30, 2017, including estimates of dividends to be distributed in January 2018, before the consummation of the Merger.

Valuation Considerations—Discounted Cash Flow, Transaction & Trading Multiples

The DCF method considered the operating and financial projections for each company prepared based on the methodology described above, as well as macroeconomic and market assumptions. The terminal value calculations were based on adjusted perpetuity cash flows and took into consideration inflation rates and replacement capital expenditure for generation and distribution assets. Different weighted average cost of capital (WACC) were calculated depending on the different types of business.

Multiples of enterprise value based on last twelve months and estimated 2017 and 2018 EBITDA were used to calculate transaction and trading multiples for Enel Chile and EGPL. Comparable companies and comparable precedent transactions were selected based on business segment.

Overall Conclusion and Valuation Results

Estimate of Value as of September 30, 2017

The estimate of Enel Chile’s value (which includes Enel Generación) that is presented in the Molina Report does not consider in any way the Offers that would be performed as part of the Reorganization.

In order to maintain consistent valuation criteria for both Enel Chile and EGPL, the inclusion of a holding discount defined as the difference between the sum of the intrinsic value of each subsidiary of a conglomerate and the market capitalization of the conglomerate (or holding) company, was not considered.

 

(Ch$, Chilean pesos)

   Enel Chile(1)      EGPL  

Value of Equity as of September 30, 2017(2)

     4,457,950,000,000        1,006,223,000,000  

Total N° of Shares

     49,092,772,762        827,205,371  

Price per Share

     90.8        1,216.4  

 

(1) Enel Chile`s valuation considers the effect of dividend distributions by Enel Generación and Enel Chile in January 2018, before the consummation of the Merger, estimated at US$64 million and US$58 million, respectively.
(2) Figures in Chilean pesos, based on the Observed Exchange Rate as of September 30, 2017.

As indicated by Enel Chile, the valuation of EGPL assumes that, as of the time of the Merger, its only asset will be the 100% ownership of EGP Chile.

 

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Exchange Ratio

Considering the equity value for Enel Chile and EGPL discussed above, Enel Chile will perform a capital increase for the purposes of the Merger based on the following assumed terms:

 

Amount of capital increase for Merger(1)

   Ch$ 1,006,223,000,000  

Price per share to be issued(1)

   Ch$ 90.80  

N° of Enel Chile shares to be issued

     11,080,940,138  

Total number of Enel Chile shares after the Merger

     60,173,712,900  

 

     N° of Shares      Exchange Ratio  
      (Enel Chile / EGPL)  

EGPL

     827,205,371        13.4x  

 

(1) Figures in Chilean pesos, based on the Observed Exchange Rate as of September 30, 2017.

Proforma Balance Sheet of the Surviving Company

The following proforma balance sheet, prepared based on the information drafted by Enel Chile’s management and reviewed by the independent auditor of Enel Chile, represents the surviving company (i.e., Enel Chile), presenting in a simplified manner the main assets, liabilities and equity accounts of Enel Chile and EGPL, with any required adjustments.

 

(thousands of Chilean Pesos)

   Enel Chile
(Sep 30,2017)
    EGPL
(Sep 30, 2017)
     Adjustments     Enel Chile
post-Merger

(Proforma)
 

Current Assets

     856,738,886       134,911,988        (16,350,370     975,300,504  

Non-Current Assets

     4,597,540,759       1,515,499,681        18,519,108       6,131,559,548  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total Assets

     5,454,279,645       1,650,411,669        2,168,738       7,106,860,052  
  

 

 

   

 

 

    

 

 

   

 

 

 

Current Liabilities

     570,117,870       146,882,745        (16,350,370     700,650,245  

Non-Current Liabilities

     1,135,969,658       756,272,394        —         1,892,242,052  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total Liabilities

     1,706,087,528       903,155,139        (16,350,370     2,592,892,297  
  

 

 

   

 

 

    

 

 

   

 

 

 

