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UPDATE 4-Edison shares fall after capital hike report

Published 12/13/2010, 01:47 PM

* Edison denies report of planned 1 bln euro cap hike

* Edison shareholder asks Consob to look into share swings

* Edison shares close down over 7 percent

(Adds A2A statement, analyst comments)

By Stephen Jewkes and Giancarlo Navach

MILAN, Dec 13 (Reuters) - Italy's No.2 power generator Edison denied a news report on Monday it was mulling a 1 billion euro ($1.3 billion) capital increase as its shares sank.

Edison shares closed down more than 7 percent at 0.862 euro following a Bloomberg report saying it was considering strengthening its balance sheet on the back of unprofitable gas-supply contracts.

"With regard to press rumours ... on a possible capital increase the company says this option has never been taken into consideration by any of its company organs," Edison said in a statement.

The Bloomberg report said 2011 core earnings at Edison may end up being 30 percent or more below analysts' consensus of about 1.35 billion euros, depending on the outcome of talks with key gas suppliers such as Russia's Gazprom.

"It's true Edison has been steadily guiding lower because of weak power and gas margins and concern for 2011 could be weighing on the shares," a Milan analyst said, adding however that the rating agencies had just confirmed ratings and Edison would surely have mentioned any capital hike plans.

In October, Edison cut its full-year guidance after weak nine-month results due to weak gas margins.

Edison is jointly controlled by Italy's A2A and French power company EDF SA through a complex shareholder pact that expires in September next year.

On Monday A2A said it had asked market regulator Consob to look into possible market manipulation violations relating to the report. Its shares closed down 3.6 percent at 1.039 euros.

A2A management has said on several occasions it is unhappy with results at Edison and wants a greater say in the running of the company. Last week EDF Chief Executive Henri Proglio said he did not see EDF leaving Italy.

Giuliano Zuccoli, chairman of both Edison and A2A's management board, said on Monday talks with the French group over restructuring at Edison were proceeding slowly, adding a decision could well be delayed a year.

The Bloomberg report also said that falling energy demand may force Edison to write down the value of its stake in Italian utility Edipower by about 40 percent and its Egyptian offshore gas field Abu Qir by about a third.

Speculation has been mounting that a restructuring of Edison could come about through a breakup of Edipower which is 50 percent controlled by Edison. A2A has a 20 percent stake in Edipower and Iren has a 10 percent stake.

(Additional reporting by Maria Pia Quaglia; Writing by Lisa Jucca; Editing by Louise Heavens and Jon Loades-Carter) ($1=.7580 Euro)

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