J&T to sell stake in Czech-Slovak energy holding EPH

By bne IntelliNews February 25, 2016

The majority owners of Energeticky a Prumyslovy Holding (EPH) want to take full control of the energy holding, Slovak financial group J&T - which plans to exit the company - claimed in a statement released on on February 25.

Daniel Kretinsky and Patrik Tkac, who are senior figures in the closely-held J&T, have expressed their intention to increase their interest in the company to 50% each, from the current 37% each holds, the press release says. The remaining 26% is controlled by private equity structures of J&T shareholders.

The report, which appears to be somewhat at odds with an interview given by Kretinsky and published the same day, will only revive speculation on the strategy and funding of EPH. The company has bought numerous large assets in recent years, leading to suggestions that it is being funded by Central Europe's richest man - Petr Kellner, who sold out of the holding in 2014 - or by Chinese investors.

As part of the drive towards a deal, EPH is planning to establish EP Infrastructure (EPIF), which will integrate all EPH's infrastructural companies. Subsequently EPH intends to sell a minority share in EPIF. According to the J&T statement, the transaction will only take place if the valuation of the EPIF share meets the expectations of the EPH shareholders.

In an interview for the Slovak weekly Trend, published on February 25, EPH chairman Kretinsky said one option is to sell the shares held by private equity structures of J&T shareholders on the stock market. "The other is their acquisition by global infrastructure and pension funds with a good reputation. Together with them we might be thinking of better ratings and new ways of financing," he said.

Kretinsky ruled out, however, that China's CEFC, which holds an unspecified share in J&T Group, could be a potential investor in the energy holding. He also indicated, that any new investor would acquire 30% of the shares of EP Infrastructure and that EPH would retain managerial control.

EPH was established in 2009 and includes more than 40 companies in the Czech Republic, Slovakia, Poland, Germany, UK and Italy. They are active in the area of coal mining, production of electricity and heat and natural gas transit.

EPH has been on a buying spree over the past few years, borrowing heavily to snap up assets to turn itself into a regional heavyweight. However, last year, it also began snapping up assets in more mature, western European markets. The latest acquisitions saw the Czech based group buy UK coal-fired power plant Lynemouth from German utility RWE in January. It is now hoping to buy Vattenfall's coal assets in Germany, and is reportedly sniffing around EDF's Polish portfolio.

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