Slovakia clears SPP stake sale for about 2.5 billion euros

BRATISLAVA Wed Dec 12, 2012 2:49pm EST

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BRATISLAVA (Reuters) - Slovakia approved the multi-billion euro purchase of a 49 percent stake in one of its biggest utilities by a Czech group, a move it says should give it more control over retail gas prices and investment in the sector.

Czech power group EPH is buying the stake in Slovakia's SPP in a deal whose value was not disclosed, but sources familiar with the matter have said it could hit 2.5 billion euros ($3.3 billion).

The stake is being bought from Germany's E.ON Ruhrgas (EONGn.DE) and France-based GDF Suez (GSZ.PA), which had paid $2.7 billion for the stake in 2002. The two companies have given no reason for their decision to sell.

Prime Minister Robert Fico, in power since April, had been at odds with E.ON and GDF since 2006, accusing them of squeezing the company for profits and submitting unjustified requests for higher regulated prices for households, which SPP had defended as justified.

The centre-left Slovak government, which approved the sale at a meeting on Wednesday, retains a 51 percent stake in SPP.

The sale agreement comes after the government held talks with EPH on future plans for SPP and both sides agreed to strengthen Slovakia's powers in the company, which should be written into a new shareholders deal.

EPH, in an e-mailed statement, said it welcomes the decision by the Slovak government.

"The signing of the transaction documents is expected in a few days. It is realistic to expect the closing of the entire transaction during January 2013," it said.

Slovakia has a buy option on the stake, but will not use it as it lacks cash for such an acquisition, according to an Economy Ministry document.

CONTROLLING STAKE

Under the deal, the SPP group should pay dividends worth at least 600 million euros a year five years to all shareholders, it said.

EPH's acquisition could also change SPP's structure, leaving the parent gas company run by the Slovak government, but preserving EPH's controlling stake in its two independent gas distribution units, Eustream and SPP Distribucia, which make up the bulk of its business, the document added.

If so the transition should be concluded by the end of 2013.

Gas transmission system operator Eustream, the largest carrier of Russian natural gas in the European Union, shipped 74 billion cubic meters of gas from Russia to the EU last year, equal to around 15 percent of the bloc's consumption.

The SPP group has a long-term gas supply deal with Gazprom (GAZP.MM) due to expire in 2028.

SPP reported a consolidated after-tax profit of 564 million euros in 2011.

EPH's owners are the PPF group, belonging to Czech billionaire Petr Kellner, which holds 40 percent, Slovak-Czech investment bank J&T with 40 percent and EPH Chairman Daniel Kretinsky, who holds the remaining 20 percent.

(Additional reporting by Jason Hovet in Prague; Editing by Michael Kahn, David Holmes and Leslie Adler)

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