July 19, 2018 / 12:13 PM / a year ago

UPDATE 1-Bulgarian competition regulator stops Inercom's acquisition of CEZ assets

(Adds details, comment)

SOFIA, July 19 (Reuters) - Bulgaria’s anti-monopoly regulator said on Thursday it has blocked the sale of the Bulgarian assets of Czech utility CEZ to a local solar energy producer Inercom.

The regulator said the deal could help Inercom establish a dominant position in Bulgaria, affecting competition, as the company already has several photovoltaic (PV) projects in southern Bulgaria.

“Based on the overall analysis, it can be concluded that there is a risk that the deal would lead to the creation or strengthening of the dominant position of the merged group,” the Commission for Protection of Competition said in a statement.

CEZ signed a contract in February to sell a power distributor that provides electricity to over three million Bulgarians, together with other assets in Bulgaria, to Inercom for an estimated 320 million euros ($372 million).

The deal, however, prompted concerns that strategic energy assets in the European Union country were passing into the hands of owners about which little was known and also raised concerns about financing for the deal.

With assets worth around 100 million levs ($63 million), little-known Inercom would have acquired a business with annual turnover of about 1.8 billion levs ($1.1 billion) that operates one third of the Balkan country’s power grid.

CEZ was not immediately available for comment.

Last month the commmision opened a case into the deal after receiving a request from Inercom to approve the purchase of seven local companies owned by CEZ Group.

The commission’s decision can be appealed before the Supreme Administrative Court within 14 days.

Inercom has said that it is holding talks with several global banks and that no offshore companies would take any part in the transaction.

In June the central bank said in a letter to parliament that four Bulgarian banks had expressed interest in potentially financing the deal between Inercom and CEZ, without naming the lenders.

Energy prices are politically sensitive in the EU’s poorest member state, and a spike in electricity bills in 2013 toppled Borissov’s first government. ($1 = 0.8612 euros) (Reporting by Angel Krasimirov; Editing by Susan Fenton and Elaine Hardcastle)

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