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UPDATE 2-CEZ supervisory board rejects Czech Coal's offer for Pocerady plant
May 18, 2017 / 10:57 AM / 6 months ago

UPDATE 2-CEZ supervisory board rejects Czech Coal's offer for Pocerady plant

* Pocerady to remain part of CEZ for now

* CEZ still has option to sell later, to decide by 2019

* Supplier Czech Coal had sought to buy now

* Pocerady not part of CEZ’s core fleet (Adds CEZ, Czech Coal comments, option details)

PRAGUE, May 18 (Reuters) - Czech utility CEZ’s supervisory board rejected rival Czech Coal’s offer for one of the country’s biggest coal-fired power plants on Thursday after the Finance Ministry objected to its sale.

Czech Coal had set an end-April deadline for its offer for the 1,000 MW Pocerady plant, which was valued at up to 10 billion crowns ($417 million), but extended the deadline after CEZ delayed its response.

CEZ’s board of directors favoured the sale as it looks to cut coal-fired generating capacity and focus on refurbished plants that emit lower emissions, but the Finance Ministry, which controls the state’s 70 percent stake in CEZ, questioned pushing a sale through now.

CEZ said in a statement after the meeting that while three external analyses had determined the sale was advantageous to CEZ, the supervisory board did not favour a sale at this point given uncertainty about lignite coal’s future as an energy source.

“The Pocerady plant remains the property of CEZ,” CEZ supervisory board chairman Vaclav Paces said in a text message.

Czech Coal spokeswoman Gabriela Sarickova Benesova said CEZ’s decision not to sell now showed coal still had strategic value and a long future.

Czech Coal is a lignite supplier to Pocerady and the two companies signed a long-term supply contract in 2013 giving CEZ put options to sell Pocerady to Czech Coal in the future. CEZ declined to exercise an option last year and must decide on the next option by 2019.

“The option remains valid, so definitely by no later than 2019 its fate must be decided,” CEZ spokesman Ladislav Kriz said.

Czech Coal’s offer price of 4.6 billion crowns in cash, and the rest in future coal and electricity supplies, is much higher than the 2 billion crowns it would pay if the put option is exercised at the later date. However, Czech Coal, owned by tycoon Pavel Tykac, wanted to buy the plant now so that it can modernise it to meet stricter emissions’ rules.

CEZ, which also produces nuclear power, has upgraded its other coal-fired plants but not Pocerady. ($1 = 23.9630 Czech crowns) (Reporting by Robert Muller and Jan Lopatka; Writing by Jason Hovet; Editing by Susan Fenton)

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