INFORMATION ABOUT REE

The Board of Directors of the state-owned holding company Sociedad Estatal de Participaciones Industriales (SEPI) agreed, in the extraordinary meeting which it celebrated on 28th of September 2005, to sell 11,497,950 shares it owns in Red Eléctrica de España, S.A. (REE), and which represent 8.5% of this company´s capital. The procedure chosen for carrying out this sale has been the ´Bought Deal´. Once the sale has been completed, SEPI will maintain its presence in the shareholding structure of the electricity company, with a 20% stake.

The Board also agreed to award this sale to UBS, since it submitted the best financial offer among the different financial entities, and which were ranked for the deal by the Board itself on July 22nd, 2005. As a result of the financial offer selected, the sale price for each of the shares is, before fees, of 23.05 Euros, which represents a total amount of 265,027,747.5 Euros.

On July 29th, 2005 the Council of Ministers authorized SEPI to sell shares equivalent to 5% of the capital of Red Eléctrica, while the authorization regarding the remaining 3.5% was already given on May 21st, 1999, since this percentage was the ´green-shoe´ call option which was not implemented in the Initial Public Offering of shares (IPO) carried out on July of that year.

The procedure for the sale of the 8.5% has also the favorable report by the Consejo Consultivo de Privatizaciones (Consultative Board of Privatizations), which was submitted on July of this year, and which highlights that the deal meets the principles of publicity, transparency and competition. The company Analistas Financieros Internacionales has taken part in the sale process as SEPI´s advisor.

As a result of that stipulated by Act 54/1997, on November 27th, 1997 concerning the Regulation of the Electricity Industry, amended by Act 53/2002 concerning Tax, Administrative and Social Measures, the state-owned holding company Sociedad Estatal de Participaciones Industriales will keep, at any rate, a shareholding participation of at least 10% into the capital of Red Eléctrica de España, Sociedad Anónima.