February 22, 2018 / 4:31 PM / 4 months ago

CEZ set to sell Bulgarian distribution, renewable assets

PRAGUE/SOFIA (Reuters) - CEZ (CEZP.PR) has approved the sale of its remaining assets in Bulgaria to Inercom Bulgaria and expects to sign a contract on the deal in a few days, the Czech electricity producer said on Thursday.

FILE PHOTO: Czech electricity producer CEZ's logo stands next to an electricity pylon in front of the Ledvice coal-fired power plant near the village of Ledvice, Czech Republic, February 9, 2016. REUTERS/David W Cerny/File Photo

CEZ’s supervisory board has given its approval for sale of an energy distributor that provides electricity to over 3 million people in northwestern Bulgaria, an energy trader and several renewable energy assets.

CEZ did not disclose the value of the deal, but a source familiar with the process estimated the transaction at about 300 million euros ($370 million). Bulgarian business online publication Capital put the deal at 320 million euros.

“Inercom’s offer is significantly above the fair market value of the assets sold, as determined in an independent appraisal, and brings a positive return on the investments in the Bulgarian assets” CEZ said in a statement.

Inercom Bulgaria, part of a group that operates six photovoltaic energy installations with an installed capacity of 23 megawatts and is active in the construction sector, declined to comment.

The deal is pending the approval of Bulgaria’s anti-trust authority.

Speaking at a parliamentary energy commission prior to the announcement, Energy Minister Temenuzhka Petkova said the deal should also get the nod of the financial and the energy regulators, as CEZ controlled significant energy assets.

“What is important to us is that security of supplies and quality of services be guaranteed,” Petkova said.

A source familiar with the process said Inercom was holding talks with an international bank to partially finance the deal. Capital said the small company planned to secure half of the funds needed with a credit from two other unidentified companies.

The European Bank for Reconstruction and Development which arranged a 116 million euros syndicated loan to CEZ Bulgaria in 2016, has the right to call the loan as result of the change of ownership and is yet to decide how to proceed.

CEZ, which started the process of offloading its Bulgarian assets last January, said the sale would not affect its ongoing international arbitration with Bulgaria.

The Czech company has already agreed the sale of its Varna power plant in Bulgaria to Bulgaria’s SIGDA OOD.

Reporting by Robert Muller and Jason Hovet in Prague and Tsvetelia Tsolova in Sofia; Editing by Jason Neely and Mark Potter

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