CEZ considers earlier payment for the distributors

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Investiční bankovnictví KB

      The company should pay CZK 21bn for government stakes in regional distribution companies earlier that previously scheduled in installments until 2006. CEZ has reportedly already submitted its proposal to the Ministry of Finance, but neither side revealed any details. Supervisory Board of CEZ should discuss the proposal on its Monday’s meeting and announce its decision later. One scenario reportedly calls for payment of the whole amount this year.

       Radical change in transaction conditions alters its present value and it could have negative impact of on company’s shares up to CZK 5 per share in case the amount is paid this year. Nevertheless, CEZ is financially strong and generates strong cash flow, therefore higher financial burden should not be a problem for the company. Moreover, company’s capital structure will be strengthened by consolidation of the distribution companies.

      

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