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SANTIAGO, Aug 25 (Reuters) - The board of Enel Chile SA said on Friday that a plan it privately presented to Enel in July to absorb Enel Green Power Latin America's non-conventional renewable generation assets in Chile has been conditionally approved by the parent company.
In a letter to Chilean regulators, Enel Chile said the plan is dependent on it successfully upping its stake in Enel Generacion Chile SA to 75 percent from its current 60 percent stake via a partial takeover bid. That takeover bid will in turn require a capital increase, the company said, but it did not specify the cost.
"In this way, all of the generation operations that (Enel) has in Chile, be they conventional or non-conventional renewable, would be run by Enel Chile through its subsidiaries," Enel Chile said in a statement.
Non-conventional renewable energy generally refers to all renewable energy sources except hydroelectric. In Chile, Enel Green Power has 475 megawatts of wind power, 493 megawatts of solar and is currently building a 48-megawatt geothermal plant, the first ever in South America, according to the company website.
Italy-based Enel's approval of the deal included a number of conditions in addition to the partial takeover of the Generacion unit. For instance, Enel will need to maintain a shareholder stake in Enel Chile that is similar to current levels, the company said.
Enel's South American assets are wrapping up a broader, complex re-organization process, which saw a number of mergers and divestitures. It was challenged in court at one point by a Chilean pension fund shareholder.
Chile's wind and solar sector has seen a massive boom in recent years, due to excellent natural conditions as well as locally high power prices. However, there have also been setbacks, as prices have slumped recently due to over-capacity and weak demand.
(Reporting by Gram Slattery; Editing by Lisa Shumaker and Cynthia Osterman)