Action of Upper House of Dutch Parliament
On 21 November 2006, the Upper House of the Dutch Parliament approved legislation titled "Further Rules Concerning Independent Network Management" (the "Legislation"). The Legislation, which takes the form of amendments to the Dutch Electricity Act of 1998 and the Dutch Gas Act of 2000 and is accompanied by various transition and grandfathering provisions, had previously been approved by the Lower House of the Dutch Parliament on 27 April 2006 (see attached statement of Essent N.V., dated 5 May 2006, with respect thereto).
Action of Upper House of Dutch Parliament
The Upper House's approval of the Legislation was also accompanied by a motion providing that the provisions of the Legislation relating to the mandatory unbundling of the network and other activities of Dutch energy companies will not be given effect unless and until further action is taken by the Dutch government in consultation with both Chambers of Parliament. Based on the motion adopted by the Upper House, that action is not contemplated to be taken until an European directive is adopted with respect to mandatory unbundling and provision has been made for any material risks relating to the cross border leases previously entered into by the Dutch energy companies, unless the public and independent network management are endangered. It is also contemplated that the Dutch government will issue reports to Parliament at least once annually on the status of such matters, with the first report due no later than 1 November 2007. The Minister of Economic Affairs has confirmed that the Dutch government accepts and will comply with the motion adopted by the Upper House.
The Legislation will now be submitted to the Queen of the Kingdom of The Netherlands for Royal assent and publication in the Official Gazette ("Staatscourant"), following which the Legislation will become law in accordance with its terms and subject to the effective dates contained therein or established by separate decree.
Essent will be analyzing the provisions of the final Legislation and, as and when the same are available, the implementing decrees that are expected to be issued in connection therewith.
Response of Rating Agencies The rating agencies Standard & Poor's and Moody's Investors Service have published statements in response to the enactment of the Legislation. On 4 December 2006, Standard & Poor's announced that it was affirming Essent's existing ratings and that all such ratings were being removed from "Credit Watch" with negative implications. Standard & Poor's also indicated that the outlook is negative. Also on 4 December 2006, Moody's Investors Service announced that, although it will continue to monitor developments, the above referenced action taken by the Upper House appears to be broadly positive for the Dutch utilities. No changes were announced in Essent's ratings by Moody's.
The credit ratings currently assigned by Standard & Poor's and Moody's Investors Service to Essent are available on Essent's website www.essent.nl/essent/corporate/index.html (tab "Investor Relations", tab "Financial Information" followed by "ratings"). For further information regarding Essent's perspective on the Legislation and related matters, see the statements on Essent's website www.essent.nl (tab "Investor Relations").
Arnhem, 6 December 2006
Published: 06 December 2006