CEZ Drops as Bulgaria Threatens to Revoke License: Prague Mover

CEZ AS fell for a fourth day after the Bulgarian government said it may revoke the Czech utility’s power-distribution license in the southeast European country.

The stock slid 0.4 percent to 616.2 koruna by the close in Prague, its lowest in two weeks, adding to a 3 percent retreat in the previous three days. The PX index, where CEZ has a 19 percent weighting, slid 0.3 percent today.

Bulgaria will decide in several days whether a finding by a regulator that CEZ violated public-procurement rules is enough to revoke the company’s license, the Sofia-based Energy, Economy and Tourism Ministry said on its website yesterday. CEZ derived 9.9 percent of its 2011 revenue from Bulgaria, making it the company’s second-biggest market after the Czech Republic.

“The loss of license is equal to the loss of business,” analysts led by Milan Vanicek at J&T Banka AS in Prague, wrote in an e-mailed report to clients today. The news is “negative” for CEZ shares, they said.

Separately, Czech police have been inquiring into CEZ’s business deals, including the 2012 sale of a stake in coal company Mibrag, Barbora Pulpanova, a spokeswoman for the Prague-based utility, said in e-mailed comments today, confirming a report in the Mlada Fronta Dnes newspaper.

CEZ shares have dropped 9.4 percent in 2013, compared with a 3.6 percent decline by the PX index, as tumbling electricity prices worsened the outlook for the utility’s earnings.

The yield on CEZ’s 2021 Eurobonds fell three basis points, or 0.03 percentage point, today to 2.55 percent, the least since Jan. 25, data compiled by Bloomberg show.

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