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CEZ buys back convertible bonds, sells MOL shares to end partnership
March 31, 2017 / 8:02 AM / 8 months ago

CEZ buys back convertible bonds, sells MOL shares to end partnership

PRAGUE, March 31 (Reuters) - Czech utility CEZ said on Friday it would buy back nearly all its 2017 convertible bonds linked to MOL shares while selling most of its 7.5 percent stake in the Hungarian oil and gas group to pay the bondholders.

CEZ said it would raise 141.4 billion forints ($490 million) from the sale of MOL shares to investors.

CEZ is ending a relationship dating back to 2008 when it bought the shares to help MOL fight off a takeover attempt by Austria’s OMV. It will retain only about 0.1 percent of MOL equity.

The deal almost a decade ago was originally intended to seal a strategic tie-up of the two central European energy firms, but plans to build gas-fired power plants were later shelved. CEZ put the shares into a convertible bond in 2014.

CEZ had launched an offer for the 470.2 million euro bond this week and said on Friday it had received 463.1 million euros ($494.6 million) of the bond by deadline.

CEZ said it would place 7.56 million MOL shares with investors after conditionally selling shares in a bookbuilding process this week at a price of 18,700 forints per share.

Shares in MOL fell 1.9 percent to 19,840 forints in early trade while CEZ shares were steady at 439.90 crowns at 0713 GMT.

CEZ had said on Thursday that if all bondholders had tendered their bonds, it would boost its 2017 pre-tax income by 3.4 billion crowns ($133.7 million).

Settlement of both the share placing and bond re-purchase will occur on around April 4, CEZ said. Barclays Bank, Citigroup Global Markets Limited and Deutsche Bank coordinated the deals while Citigroup is the settlement agent, it said.

CEZ said last week it expected adjusted net profit of 12 billion to 17 billion crowns for the full-year 2017, with the higher end of that range including income if convertible bondholders redeemed the paper for shares instead of cash.

Analysts have said, with the deal this week buying back the bonds with cash, that profits could fall somewhere in upper half of that range. ($1 = 288.7700 forints) ($1 = 0.9363 euros) ($1 = 25.4250 Czech crowns) (Reporting by Jason Hovet; Editing by Keith Weir)

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