Increase in paid-up capital (June 2011) and shareholder remuneration system

In keeping with the policy implemented by other national and international companies, Naturgy Energy Group, S.A. wishes to offer its shareholders an alternative that enables them to receive company shares with the tax status of paid-up shares, without in any way limiting their option to receive the full annual payout in cash if they so choose.

To put this system into practice, the Ordinary General Meeting of Naturgy Energy Group, S.A. held on 14 April 2011, approved an increase in paid-up capital and the means by which the Company will take on the irrevocable commitment to purchase the free assignment rights corresponding to the above mentioned increase in paid-up capital at a fixed price (the Purchase Commitment), which will enable all shareholders who wish to do so to sell their rights and receive a cash amount equivalent to the sum of the complementary dividend they would have received for 2010, which would be paid out in early July 2011.

Once the free assignment rights have been received, Naturgy Energy Group, S.A. shareholders will be able to freely choose from among the following options:

(a) Not to transfer their free assignment rights. In this case the shareholder will receive the proportionate number of new shares corresponding to them, fully paid up. In all cases, this option will depend on the terms and conditions of the securities deposit and administration contract they have signed with their deposit entity, and on the instructions that have been given with regard to this.

(b) To transfer all or part of their free assignment rights to Naturgy Energy Group, S.A. by virtue of the Purchase Commitment at the guaranteed fixed price. In this way the shareholder would choose to monetise their rights.

(c) To transfer all or part of their free assignment rights on the market. In this case the shareholder may also choose to monetise their rights, although in this case they would not receive a guaranteed fixed price. Instead the payment for the rights would depend, in general, on the market conditions and, in particular, on the quoted price for those rights.

Naturgy Energy Group, S.A. shareholders will be able to combine the options mentioned in sections (a) to (c) above. It should be borne in mind that the fiscal treatment of the various options is different.

You should contact the financial entity in which the shares are deposited to instruct them, according to your decision.
If you would like more information, we can provide you with the information documents and the pertinent facts on this capital increase.

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