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UPDATE 1-CEZ, Inercom to study potential Bulgarian state stake in asset sale

Fri 9th March, 2018 3:45pm
(Adds details, quotes)
    By Jason Hovet and Tsvetelia Tsolova
    PRAGUE/SOFIA, March 9 (Reuters) - Czech utility CEZ
 CEZP.PR  and Inercom agreed to study the possibility of the
Bulgarian state taking a stake in assets that CEZ is selling to
the small Bulgarian solar energy producer, CEZ said on Friday.
    CEZ signed a contract in February to sell a power
distributor that provides electricity to over three million
Bulgarians, together with other assets in Bulgaria, to Inercom
for an estimated 320 million euros ($394 million).
    But Bulgaria's government said last week it wanted a
controlling stake in the assets after the deal prompted concerns
across the political spectrum in Bulgaria that strategic energy
assets were passing into the hands of owners which little was
known about.  urn:newsml:reuters.com:*:nL8N1QJ55Z
    CEZ said on Friday that Inercom representatives had asked if
the Bulgarian state could take a role in the asset sale.
    "Although the Bulgarian government did not officially show
interest in the sale process which was running last year, CEZ
will comply with its business partner's wishes and will examine
this possibility," it said in a statement.
    Both sides agreed to study the impact of the Bulgarian state
taking a role in the transaction, CEZ said, adding that
negotiations would continue in the coming weeks.
    Inercom, with assets of around 100 million levs ($63
million), is set to acquire a business with annual turnover of
about 1.8 billion levs. 
    Last month, Bulgarian Prime Minister Boyko Borissov urged
the central bank and intelligence services to look into the
    A week ago, Finance Minister Vladislav Goranov said
Bulgaria's government wanted a stake in CEZ's Bulgarian assets.
    However, he, as well as Delyan Dobrev, head of the
parliamentary energy commission, said later they did not think
the government should get involved, as the state has enough
instruments to control energy distribution companies. Goranov
said this was his personal view.
    Energy prices are politically sensitive in the EU's poorest
member state, and a spike in electricity bills in 2013 toppled
Borissov's first government.     
    Inercom said on Friday it would be up to CEZ to decide
whether to start talks between the companies and the Bulgarian
state over a potential government involvement in the sale.
    In written responses to Reuters, Milena Stoeva, chair of the
board of directors of Inercom Bulgaria, declined to reveal the
value of the deal but said the company has made firm commitments
to close the transaction and planned to deliver on them.
    Addressing concerns about the financing of the deal, Inercom
said that it is holding talks with several global banks and that
no offshore companies would take any part in the transaction.  
    The company said it has never discussed the financing of the
deal with Russian banks and said it was ready to commit
significant equity for the deal, but did not elaborate.
Bulgarian Mane Capital is Inercom's financial adviser.
    "Since signing the contract, the negotiations with the banks
are progressing well," she said, declining to name them.
    CEZ has taken Bulgaria to arbitration seeking hundreds of
millions of euros for failing to protect its energy investments
in the country and the ongoing case will complicate any eventual
involvement of the state in CEZ's assets.
    Hundreds of protesters, backed by opposition Socialists,
rallied in Sofia on Wednesday demanding the centre-right cabinet
stop the sale of CEZ's assets.    
($1 = 1.5904 leva)

 (Additional reporting by Petra Vodstrcilova in Prague and Angel
Krasimirov in Sofia; Editing by Adrian Croft)
 ((mailto:jason.hovet@thomsonreuters.com; +420 224 190 476;
Reuters Messaging:
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