February 1, 2018 / 1:14 PM / 4 months ago

CEZ sees distribution business spin-off as best option in possible split

PRAGUE, Feb 1 (Reuters) - Czech utility CEZ is considering separating its nuclear and coal assets from its distribution and new energy businesses as the best route to potentially splitting up the company, a CEZ presentation for state officials showed.

Reuters reported in September that government officials had asked state-owned CEZ to look into the possibility of a split, one of three options the government is exploring to help fund expansion of nuclear power stations.

In a CEZ study presented to a parliamentary committee on Wednesday, seen by Reuters, CEZ said the best option for a transformation was creating a 100 percent state-owned company housing CEZ’s nuclear and traditional power plants like coal and gas, along with coal mining and power trading.

Distribution, sales, renewable energy and its energy services provider ESCO would form a new company, in which a 49 percent stake could be held by investors. Eventually the state could reduce its stake to 25 percent, from 51 percent, CEZ said.

CEZ estimated the transformation would increase the group’s value by 65 billion crowns ($3.2 billion), eliminating a share “discount” associated with uncertainties over the future nuclear construction.

The split would also eliminate the risk of lawsuits from CEZ minority shareholders, it said.

New Prime Minister Andrej Babis, though, has opposed a CEZ split, saying it would cost taxpayers, consumers and companies, but has not commented on the latest presentation. Lawmakers are expected to give a recommendation on how to proceed by the end of March.

CEZ, which has a market capitalisation of $13.7 billion, has said any nuclear expansion would need direct or indirect state participation. Other options include providing guarantees to a CEZ unit to build the new blocks or having the state take over the project.

Details from the presentation were first reported in Czech media by newspaper Hospodarske Noviny and magazine Respekt.

CEZ cancelled a tender for the multi-billion expansion of one of its two nuclear power stations in 2014 after failing to get price guarantees from the government.

$1 = 20.2730 Czech crowns Reporting by Jan Lopatka and Jason Hovet; Editing by Susan Fenton

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