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General meeting completed another round of the firm restructuring

21. 1. 2005

Others

General meeting completed another round of the firm restructuring

The general meeting of CEZ has today approved control agreements with CEZData, s.r.o., CEZ Customer services, s.r.o. and CEZ Logistics, s.r.o., and has thus completed another phase of the company restructuring towards the regional distribution companies integration. The aim of the transformation is to make the operation of the CEZ Group more effective and to satisfy the EU conditions of unbundling production and power distribution department.

The general meeting of CEZ further approved, at FNM´s suggestion, a possibility for CEZ to acquire its own stocks up to the statutory limit of 10 %. This decision opens up a possibility to sell CEZ shares to CEZ, which is being considered by the Ministry of Industry and Trade, as has already been released. A possible realization of this step is, however, determined by approvals of the Czech government and the Board of Directors and the Supervisory Board of CEZ. The Board of Directors and the Supervisory Board of CEZ will measure a possible surrender of the shares and their follow-up sales on the public market, or a decrease in the equity, considering if the terms are favourable for the company and all of its share-holders.

CEZ can use this opportunity to optimize the capital structure, which is currently deviating towards the equity with a relatively low external debt. A better use of the capital means an increase in return on equity, which can benefit all CEZ share-holder.

The key factors for the decision on this transaction will obviously be only the specific parameters of the possible operation, not only from the standpoint of the position of the CEZ stocks on the capital market and influences on their rating, but also from the view of  equal and transparent approach to all share-holders.

The validity period of the general meeting´s resolution provides CEZ with flexibility to consider if and when it should place stocks on the market, depending on market developments as well as investment opportunities that will arise, or if it should decrease the equity. An increase in free float (freely marketable stocks) would cause an increase in stock liquidity and would attract new investors. New investors will increase a demand for shares, the higher demand will support the share quotations and thus the value for all shareholders, including the state.

Further, the general meeting of CEZ approved the possibility to extend the share motivation program to the managers of CEZ´s daughter companies.

Ladislav Kriz, Press Officer, CEZ, a. s.