DJ 2nd UPDATE: Rome Tries To Mediate ACEA, GDF Dispute - Sources

(Updates to add details of Rome's mediation, official quotes, bond issue details.)

ROME (MF-Dow Jones)--The City of Rome is trying to mediate a spat between utility ACEA SpA (ACE.MI) and its French partner and shareholder, GDF Suez SA (GSZ.FR), people familiar with the matter told MF-Dow Jones Thursday.

ACEA is set on finding a legal solution to the dispute, which will bring it to Paris for arbitration.

It accuses GDF of violating terms of some of their joint ventures by expanding in Italy outside of those arrangements such as through the direct sale of gas in Italy.

ACEA also opposes the sale of its power-generating facilities to the French power giant.

ACEA is controlled by the City of Rome, but 10% of it is in the hands of GDF.

One of the people said that the city will be organizing meetings in the coming days between the two parties.

Also on Thursday, ACEA said it would issue a 15-year bond denominated in Japanese yen. The bond was worth JPY20 billion, or some EUR160 million. ACEA's shares ended 1.44% lower at EUR7.51 in Milan

ACEA Chairman Giancarlo Cremonesi told reporters on the sidelines of an event earlier Thursday that tensions were running high between the utility and GDF.

"There is no doubt that this is a tense moment," he said. "I hope we can overcome it."

Rome Mayor Gianni Alemanno said he is hopeful.

"We hope that in the coming weeks there will be an agreement with the French and it will not come to arbitration," he said.

"There is no interest in expropriating the French but there is instead interest in having the French stay as partners and have an agreement...that is advantageous for ACEA and the city of Rome," he said.

GDF Suez has said it is ready for arbitration to resolve the dispute, described by analysts as longstanding.

GDF added that the procedure would be detrimental to ACEA's business and stakeholders.

-By Catia Augelli of MF-Dow Jones and Christopher Emsden of Dow Jones Newswires; +39-06-6976-6921; chris.emsden@dowjones.com

(Rosario Murgida and Gilles Castonguay in Milan contributed to the article.)

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February 18, 2010 13:31 ET (18:31 GMT)

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