February 22 (SeeNews) - Czech energy group CEZ said on Thursday its supervisory board granted consent to the sale of the group's Bulgarian assets to Inercom Bulgaria for an undisclosed sum.
The package contains seven companies - power distributor 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, which manages and coordinates the operations of the group's Bulgarian units, CEZ Group said in a statement.
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The contract is expected to be signed in a few days, CEZ said.
"Taking into account the sales price, the Group’s fourteen-year-investments in its Bulgarian operations yielded an overall positive return," the statement reads. "Inercom’s offer is significantly above the fair market value of the assets sold, as determined in an independent appraisal, and brings a positive return on the investments in the Bulgarian assets."
In 2017, CEZ received several indicative offers for its Bulgarian assets and launched negotiations on the potential divestment.
Inercom Bulgaria submitted the highest offer and CEZ subsequently started exclusive negotiations with the company, the Czech energy group said.
Inercom Bulgaria is a 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 ($31,500/25,600 euro).
Inercom Investments is fully owned by local private investor Ginka Varbakova, according to the commercial register. The company also has a registered capital of 50,000 levs.
Settlement for the transaction is subject to approval by Bulgaria's Commission for Protection of Competition.
Last year, CEZ Group agreed the sale of its 1,260 MW Varna thermal power plant (TPP) to a Bulgarian buyer. On December 12, Bulgaria’s Commission for Protection of Competition said it has allowed Bulgarian logistics company SIGDA to acquire Varna TPP for an undisclosed price.
Despite the Czech group's decision to sell its Bulgarian assets, it will proceed with the international arbitration, which it initiated against Bulgaria in 2016.
In July 2016, CEZ Group said it has filed a request for international arbitration worth hundreds of millions of euro against Bulgaria over the country’s failure to observe the investment protection provisions of the Energy Charter Treaty. CEZ Group added it has repeatedly asked the Bulgarian government for speedy rectification of that state of affairs and for compensation for the damage caused, recalling that in November 2015 it had sent a notice to the Bulgarian government, in which it requested amicable settlement of the dispute.
CEZ started managing the power distribution companies in the Bulgarian capital Sofia, the Sofia region and the northern town of Pleven in January 2005 after it bought ownership interest of 67% in each company for a total of 281.5 million euro from the state the previous year.
in 2006, CEZ signed a deal to buy 100% of Varna TPP from the Bulgarian state for 306 million euro in cash and a capital hike.