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PENTA AND SE START DISCUSSIONS

PPC fate deliberated

PENTA has been negotiating the fate of its 90-percent stake in the steam-gas company Paroplynový cyklus (PPC Bratislava) with major power producer Slovenské elektrárne (SE). Penta bought its PPC Bratislava package from the state just one year ago.

PENTA has been negotiating the fate of its 90-percent stake in the steam-gas company Paroplynový cyklus (PPC Bratislava) with major power producer Slovenské elektrárne (SE). Penta bought its PPC Bratislava package from the state just one year ago.

Information on the possible resale of the PPC package has leaked before. This time, however, Penta confirms negotiating with SE, which holds the remaining 10 percent of PPC Bratislava.

"The private equity group Penta, a majority shareholder of PPC Bratislava, was contacted by Slovenské elektrárne based on an initiative from Enel, SE's future majority owner, to settle shareholder relations within PPC Bratislava," Penta Group spokesperson Andrea Straková told The Slovak Spectator.

Observers say that the outcome of the negotiations is uncertain.

According to Straková, there are two alternatives: Penta could sell its 90-percent stake in PPC Bratislava to Slovenské elektrárne or Penta could buy SE's remaining 10 percent.

Straková stressed that it was too early to say whether shareholder relations would be settled at all, and if yes, which alternative would prevail.

Penta says that its strategies for the energy sector would remain the same.

In a memo to The Slovak Spectator on June 16, she said that the meetings have been informative in nature and in no way bind the involved parties to anything.

The SE has only confirmed that Enel compelled the company to approach Penta.

"We have been requested by our future majority owner, Enel, to start negotiations over the shares that SE holds in PPC Bratislava," Rastislav Petrech, spokesperson for Slovenské elektrárne, told The Slovak Spectator.

He repeated what Straková said, saying that the talks could go in two directions.

"SE can either sell its 10 percent or buy the 90-percent PPC share from Penta," Petrech said.

The deal remains closely watched. According to the daily SME, unofficial sources suggest that Penta's PPC share could be sold for Sk6 billion (€160 million), almost Sk4 billion (€100 million) more than what Penta paid in 2004.

Penta considers the asking price published in local media misleading. "These are worthless speculations," Straková said.

Transparency International says that reselling the steam-gas company to the state would not be completely in line with the rules. [The state currently owns a 34-percent stake in Slovenské elektrárne.]

"Nothing has been carried out yet, neither a sale nor a purchase. I restate that we only have a go ahead to start negotiations over our future in PPC Bratislava," Petrech told The Slovak Spectator.

PPC Bratislava is a highly profitable power producer that sells electricity to Slovenské elektrárne. If SE purchased PPC Bratislava, it could annul a disadvantageous contract that requires Slovenské elektrárne to purchase electricity from the steam-gas company until 2013.

The state estimates that it is losing billions of crowns because of the contract. Enel, the 66-percent owner of SE, is interested in cancelling the contract.

Any eventual deal would have to be approved by the state-run privatization agency, the FNM.

In March 2004, the FNM sold its 90-percent stake in PPC Bratislava to PPC Holding, a subsidiary of the VSŽ Košice company in which Penta controls 89.08 percent, for Sk2.01 billion (€49.35 million). PPC Holding/Penta beat out second-place bidder Agare Tessin für Electrizität, a Swiss firm, in a public tender.

Several companies submitted official offers, among them German E.ON Energie, the owner of electricity distributor Západoslovenská energetika. Although the German company gave the best offer (Sk2.386 billion/€60 million), the privatization commission found its conditions unacceptable. FNM representatives said that the 2004 purchase price for PPC exceeded three times the value of the nominal value of the firm's shares.

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