Enel agrees to sell Slovak unit to EPH for €750mn

By bne IntelliNews December 21, 2015

Italy’s Enel has agreed to sell its 66% stake in Slovak power producer Slovenske Elektrarne (SE) to Energeticky a Prumyslovy Holding (EPH) for €750mn, the Czech-based energy holding announced on December 18.

The sale is part of a larger divestment programme of the Italian utility and comes after almost one and a half years of negotiations and pressure from Bratislava, the owner of the remaining 34% in the company. Slovakia has an option to increase its stake in the utility to 51%.

The sale will be implemented by transferring Enel’s entire stake in SE to a newly established company named HoldCo and will be carried out in two phases, as it has previously been requested by Slovak Prime Minister Robert Fico.

In the first phase, Enel will sell 50% of HoldCo’s share capital to EP Slovakia, EPH’s subsidiary, for €375mn, of which €150mn will be paid upon the closing of the first phase, and €225mn will be paid upon the closing of the second phase.

The second phase will be carried out after Enel’s long-delayed and over-budget construction of two reactors at the Mochovce nuclear plant is completed. EPH is expected to pay another €375mn for the remaining 50% stake in HoldCo.

“In the second phase, a put or a call option can be exercised respectively by Enel Produzione or by EP Slovakia, exercisable 12 months after receiving the trial operation permit of units 3 and 4 of the Mochovce nuclear power plant, which are currently under construction,” EPH said,

The closing of the second phase is subject to obtaining the final operation permit for the two reactors.

According to the latest estimations, Mochovce's third block is expected to be launched in the first quarter of 2017, while the fourth reactor will be launched in the first quarter of 2018. The project, which is more than two years behind schedule, has been the main obstacle claimed by Enel’s suitors. 

The transaction is subject to approval from the European Union’s antitrust authorities. The total price, which is lower than the previously estimated €1.3bn, is subject to an adjustment mechanism.

“Any adjustment will be calculated by independent experts and applied upon completion of the second phase on the basis of a set of parameters, including the evolution of the net financial position of Slovenske elektrarne, developments in energy prices in the Slovak market, operating efficiency levels at Slovenske elektrarne as measured against benchmarks specified in the agreement, and the enterprise value of units 3 and 4 of Mochovce,” EPH said.

Meanwhile, Slovakia, which has expressed several times its intention to strengthen its position in the company, has received the option to buy a further 17% in SE, Fico announced on December 20, according to TASR news agency. This option can be applied up to six months after all authorisations for the two reactors at Mochovce nuclear power plant are concluded.

“The information that I have confirms for me that when Enel decided to sell 33% of its stake to a different company, we used this decision to the maximum to increase the state's stake," Fico said, adding that a memorandum in this respect was signed by the government and Enel last week.

Slovakia and EPH, whose owners of the energy holding – from Slovak financial group J&T – are reportedly on good terms with Fico, have previously been involved in a similar transaction.  EPH bought EDF Suez and E.ON out of their 49% stake in Slovak gas utility and pipeline operator SPP in 2013. The state holds the majority 51% stake, but EPH maintains operational control.

At the end of last year, SE had installed capacity of about 4,521MW, of which about 1,940 MW was from nuclear power generation.


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