Czechs Delay Verdict on Bill Guiding Revamp of Power Maker CEZ

Krystof Chamonikolas
·2 min read

(Bloomberg) -- The Czech government asked for more time to decide how to reassure investors that a potential ownership revamp of the dominant power utility CEZ AS won’t hurt minority shareholders.

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The parliamentary Committee on Constitutional and Legal Affairs, which is supervising a bill on corporate overhauls in the assembly, adjourned its deliberations on the legislation for the fourth time on Wednesday, saying it needs input from the cabinet on how to proceed.

The draft effectively allows the state to carve up CEZ, in which it now holds 70%, and possibly gain full control of some of its assets without making a formal buyout offer. But the ruling coalition has signaled it will tweak the bill to preserve more influence for minority owners over asset splits.

“It’s clear that the proposal will change, but we don’t know yet how,” Marek Benda, deputy chairman of the committee and a lawmaker for the ruling Civic Democrats, said in an interview in parliament in Prague.

The bill was conceived as part of efforts to gain more state control over critical energy infrastructure to avoid a repeat of a spike in power and natural gas prices. CEZ, the biggest traded utility in eastern Europe with a market value of about $23 billion, was seen as a key part of the plan because its power plants dominate electricity production in the country.

The draft is designed to lower the limit for approving changes in ownership structures, including uneven splits, to 75% of shareholders present at a general meeting, from the current 90% of all owners. The government has said the draft law is meant to align Czech rules with those in other European Union countries and isn’t tailor-made for CEZ.

Benda said the coalition hasn’t yet reached agreement on how to modify the controversial clause about uneven asset splits, saying the government may submit a modified proposal or let lawmakers amend the legislation on the floor of parliament.

Read more: Czechs Set to Water Down Bill on $24 Billion Utility Revamp

Options for diluting the bill include removal of the reference to uneven splits or changing the voting thresholds to give minority investors more say in the potential overhaul.

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