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CEZ Drops From Three-Week High on Albania Dispute: Prague Mover

Dec. 20 (Bloomberg) -- CEZ AS fell from a three-week high after an escalation of a dispute with the Albanian government threatened to deepen the Czech utility’s losses in the country.

The stock, the second-most traded in the PX index today, slid 0.2 percent to 659 koruna by 12:18 p.m. in Prague. It rose 2.4 percent in the previous two days to the highest since Nov. 28 after Goldman Sachs Group Inc. recommended buying the shares.

CEZ seeks to sell its unit in Albania after a dispute with the government there over taxes and power prices to “minimize potential losses,” Chief Executive Officer Daniel Benes told Hospodarske Noviny newspaper yesterday. The Balkan country is “firmly opposing” the plan, the administration said yesterday in a statement, adding CEZ owes it about $1 billion in damages.

“The damages allegation doesn’t seem logical and we don’t expect CEZ to pay the sum, but the likelihood that the company will soon find a buyer for its unprofitable Albanian unit is near zero after this news,” Josef Nemy, an analyst at Komercni Banka AS in Prague, wrote in a report today. “The risk of more losses from power distribution in the country is hence rising.”

CEZ has asked potential investors to submit bids for CEZ Shperndarje, of which it controls 76 percent, spokeswoman Barbora Pulpanova said in an e-mailed statement. The company “repeatedly” discussed the sale with representatives of the Albanian government, she said.

“The Albanian side has not explained what’s included in the $1 billion sum, but we suppose they are trying to extract damages,” Pulpanova said. “This only shows that the whole problem is getting seriously politicized in the country.”

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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