Czech Energy Group EPH to Float Stake in Infrastructure Unit
Czech energy company EPH is planning to sell a minority stake in its newly-created EP Infrastructure (EPIF) business on the stock market by the end of June, the company said on Tuesday.
EPH has grown via acquisitions in recent years into one of central Europe's largest power companies and announced plans last year to hive off its infrastructure businesses with the intention of floating shares or selling a stake to an investor.
EPIF will house EPH's assets in gas transmission, gas and power distribution, heating distribution and gas storage. It includes a 49 percent stake in Slovak gas pipeline operator Eustream, which delivers Russian natural gas via Ukraine to the European Union and European gas to Ukraine.
The group hopes to entice investors with rising dividends, strong cash flow and long-term contracts that place it on steadier ground than peers in the generation business, which are struggling with falling power prices.
Analysts said this difference should attract investors although EPIF's indebtedness may cause some caution. Net debt stood at 6.7 billion euros ($7.6 billion), according to financial statements.
EPIF made a net profit of 622.7 million euros last year on sales of 3.3 billion euros. Total assets reached 9.7 billion.
EPH said it would sell shares on the Prague bourse and global depositary receipts in London, subject to market conditions. A source close to the deal said a direct sale to an investor remained an option.
The companies said all proceeds would go to EPH, which would use the money to buy back EPH shares from Biques Limited, a passive investor in EPH, which is two-thirds controlled by Chairman Daniel Kretinsky and investor Patrik Tkac.
EPIF will also pay out a 365 million euro dividend from 2015 profit and said it aimed to grow the payout per share by 3 percent annually until 2020.
EPH has grown in the past decade to be a competitor to central Europe's largest utility CEZ thanks to a series of deals.
Sources told Reuters last week EPH was set to buy Swedish group Vattenfall's loss-making lignite coal mines and power plants in Germany, where EPH already owns mines and plants. That deal will remain outside the infrastructure business, which is focused on regulated and long-term contracted activities.
Citigroup, J.P. Morgan, Societe Generale (SGE.SG) and UniCredit are global coordinators and bookrunners for the EPIF offering, while Wood & Company Financial Services is a joint lead.
(By Jason Hovet and Robert Muller)
