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CEZ offers EUR 450mn bonds exchangeable for shares in Hungary's MOL.

February 2, 2014

Czech energy group CEZ has announced an offering of EUR 450mn worth of guaranteed bonds due in 2017 and exchangeable for existing shares in Hungary's oil and gas firm MOL, CEZ said in a statement on its website. CEZ, majority owned by the Czech government, owns a 7% stake in MOL. The Hungarian company did not exercise an option to buy back the shares by the Jan 23 deadline. The bonds will be issued by CEZ's fully-owned subsidiary CEZ MH B.V. , based in the Netherlands , and will be guaranteed by CEZ. The paper has received a preliminary rating of A2 by Moody's and is expected to be rated A- by Standard & Poor's, CEZ said. The bonds will have a maturity of 3.5 years and was priced with a coupon of zero. Bondholders will have the right to exchange the bonds for shares from Jan 25, 2017 to July 21, 2017 . CEZ will also have the right to redeem the bonds from February 2017 at their principal amount if the value of the shares exceeds 130 percent of the principal for a specific period. Settlement for the bonds is expected on Feb. 4. CEZ bought the MOL stake in 2008 when the Hungarian company was fighting a takeover bid from Austria's OMV . Then it sold a call option to MOL which had a strike price of HUF 20,000 (EUR 66), which was higher than the company's market price of HUF 13,955 as of Jan 21 , meaning that MOL had no financial incentive to exercise the option.

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Source: IntelliNews - Weekly Reports

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