According to Minister for Trade&Industry, Mirek Riman, the Government will not use CEZ to pay an extra-ordinary dividend to fill its budget deficit and would rather focus on selling the state’s 16% stake to investors through the stock market in several steps. Note that the Government has 68% stake in CEZ.
Our view: CEZ has established its dividend policy of 40-50% of its consolidated net income. The market has not been expected any extra-dividend in the next 2-3 years given continued acquisition opportunities. Also, not paying an extra-dividend would allow CEZ to buy-back up to 10% of its shares once the Government starts selling, which could reduce potential share-over hang. Nevertheless, we would favour selling the 16% stake at once rather than in steps.