Enel blinks as Slovakia eyes control of Slovenske Elektrarne

By bne IntelliNews April 29, 2015

bne IntelliNews -


Italian utility Enel looks close to abandoning the sales process for its 66% stake in Slovenske Elektrarne, following a campaign of obstruction by the Slovak government, owner of the remaining 34%.

Following a meeting with Prime Minister Robert Fico, Enel CEO Francesco Starace raised for the first time the possibility of selling the 66% stake in tranches, with the Slovak state buying enough shares to regain a majority, and Enel remaining a minority shareholder until the new units at Mochovce nuclear power plant are completed.

"There are many possible solutions," Starace said, according to Reuters. "One of them is the state getting 51% and someone else buying the rest. A model where there would be three shareholders - Enel, the state and someone else, could also be a possible solution."

“It will depend on what kind of offers we get. We will try to sell the first tranche of SE this year,” he added.

Enel had set May 9 as the deadline for binding bids for the 66% stake, which it wants to sell to reduce its debts. But a prolonged campaign of harassment from the government made the prospect of drawing viable bids look less and less likely. It now appears to have few options other than to sell a minimum 17% stake to the government, and hand it management control.

Bratislava has been arguing with Enel over the unfinished nuclear project at Mochovce for years, and Starace suggested that is the biggest factor which affects the SE sale price. However, Fico has also made it more and more clear recently that he wants to boost the state's position in the company. 

As he came out of the meeting, Fico said Bratislava will now start negotiations with Enel outside the format of the sales process. He added that the government will block the sale of any other assets until Enel finishes the two new reactors it is building at Mochovce.

“I informed Mr Starace that the government wants to start talks with Enel to strengthen Slovakia’s position in SE. We want to return SE to the state [where] it belongs,” the PM said. "Our aim is to gain a majority in Slovenske Elektrarne ... and at the same time have management control."

Someone else

Other prospective bidders appear to have been chased off. CEZ,  previously seen as  the leading contender, said in mid-April that its interest in SE had waned. CEO Daniel Benes has suggested that any investor would be crazy to go forward without the state's blessing. A consortium of Hungary's MVM and MOL, as well as Finnish energy producer Fortum, had also shown interest in buying the 66% stake. 

However, Czech-based Energeticky a Prumyslovy Holding (EPH), whose largely Slovak owners are reportedly on good terms with Fico, announced on April 27 that it is not giving up. In its first public statement on the sale it said: "EPH seeks to verify if it is possible to find a solution that would be in the interests of Slovakia and Enel and in which EPH could play a meaningful role."

Controlled by closely-held Slovak financial group J&T, EPH bought EDF Suez and E.ON out of their 49% stake in Slovak gas utility and pipeline operator SPP in 2013. During that sale, Fico's government also put off bidders as it tried to regain management control from the minority shareholder. However, the government did not have the cash to pull that deal off. 

Last summer, Bratislava bought EPH out of the loss-making gas sales unit, leaving the energy holding with the lucrative distribution and transmission parts of the business. 

Slovakia hopes to use the proceeds from the upcoming IPO of its 49% stake in Slovak Telecom to power its purchase of part of Enel's stake in SE, which is due for completion on May 12. Fico is due to meet Starace again in June.

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