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KGHM Says Tauron ‘Attractive’ at 0.7 Zloty a Share

KGHM Polska Miedz SA, the Polish copper producer that aims to buy a stake in Tauron Polska Energia SA, says the utility is “attractive” at the top end of the price range in its initial public offering.

“We won’t buy Tauron shares at any price,” Chief Executive Officer Herbert Wirth told Bloomberg News in an interview yesterday. “A price of 0.7 zloty per share is attractive” and has the potential to rise.

Poland’s government is selling 52 percent of Tauron, the country’s second-largest electricity producer, in an IPO this month, for 0.55 zloty to 0.7 zloty a share. KGHM, the copper producer with the largest European mine output, said last week it subscribed for 11 percent of the company in the book building process, seeking to diversify revenue, cut the risk from changes in metals prices and benefit from growing energy demand.

“We want to be able to have an influence on Tauron,” Wirth said. “We don’t want to be a passive investor, and a 10 percent stake gives us such a possibility,” he said, adding that KGHM has “some ideas” for adding value to the utility, especially in its mining operations.

Yesterday the Treasury Ministry said KGHM wouldn’t receive special treatment in the sale. Wirth, who said 10 percent was the “optimal” stake, declined to say whether KGHM would buy shares on the market to reach that level if its order in the IPO is reduced.

The investment in the utility is separate from a plan by KGHM and Tauron to build a 910-megawatt coal-fired power plant, Wirth said, adding that the companies are still studying whether to start construction.

If it doesn’t buy Tauron, KGHM won’t purchase a stake in another company, Wirth said.

Polkomtel Sale

As KGHM moves into energy, it’s also trying to sell its 24 percent stake in Polkomtel SA, Poland’s biggest mobile-phone company. Any proceeds will be used to finance investments in operations related to copper, Wirth said, adding that the sale is possible at the beginning of next year.

Polkomtel’s Polish shareholders, which also include oil refiner PKN Orlen SA, Tauron’s bigger rival PGE SA and coal trader Weglokoks, are seeking a buyer for their 76 percent stake.

Vodafone Plc, which holds the remaining stake, hasn’t yet decided whether it wants to join the sellers, Wirth said. KGHM received three offers for Polkomtel, which it needs to discuss with fellow shareholders, he added.

Vodafone’s Role

“Vodafone’s role in the process is very important, because just like all the shareholders, it has the right of first refusal,” Wirth said.

The world’s largest mobile-phone operator used that right to block the 2006 attempt by TDC A/S of Denmark to sell its stake in Polkomtel. An agreement was reached two years later when the current shareholders bought TDC’s 20 percent stake in a deal that valued the operator at 3.7 billion euros ($4.58 billion).

The Polish companies have been trying to sell their Polkomtel stake since at least 2003.

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