According to the CIA news agency quoting the Bulgarian press, the Bulgarian Government will terminate the privatization of the Varna power plant without choosing a new owner. Notwithstanding, we did speak to the Privatization Agency yesterday afternoon and were told that no decision had been taken yet; and, that the Bulgarian government should decide by the end of this week. Note that Russian UES won the tender for the two Bulgarian power plants, Varna and Russe, while CEZ finished second. According to the decision of the Bulgarian anti-monopoly regulator, UES could purchase only one and chose Varna. Originally, CEZ offered EUR 287m (UES EUR 578m) for Varna, which has an installed capacity of 1,260MW (or 10% of CEZ's capacity). We believe that CEZ still remains in the game. We reiterate our Buy recommendation.
Separately, CEZ's board member, Radomir Lasak, is said to replace the departing CEO of Czech Airlines (CAS), Jaroslav Tvrdik. We would consider the news as neutral without any impact on CEZ’s share price.