A change in the organisational structure of the Czech power industry, modelled according to western utilities, has brought forth better rating from Standard and Poor´s agency for CEZ

On April 2, 2003, the international rating agency Standard and Poor´s changed its long-term rating outlook of CEZ company, promoting it from stable to positive, as a result of the completed transaction process of integrating the (state owned) equities in regional distribution companies into the CEZ Group. The rating agency thus confirmed the suitability of this transaction. Standard and Poor´s agency also confirmed the BBB+ rating of CEZ company.

The positive outlook reflects the strategic and commercial benefits resulting from the fact that CEZ has gained better access to the end customers and also a better position on the European market, which fully compensates for the loss of control over the transmission network.

By incorporating the regional distribution companies into the CEZ Group, the organisational structure of the Czech power industry returned to a system practiced in most West European countries.

Through this transaction, CEZ Power Company has acquired a majority share in five regional distribution companies (however, only two of these were purchased from the state) and a minority share in three of them. However, the Economic Competition Protection Authority decided that CEZ had to sell one majority and three minority shares and also its remaining equity in CEPS. The company is simultaneously transferring 66% of its equity in CEPS. This transaction will bring 21 billion CZK to the Czech state treasury.

CEZ will pay 32 billion CZK for the regional distributors, while the state will pay 15 billion CZK for a two third equity in CEPS (according to the current estimate). To this amount of money we must also add 4 billion CZK which CEZ will pay to the state treasury in income tax.

3. 4. 2003