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UPDATE 1 - Eurohold confirms start of exclusive talks over buying CEZ's assets in Bulgaria

Author Mario Tanev
UPDATE 1 - Eurohold confirms start of exclusive talks over buying CEZ's assets in Bulgaria Eurohold/All rights reserved.

SOFIA (Bulgaria), April 17 (SeeNews) - Financial and insurance group Eurohold Bulgaria [BUL:4EH] said on Wednesday that it has been granted exclusivity in talks with Czech energy group CEZ over the sale of the group's assets in Bulgaria.

Eurohold Bulgaria will participate in the procedure for acquiring the assets on its own, and will use own funds, with additional support to be provided by leading Western European banks, the Bulgarian holding company said in a statement.

Earlier on Wednesday, CEZ press officer Alice Horakova told SeeNews in an emailed statement that the company has started exclusive talks with Eurohold over the sale of its Bulgarian assets.

CEZ was considering offers from Eurohold Bulgaria and India Power over the sale of its assets in Bulgaria.

As at 11:00 CET on Wednesday, Eurohold Bulgaria's shares traded 2.16% higher at 1.89 levs ($1.09/0.97 euro) on the Bulgarian Stock Exchange.

By the same hour, CEZ Distribution Bulgaria [BUL:3CZ] shares traded 7.34% higher at 234 levs, while the other BSE-listed CEZ unit - CEZ Electro Bulgaria [BUL:1CZ] had not yet traded.

Earlier this week, CEZ told SeeNews that the company has terminated a contract to sell its assets in Bulgaria to Sofia-based Inercom due to "unlawful obstructions" by Bulgaria regarding the closing of the deal.

"The reason for the termination of the contract by CEZ, a. s., is frustration of the fulfillment of the conditions precedent, and thus closing of the contract, by unlawful obstructions of the Bulgarian State," CEZ press officer Alice Horakova said at the time.

CEZ Group launched the procedure for selling its assets in Bulgaria in 2017 and signed an agreement with Inercom in February 2018. According to data from CEZ Group's annual financial statement for 2017, the deal with Inercom valued the group's Bulgarian assets at some 326 million euro.

The deal was then banned by Bulgaria's Commission for Protection of Competition, which expressed worries about the combination of Inercom's renewable energy assets and CEZ's control of the power distribution grid in northwestern Bulgaria. The regulator's decision was appealed before court by both CEZ and Inercom. 

Subsequently, Inercom divested its renewable energy portfolio and asked the competition regulator to look into the deal for a second time. However, the competition authority said that it will not look into the updated notice until the Supreme Administrative Court rules on the complaints filed by the two companies against the Commission for Protection of Competition's initial decision.

In December 2018, CEZ announced that it plans to start parallel negotiations with India Power over the sale of its Bulgarian assets, but the deal with Inercom remains valid.

CEZ's assets in Bulgaria comprise power utility CEZ Distribution Bulgaria [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.

(1 euro = 1.95583 levs)