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(Bloomberg) — Shareholders approved a proposal to split up the assets of the Czech Republic’s dominant power utility, a step toward a government plan to buy out minority investors and gain full control over the company’s power production.
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CEZ AS, in which the state holds 70%, will transfer its customer segment — distribution of electricity and natural gas, trading and services — to a new subsidiary, according to a plan endorsed by the annual general meeting in Prague on Monday. The motion also gave the board the right to decide on the sale of a minority stake in the new entity.
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The utility’s shares dropped 0.3% to 1,252 koruna on Monday. With a market capitalization of 674 billion koruna ($32 billion), CEZ is one of the most valuable listed enterprises in the east of the European Union. The stock gained about 5% over the previous two months and is trading near an 18-year high it reached in January.
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The company’s management said the potential sale of the minority stake in the new subsidiary may take place via a public offering, a direct sale, a combination of the two or another structure.
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The separation of stable, regulated business elements from power generation, which is exposed to higher market volatility and different investment risks, may enable the new subsidiary to attract a broader range of financing banks and investors, CEZ said in the original filing outlining the move. That in turn could result in more favorable terms.
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The sale of a minority stake in the new unit should generate cash for the parent company, which it can then use to buy out minority investors via a share buyback. Neither the management nor the government have presented details about the potential buyout price.
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The government led by Andrej Babis has described its plan to gain full ownership of power production as important for energy security and key for major investment in power generating assets, such as the construction of more nuclear reactors.
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