March 20 (SeeNews) - Czech energy company CEZ Group said on Tuesday it expects the sale of its assets in Bulgaria will lead to a 'positive effect' of 9.9 billion Czech crowns ($478.4 million/389.4 million euro) on the group's net debt in 2018.
CEZ Group's key objectives for 2018 include closing the 'advantageous sale' of its Bulgarian assets along with maximising proceeds from the international arbitration launched against Bulgaria in 2016, CEZ Group said in a presentation of its 2017 financial results.
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The revenue generated from CEZ Group's Bulgarian operations edged down to 24.14 billion crowns in 2017 from 24.43 billion crowns the year before.
On the electricity distribution segment, CEZ Group's earnings before interest, tax, depreciation and amortisation (EBITDA) in Bulgaria grew by an annual 5% to 1.3 billion crowns.
On the electricity sale segment, the group's EBITDA in Bulgaria rose sharply to 600 million crowns last year, compared to 100 million crowns in 2016. The increase was mainly due to the effect of an out-of-court settlement agreement between CEZ Elektro Bulgaria and Bulgarian state-owned electricity company NEK concerning renewable energy receivables.
"By the sale of Bulgarian assets the two key strategic goals will be met, i.e. gradual shift of activities to regions with a stable regulatory environment and additional financial resources for development in the field of new energy," CEZ Group said.
An audit by the KPMG has shown that the process of the sale of CEZ assets in Bulgaria was transparent and in compliance with applicable law, according to the presentation.
Last month, CEZ Group said it has signed a contract for the sale of its assets in Bulgaria with Sofia-based Inercom after the group's supervisory board granted consent to the transaction.
The deal comprises CEZ interests in seven companies - power distributor CEZ Razpredelenie [BUL:3CZ], power supplier CEZ Electro Bulgaria [BUL:1CZ], licensed electricity trader CEZ Trade Bulgaria, IT services company CEZ ICT Bulgaria, solar park Free Energy Project Oreshetz, biomass-fired power plant Bara Group and CEZ Bulgaria, which manages and coordinates the operations of the group's Bulgarian units. The total selling price for the respective interests in the companies is 326 million euro, CEZ said on Tuesday.
In 2017, CEZ received several indicative offers for its assets in Bulgaria and launched negotiations on the potential divestment. Inercom submitted the highest offer and CEZ subsequently started exclusive negotiations with the company.
Inercom Bulgaria EAD has said it is a special purpose vehicle incorporated for the purpose of the transaction with CEZ. It is wholly-owned subsidiary of Sofia-based Inercom Investments, according to data from the Bulgarian commercial register. The company has a registered capital of 50,000 levs. It manages six solar parks in southern Bulgaria with a total capacity of 23 MW and is also developing a project for a 80 MW solar park.
(1 euro = 25.4211 Czech crowns)