CEZ Exits Bulgaria: Unloads Assets on Inercom

Prague, Feb 22 (CTK) – CEZ energy group is leaving Bulgaria, its statutory bodies approved sale of the local assets to Inercom Bulgaria company today, the contract will be signed in the coming days, CEZ spokeswoman Alice Horakova told CTK.


Inercom’s offer is significantly above the market value of the sold assets set in an independent appraisal, she said.


CEZ said that the resulting price is higher than the value of CEZ’s initial investment. CEZ bought two thirds in three Bulgarian distribution companies for EUR281.5m (Kc7.12bn with the crown’s current rate) in 2004.


Domestic media earlier speculated that CEZ might gain Kc8bn to Kc9bn in the deal.


Bulgarian business weekly Capital wrote, referring to its sources, that the price in the deal is some EUR320m (Kc8.1bn), said E15.cz server.


Of the amount, Inercom will reportedly borrow EUR180m from two unspecified companies. According to the server, Inercom raises questions among local media.


“It is a small local company which runs three solar parks,” Nikolay Stoyanov of the weekly told E15.


CEZ planned to leave Bulgaria due to long-lasting disputes with local authorities and because it wants to focus on the Czech Republic and Central Europe and renewable energy sources, for example in Germany and France, where it sees more opportunities.


CEZ started international arbitration against the Bulgarian government in 2016. Horakova said today that the sale will not affect the arbitration which will continue from the side of CEZ.


CEZ entered the Bulgarian market at the end of 2004. Its distribution and trading company provides services to some 3 million clients in Bulgaria, in particular in the western part of the country.


The package of the sold assets comprises seven companies, namely CEZ Bulgaria, CEZ Elektro Bulgaria, CEZ Razpredelenie, CEZ Trade Bulgaria, CEZ ICT Bulgaria, Free Energy Project Oresec and Bara Group. CEZ Razpredelenie is the most important of them.


“The settlement of the transaction is still subject to approval of the Bulgarian antimonopoly office,” Horakova added.


Energo-Pro based in Prague, one of the unsuccessful investors interested in the assets, has complained about the sales process in a letter this week. If refers to an analysis of BDO Advisory consulting company.


Energo-Pro board chairman Jaromir Tesar in the letter made available to CTK said, among other things, that the organisation of the sale did not correspond with the size of the transaction and importance of the assets.


Insufficient preparation of the sale’s process has caused time shifts against the original plan and changes in its individual stages, Tesar said in the letter.


The process thus must have been non-transparent for the bidders and they could then have been less willing to take part in it, which has lowered the probability of gaining the best possible bid, he added.


At the end of last year, CEZ sold separately Varna coal-fired power plant to Bulgarian company SIGDA ODD. The power plant with an installed output of 1,260 megawatts has been temporarily out of operation since the beginning of 2015.


CEZ halted the power plant’s operation because Bulgaria had not gained permit from the EU even for its short-term operation.