Sale of SE shares to EPH in final stage

Talks between Enel and Czech EPH expected to take another 15 to 20 days.

The nuclear power station in MochovceThe nuclear power station in Mochovce (Source: Sme)

Negotiations between the Italian company Enel and the Czech company Energetický a Průmyslový Holding (EPH) on the sale of Slovenské Elektrárne’s remain active, and  Enel’s CFO Alberto De Paoli announced at the press conference in London on November 18 that negotiations will take another 15 to 20 days.

Enel, holding a 66-percent stake in the dominant electricity producer Slovenské Elektrárne (SE) finalise the deal before the end of the year.

“The transaction is in the final phase,” Paoli said as cited by the SITA newswire. Though the contract would be signed in the following weeks, the sale would be final two or three months later.

Enel expects to collect proceeds from the sale during the first half of 2016.

A deal to sell half of its 66 per cent stake in SE to EPH is set to be agreed by the end of this month, three people with knowledge of the talks said, in a sale that could raise €350m, The Financial Times reported November 15. Enel’s CEO Francesco Starace neither confirmed nor denied this information in London. The Italian group wants to sell the remaining 33 percent stake only after completing the third and fourth units of the nuclear power station in Mochovce.

Read also:Enel reportedly nears deal with EPH Read more 

On the other hand, according to EPH it is too early to speak about the term when they will enter SE as this might be affected by several factors, for example a check by the Antitrust Office, EPH spokesman Daniel Častvaj said as cited by the Hospodárske Noviny daily. This might be also a reason why EPH decided to spin off all its assets in central Europe active in transit, distribution and storing of gas or in distribution and supply of heat and electricity into a new daughter company EPIF Infrastructure.

Cabinet discussed SE deal

The Slovak cabinet discussed the sale of the SE shares on November 18, but did not make information about its purported interest in increasing  the state’s stake in SE, now 34 percent, public. The gas utility SPP and KPMG consultancy company were meant to elaborate an analysis about expediency of the increase of the state’s share in SE, but the contents remain concealed.

The cabinet adopted a resolution based on which Economy Minister Vazil Hudák said the state would continue talks on the change of SE’s ownership structure and the possibility of buying a larger stake. The minister is set to submit a report about results of the negotiations by the end of 2015, SITA wrote.

Prime Minister Robert Fico reiterated after the cabinet session that his cabinet is interested in increasing the state’s share in SE from to 51 percent.

“If the interest of the Italian company Enel, holding 66 percent in SE, to sell half of its share, 33 percent, the cabinet is interested sign upon such a transaction a memorandum on understanding, in which we will employ an option for 17 percent after the completion of the third and fourth units of the nuclear power station Mochovce,” said Fico as cited by SITA. “If Enel sells a portion of shares now, we want to use this step to obtain a binding legal document that will authorise us to buy a 17 percent stake after the completion of the third and fourth unit.”

Fico stressed that the state will be interested in the 17-percent stake only after the Mochovce’s units are complete. The third unit should be complete in late 2016 and the fourth in 2017.      

Starace responded that Fico’s words are in accord what he has said before.

“Thus his statements have not surprised us,” Starace said in London as cited by SITA, adding that it is actually logical that Slovakia wants to invest only after Mochovce is complete. “This is of no surprise, rather confirmation of what he has said before. I think that this is a known thing for us as well as EPH. There is no conflict.”

Such a step might have been expected from Fico, according to Martin Dargaj, the editor-in-chief of the website dedicated to energy.

“A question remains what the stance of the future shareholder of SE would be,” said Dargaj as cited by Hospodárske Noviny.

SE doubles its earnings

Enel reported about its financial results at the Capital Markets Day in London. SE achieved earnings before interest, tax, depreciation and amortisation (EBITDA) of €789 million during the first three quarters of 2015. This represents more than double the figure for the first nine months of 2014, the TASR newswire reported.

The EBITDA for parent company Enel was €12.2 billion, which amounts to a 5-percent rise on the year.

Enel unveiled its strategic plan through 2019 at the event. The group is also set to boost investments to €36.3 billion up until 2019, which is an extra €2.7 billion compared to figures released on March. Enel also seeks to receive €6 billion by selling some of its assets, including its stake in SE. Over €2 billion of the amount raised is to be spent on acquisitions of electricity networks, with extra investments also set to flow into renewable energy. Enel also envisages savings worth €1.8 billion between 2016-2019, both in operating expenses and expenditures in capital maintenance, TASR reported.

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