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Endesa bumps Ashmore Energy International for Southern Cross

July 4, 2007

After Ashmore Energy International (AEI) announced June 1 its intention to purchase 50% of CMSEnergy’s on June 1, Endesa, which controls the other 50% of the northern Chilean transporter and generator, decided that the best suitor for the troubled company is Southern Cross.

Southern Cross is an investment fund owned by Norberto Morita and Ricardo Rodríguez.

The decision by Endesa’s board in Chile, which has an option to purchase or sell to a third party CMSEnergy’s stake in GasAtacama, must be a setback for AEI, which is controlled by funds managed by UK’s Ashmore Investment Management (AIM).

Mining companies served by GasAtacama have reportedly agreed to pay higher power prices. Gas shortages from Argentina have forced the company to generate electricity at a loss with diesel, which is about three times costlier than gas.

The AEI-AIM deal with GasAtacama had received a lot of negative press in the Chilean media, which accused the former of being “a vulture fund” that preys on companies that are in financial trouble. What clinched the deal, however, at day’s end was that Southern Cross offered a higher price for CMSEnergy’s interest.

AEI had originally offered $80 million, a very small sum considering the hundreds of millions invested to build a pipeline from Argentina and a 780MW combined cycle gas turbine plant at Mejillones.

Is GasAtacama better off? Possibly because some of GasAtacama’s main clients like mining companies like Southern Cross more than AEI.

In May, AEI announced the purchase of Shell’s assets in Bolivia and in Cuiabá, Brazil. Prior to that acquisition, the company announced in February that it had acquired in a swap deal with Suez Energy International 100% of Caliddá of Peru, the Lima and Callao gas distributor. In January it had raised its interest in Colombian gas distributor Promigas to 52.88% from 42.98%.

AEI’s entry in to South America was helped in September by the purchase of Prisma Energy, a subsidiary controlled by bankrupted and disgraced Enron. AIM announced in September that it had raised $1.3 billion for acquisitions.

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