CEZ - 1bn euros for Romanian energy acquisitions

Czech energy group CEZ, the only power company from the former communist Eastern European states to have become a major European player, has placed Romania at the top of its list of priorities. Thus, the company is ready to set aside as much as one billion euros for acquisitions and projects in electrical power production and distribution in Romania.

The Czechs say they have allotted 3-4 billion euros for their acquisitions campaign. Most recently, CEZ took over three electrical power distribution companies in Bulgaria, for which they paid 281 million euros.

“CEZ will submit final bids for Electrica Oltenia and Electrica Moldova on October 6th. We are not considering any alliance, we entered this race on our own and we will submit bids by ourselves,” said Vladimir Schmalz, CEZ director for mergers and acquisitions.

“Our bid will be very attractive. Should we not win (the tender), we shall not lose interest in Romania, where we want to build a power distribution-production chain. We are also interested in the privatisation of the energy generating area,” Schmalz added. “At any rate, we will head for the energy production segment,” the CEZ official added.

Asked by Ziarul Financiar whether CEZ is willing to invest 1 billion euros in its acquisition plans for Romania, Schmalz answered: “Why not? Our funds will be targeted at the two power distribution companies, as well as at other projects. We have a free cash flow of 700-800 million euros annually, and we now have some 3-4 billion euros earmarked for the entire region”. For the privatisation of Electrica Oltenia and Electrica Moldova, two of Romania eight biggest energy distribution companies, CEZ is competing against the German utilities company E.ON, the consortium including Union Fenosa (Spain) and an investment fund registered in Cyrpus, AES (USA), and the Public Power Corporation (Greece).

Sources close to the privatisation process told Ziarul Financiar that Spain’s Union Fenosa group requested the Romanian authorities a postponement of the deadline for the submission of final bids, beyond October 6th.

The Romanian State is directly selling a stake of 24.6% in Electrica Oltenia and Electrica Moldova to investors, which will then participate in a capital increase in order to get 51% in each of the two branches.

The State is advised in the negotiations by a consortium led by Bank of America Securities, the team also including Nestor Nestor Diculescu Kingston Petersen law firm and the British Allen & Overy law firm. adrian.mirsanu@zf.ro