CEZ - government could discuss merger of coal mining companies in 4Q

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Investiční bankovnictví KB

      According to deputy industrial minister Pavel Pecina the government could discuss merger plan of CEZ, Appain Group and Severoceske doly in 4Q04. Industrial ministry prepared a plan, which calls for CEZ and Appian Group to set up a JV, which would then buy Severoceske doly. CEZ would than transfer its stake in Severoceske doly to the JV and Appian Group would put in its stake in Mostecka Uhelna Spolecnost. Another scenarios are Severoceske doly buying Appian Group, CEZ buying both Severoceske doly and Appian Group or CEZ buying Mostecka Uhlelna Spolecnost.

       CEZ already holds 37% stake in Severoceske doly and would like to keep an influence over the company in order to control the volume and price of coal deliveries for its power stations.

       CEZ warned that the current proposal of CO2 emission vouchers prepared by the Ministry of Environment would lead to closure of some coal-fired power stations and reduction of pre-tax profit by CZK 2bn.

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