Issued Capital

     2,229,108,975       527,698,886        478,524,114       3,235,331,975  

Accumulated Earnings

     1,754,976,619       123,506,438        (123,506,438     1,754,976,619  

Other Reserves

     (1,017,014,701     992,619        (336,498,568     (1,352,520,650

Equity attributable to the owners of the controller

     2,967,070,893       652,197,943        18,519,108       3,637,787,944  

Non-controlling stakes

     781,121,224       95,058,587        —         876,179,811  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total Equity

     3,748,192,117       747,256,530        18,519,108       4,513,967,755  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total Liabilities and Equity

     5,454,279,645       1,650,411,669        2,168,738       7,106,860,052  
  

 

 

   

 

 

    

 

 

   

 

 

 

For additional information regarding the pro forma statement of financial position giving effect to the Merger is available in the full Molina Report attached as Annex G.

Preliminary Presentations of the Independent Appraiser of Enel Chile (Oscar Molina)

In addition to the Molina Report described above, which included financial information as of September 30, 2017, Mr. Molina also made a preliminary written presentation to the Board of Enel Chile on October 26, 2017, which included financial information as of June 30, 2017. The preliminary presentation consisted of various summary data and analyses prepared by Bansud Capital that Mr. Molina utilized in formulating his preliminary estimated value of the merging companies and merger exchange ratio. This preliminary presentation was for

 

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discussion purposes only and did not present any definitive findings or make any recommendations or constitute his report, or any part of his report. The only presentation in which Mr. Molina presented his findings with respect to the estimated value of the merging companies and merger exchange ratio was the Molina Report described above, which was delivered by Mr. Molina on November 3, 2017. The preliminary presentation contained substantially similar analyses as described above in connection with the delivery of the Molina Report, except the financial information used in the Molina Report was updated to September 30, 2017.

A copy of the October 26, 2017 preliminary presentation has been filed as an exhibit to the Schedule TO/13E-3 filed with the SEC in connection with the Offers, and is available on Enel Chile’s website and will be made available for inspection and copying at the principal offices of Enel Chile during its regular business hours by any interested holder of Enel Generación, EGPL or Enel Chile shares or representative who has been so designated in writing. Copies may be obtained by requesting them in writing from Enel Chile at the address provided in the section titled “Incorporation of Certain Information by Reference” of this prospectus.

Summary of Report of Independent Appraiser of EGPL (Felipe Schmidt)

On October 17, 2017, the Board of Directors of EGPL designated Felipe Schmidt as an independent appraiser (perito independiente) pursuant to Chilean law, for the purposes of delivering a report as to the estimated value of the merging companies and the estimated appropriate merger exchange ratios in accordance with Articles 156 and 168 of the Chilean Corporate Regulations and SVS instructions.

Mr. Schmidt is a Vice President for Providence Capital and in appointing him, the Board of Directors of EGPL considered his over 14 years of experience in investment banking and broad experience in local and cross-border transactions advising Chilean and international clients in a wide range of industries, as well as the fact he holds a degree in Business and a masters degree in Finance from Universidad Adolfo Ibañez.

At the November 3, 2017 meeting of the Board of Directors of EGPL, Mr. Schmidt delivered his final report (the “Schmidt Report”) that sets forth:

 

    the estimated valuation of the merging companies (all calculations in the Schmidt Report were based on ex-ante values without considering any type of previous transaction or corporate restructuring in connection with the Reorganization);

 

    the proposed merger exchange ratios in connection with the Merger, based on an estimated economic valuation of the equity of EGPL and of Enel Chile, as calculated by Providence Capital as of November 3, 2017;

 

    the number of shares to be issued by Enel Chile and to be exchanged for outstanding EGPL shares upon consummation of the Merger; and

 

    the unaudited pro forma consolidated statement of financial position of Enel Chile.

No portion of the fees payable to Mr. Schmidt are contingent on the consummation of the Merger.

