The Finance and Industry & Trade Ministries have proposed the launching of exclusive talks with CEZ on the sale of a majority stake in brown-coal mine Severoceske doly according to a document that the ministries submitted at the Government Office at the end of last week. If the government approves the proposal, CEZ will have 90 days to present its bid. The Cabinet is to discuss the document during one of its upcoming meetings. CEZ already owns 37% in SD. While we would view a CEZ purchase of SD as positive for CEZ from the strategic point of view, we believe that CEZ is not under any pressure to pay a high price for SD, in particular as it has already secured long-term coal supply contracts with both SD and Mostecka uhelna.
Separately, CEZ is planning to spend about CZK 500m on buying out minorities in four of its five distribution companies (Severomoravska energetika, Zapadoceska energetika, Vychodoceska energetika and Stredoceska energeticka). CEZ already owns between 98 and 99 percent in the concerned distributors and wants to delist the stocks after the buyout.