The Czech HN daily newspaper reports that the highest privatization bid on Friday (by Enel/Iberdrola) for CEZ and six regional distributors amounted to CZK 135 bil. (we estimate that this corresponds to approx. CZK 287 per CEZ share). Reportedly, Electricite de France (which reportedly submitted its bid after the deadline) and International Power (which had teamed up with E.ON and British Power) were excluded by the privatization committee. Enel/Iberdrola, the highest bidder, later in the day halted its talks with the committee.
Reportedly, none of the bids (their non-financial part) completely fulfilled the privatization requirements, and the bids were well below the required minimum of CZK 200 bil. sought by the state for CEZ and the distributors (we estimate this required minimum would correspond to approx. CZK 449 per CEZ share), which is rather likely to lead to a new tender (HN says that, in the event of a new tender, new bids would have to be submitted by January 7, 2002).
The above implies that there are some rather serious complications with the sale, mostly due to the strict privatization conditions, and that government expectations concerning energy-sector privatization revenues are too high. Privatization delays are likely at the moment; the stock is likely to react negatively.
(Jiri Soustruznik)