Except in connection with the Schmidt Report, neither Mr. Schmidt nor Providence Capital provided any services to EGPL, Enel Chile or Enel Generación or its affiliates during the past two years, except that Providence Capital and its affiliated entities acted as an independent appraiser for Enel Américas in the context of a corporate reorganization of Enel Américas carried out during 2016. The fees paid to Providence Capital and its affiliated entities, as applicable, in connection with these activities were, in the aggregate, financially immaterial to Providence Capital and its affiliated entities.

 

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Conclusion of Felipe Schmidt

Mr. Schmidt proposed the following merger exchange ratio in connection with the Merger (shares of Enel Chile per share of EGPL):

 

    

Enel Chile shares

Determined by the Independent Appraiser

   15.15 Shares

Additionally, Mr. Schmidt calculated the requisite number of shares to be issued by Enel Chile as follows:

 

CALULATION OF NUMBER OF SHARES TO BE ISSUED BY ENEL CHILE  
     US$      %  

Equity valuation of Enel Chile

     7,086,956,297        79.66

Equity valuation of EGPL

     1,809,291,212        20.34

Valuation of Equity upon Merger

     8,896,247,509        100.00

Capital Increase

     1,809,291,212     
NUMBER OF SHARES TO BE ISSUED BY ENEL CHILE  

Pre-Merger number of shares

     49,092,772,762     

Number of Shares to be issued

     12,533,324,406     

Post-Merger number of shares

     61,626,097,168     

Note: Figures are in U.S. dollars, converted from Chilean pesos based on the Observed Exchange Rate of Ch$ 637.93 per U.S. dollar as published by Chile’s Central Bank on October 2, 2017.

The full text of these conclusions as set forth in the Schmidt Report are attached as Annex H to this prospectus. The Schmidt Report outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Mr. Schmidt in rendering the Schmidt Report. Holders of Enel Generación Shares are urged to read the entire Schmidt Report carefully in connection with their consideration of the proposed Reorganization. The Schmidt Report was prepared in Spanish and in accordance to Chilean laws. Attached to this prospectus is a free English translation of the Schmidt Report. In the case of doubt as to the proper interpretation or construction of this prospectus, or the English version of the Schmidt Report, the original Spanish version of the Schmidt Report shall prevail.

In rendering the Schmidt Report, Mr. Schmidt relied upon the financial and other information provided by EGPL and Enel Chile, either orally or in writing, and in public information, without undertaking an independent verification of the truthfulness, accuracy and completeness of such information. Mr. Schmidt also reviewed the estimated economic valuations of Enel Chile (including Enel Generación) and EGPL prepared by Providence Capital. With regards to projections relied upon in the report, Mr. Schmidt has assumed that such projections have been prepared by EGPL and Enel Chile in good faith and based upon sound assumptions. Mr. Schmidt has not assumed any obligation or commitment to provide legal, accounting or tax advice and as a result none of the contents of Schmidt Report should be considered, used, or interpreted as legal, accounting, or tax advice and any content of the same that makes reference, directly, or indirectly, to legal, accounting, or tax aspects should be understood as a review of general aspects that Mr. Schmidt deemed relevant as support for its analysis. Mr. Schmidt was neither asked nor requested to provide an opinion as to the design, choice or structuring of the Merger or the Reorganization, nor was asked to provide services other than those rendered in connection with the Schmidt Report. Therefore, Mr. Schmidt has not made a determination in his opinion as to the possibility of any alternative transaction to the Merger or the Reorganization or a different configuration for the companies.

The Schmidt Report does not represent a recommendation, express or implied, with respect to how any person or entity should make decisions on transactions relating to this Reorganization. Mr. Schmidt has assumed no obligation or liability for the projections contained therein.

 

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The Schmidt Report as well as the analysis, opinions, comments and conclusions contained therein are valid as of the date of the Schmidt Report, and only for the purpose for which the Schmidt Report was prepared, in accordance with Chilean laws and regulations.

The Board of Directors of EGPL and Enel Chile determined the merger exchange ratios for the Merger. Mr. Schmidt’s analysis provided an independent determination of the merger exchange ratios for the Board of Directors’ reference as required under Chilean law.

