EPH "significantly" dropped its debt to around €4.6bn in 2015, the Czech-based energy group announced in a statement released on July 14.
The debt burden of the group, controlled by billionaires closely associated with Slovak closely-held financial group J&T, has long been the subject of speculation. EPH has been ravenously buying assets – including many older fossil fuel based power plants as well as the Slovak gas transit system – in recent years, spending billions in the process.
However, it has never been clear where the cash comes from. While the group has borrowed heavily from banks and via bonds, it is also speculated that it is backed by former shareholder Petr Kellner – the richest Czech – via his PPF vehicle. There have also been rumours that it may benefit from Chinese backing.
EPH has not discussed its debt position previously. Reporting full year 2015 results, the group says consolidated revenue rose 25% y/y to €4.57bn, with ebitda pushing to €1.64bn.
"The relative indebtedness expressed as a ratio of net debt to EBITDA (ie. leverage) decreased significantly to the level of 2.8x, which can be, due to the high proportion of infrastructure assets held by EPH, considered as very conservative," the statement adds.
However, there is no note on the previous volume of debt. Nor is there any suggestion of how the decrease was achieved, save for a hint that earnings have played a part.
It is notable that EPH spun off most of its gas assets – including the Slovak network – into a new unit last year. The company announced an IPO of EP Infrastructure earlier this year, only to pull the plan almost immediately. Reports suggest it is in talks with Australian infrastructure specialist Macquarie over the sale of a 30% stake.
"In the area of acquisitions of regulated and contracted assets, we have fulfilled our priorities and built EP Infrastructure, the strongest regional infrastructure group," chairman Daniel Kretinsky says in the statement. "It has become a key economic pillar of EPH. It generates strong and predictable cash flow, which is almost independent of the development of energy prices and other commodities. These activities significantly stabilize the economic results of EPH - and combined with the minimal requirements of EPH’s shareholders for the pay out of dividends - create resources for further growth of the financial profile of the group and for growth through acquisitions in the electricity generation sector in selected European markets."
That suggests the debt burden could be due to rise again this year. Indeed, the group recently got the green light on the acquisition of Vattenfall's 8 gigawatts or so of coal-fired capacity, along with several mines, in Germany.
The value of the deal with the Swedish state-controlled seller is not clear. EPH said on April 18 that it has agreed on a new capital structure for the company owning the German lignite operations, which has liabilities and provisions of around €2.0bn, against which it operates fixed assets valued by the Swedish seller at €3.4bn, and will retain around €1.7bn of cash. PPF is reported to be funding the deal.
EPH is also said to have filed a bid for EDF's coal-fired power plant at Rybnik in Poland.
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