William Malcolm

Bulgarian Energy Regulator OKs CEZ’s Bulgarian Assets Sale To Eurohold

The Bulgarian energy regulator has approved the ČEZ’s sale of its distribution company in Bulgaria to the insurance and financial group Eurohold. It thus made it possible to complete the agreement for 335 million euros. In addition to the distributor supplying electricity to more than two million people, Eurohold will acquire other assets of ČEZ in Bulgaria.

The transaction was already approved by the Bulgarian Antitrust Authority last year. However, the energy regulator’s approval was the last obstacle that stood in the way of completing the transaction. “We have not yet received an official statement from the Bulgarian regulatory authority. As soon as we have it, we will continue to prepare for the settlement of the transaction,” CEZ spokeswoman Alice Horáková said.

CEZ signed an agreement with Eurohold on the sale of assets last June. The Bulgarian Antimonopoly Office first blocked the transaction, but the administrative court annulled its decision, and the office finally authorized the transaction last October.

The package of sold companies includes CEZ Bulgaria, which has been representing CEZ Group on the Bulgarian market since 2005 and coordinates the activities of companies, as well as CEZ Elektro Bulgaria, CEZ Razpredelenie, CEZ Trade Bulgaria, and CEZ ICT Bulgaria (since 2015 providing information and telecommunications services). Free Energy Project Orešec and Bara Group. The most important of these is the distribution company CEZ Razpredelenie Bulgaria.
Eurohold confirmed today that it has already obtained all the regulatory approvals needed to complete the transaction. He added that his goal is to create a leading regional energy company.

The company also said it intends to finance the acquisition with a combination of equity and loans from leading investment banks. According to Reuters sources, the transaction should be completed in the second quarter. Eurohold shares rose almost 13 percent on the Sofia Stock Exchange after the report approving the transaction.

“We have the support of global investment banks with good experience in financing such agreements. Once the acquisition is completed, we will focus on building a leading regional energy company,” said Vasil Stefanov, who is in charge of mergers and acquisitions at Eurohold.

CEZ entered Bulgaria in 2004 when it bought three distribution companies for 281.5 million euros. However, due to ongoing disputes with local authorities, which have been going on since February 2013, he decided to leave the country. For example, the company received millions in fines for abuse of a dominant position. In 2016, ČEZ initiated international arbitration against the Bulgarian government for hundreds of millions of euros due to interventions that, according to the company, damaged its business. The arbitration proceedings have not yet ended.

The sale of Bulgarian assets results from a change in CEZ’s strategy. The company wants to focus more on Czechia and Central Europe and renewable energy sources in countries such as Germany and France. At the end of last year, ČEZ announced that it had signed an agreement to sell most of its Romanian assets to the London company Macquarie Infrastructure and Real Assets (MIRA). But the companies did not state the price.

CEZ’s expansion abroad has been repeatedly described as unsuccessful by Prime Minister Andrej Babis. The majority owner of ČEZ is the state, which owns 70 percent of its shares through the Ministry of Finance.