Methodology

In connection with rendering the Schmidt Report on November 3, 2017, Mr. Schmidt utilized the estimated economic valuation of Enel Chile and EGPL’s equity as calculated by Providence Capital to calculate the merger exchange ratios presented in the Schmidt Report. In rendering estimated economic valuations contained in the Schmidt Report, Mr. Schmidt and Providence Capital reviewed and considered, among other things, information provided by Enel Chile and EGPL, consisting of historical financial information, macroeconomic assumptions, the 2017 budget, investment estimates, business plans and financial projections for each business for the period from 2018 to 2022, tariffs, financial debt information for Enel Chile and EGPL as of September 30, 2017 and other information considered relevant for purposes of issuing the Schmidt Report. Mr. Schmidt and Providence Capital also received presentations from the management of Enel Chile and EGPL, as well as from Enel Generación and Enel Distribución regarding their operations, financial projections, investment estimates, and tax implications. The management teams further made themselves available for inquiries and responded to requests for additional information.

In making the calculations presented in the Schmidt Report, Mr. Schmidt and Providence Capital used the methodologies described below.

DCF Method

Mr. Schmidt and Providence Capital’s estimated economic valuations are based on the sum of the corresponding investments in generation and distribution operations currently existing in Chile under the discounted cash flow (DCF) method, which considered the financial statements of Enel Chile and EGPL as of September 30, 2017. Specifically, the DCF method considered, among other things, (i) the operational cash flows of each of the controlled operating entities, either directly or indirectly, owned by Enel Chile and EGPL; (ii) relevant country’s gross domestic product, inflation, exchange rate, commodity prices as well as other macroeconomic data obtained from various external sources; and (iii) the application of a calculated weighted average cost of capital (WACC) (implementing the capital asset pricing model).

Market Multiples Method

In addition to the DCF method, similar companies falling within the same sector and listed on public stock exchanges (in Chile, Colombia, Peru, and in some cases in other markets such as Brazil, the US and Europe) were selected as a basis for comparison to the results of the DCF method. Nevertheless, this methodology was not used to directly calculate any of the equity values calculated in the analysis.

Transaction Multiples Method

The results of the DCF method were also compared to multiples used in transactions by companies with some similarity to Enel Chile and EGPL, all recently undertaken in relevant markets as a basis for comparison to the results of the DCF method. Nevertheless, this methodology was not used to directly calculate any of the equity values calculated in the analysis.

 

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Estimated Economic Valuation Results

The table below presents a summary of the estimated economic valuations of the equity of Enel Chile and EGPL as of September 30, 2017 in millions of U.S. dollars (Chilean peso equivalents were determined using the Observed Exchange Rate of Ch$ 637.93 per U.S. dollar as of October 2, 2017, which reflects September 30, 2017 transactions, as defined by local Chilean regulation for listed companies). The valuations consider their corresponding investments in generation and distribution operations in Chile.

ESTIMATED EQUITY ECONOMIC VALUATIONS (US$)

 

     Enel Chile      EGPL  

Valuation as of September 30, 2017

     7,086,956,297        1,809,291,212  

Pro forma combined statement of financial position after the Merger

The following pro forma combined statement of financial position represents the absorbing entity (Enel Chile), presenting the assets, liabilities and shareholders’ equity accounts of the companies, with their respective adjustments and balances merged, representing the surviving company. Figures are in thousands of Chilean pesos.

 

     Enel Chile
Consolidated
Historical
Th Ch$
    EGPL
Combined
Th Ch$
     Merger
Proforma
Adjustments
Th Ch$
    Enel Chile
Proforma
Merged
Th Ch$
 

Total current assets

     856,738,886       134,911,988        (16,350,370     975,300,504  

Total non-current assets

     4,597,540,759       1,534,018,789        —       6,131,559,548  
  

 

 

   

 

 

    

 

 

   

 

 

 

TOTAL ASSETS

     5,454,279,645       1,668,930,777        (16,350,370     7,106,860,052