Montenegro allows state-owned EPCG to sell shares in stock market

Elektroprivreda Crne Gore (EPCG) is obligated by law to sell a 10% stake by September 26. The government decided to let the state-owned coal and power utility try in the stock market.

After two failed bidding rounds, EPCG won approval from the government in Podgorica to try and sell 10% of its shares in the stock market. The company has been holding on to the package for almost three years, since it bought out its former partner A2A from Italy.

The public offering at the Montenegro Stock Exchange has been scheduled for September 23 for 11.81 million shares with an initial price of EUR 4.49 per share.

EPCG is obligated by law to sell the currently non-voting shares by September 26. Otherwise, it will have to write them off.

EPCG initially valued the stake at several times higher than what the shares sell for in the stock market

Montenegro owns 88.7% of shares, which means it controls 98% of votes, given the current structure. There were no bids in the said public calls. EPCG asked for a much higher price than what the shares were being sold at in the stock market. It also said the package can be taken by only one bidder.

Outgoing Prime Minister Dritan Abazović said the government decided to leave the possibility to buy a part of the package if it opts for such a move. He revealed that the Ministry of Capital Investments initially suggested that the Ministry of Finance should commit to buying shares and that he opposed the proposal.

Minister of Finance Aleksandar Damjanović said the funds for buying shares have been secured, but it remains unknown what stake the government would take in case the investor response turns out to be week in the stock market as well

Even so, Minister of Finance Aleksandar Damjanović said the funds to buy shares have been allocated, from the current budget reserves, Vijesti reported. Abazović earlier said EPCG should buy the troubled Željezara steel plant in Nikšić from Turkish company Tosçelik. It means the utility needs to raise funds for the transaction.

Of note, the steelworks has a project for a solar power plant for own consumption, envisaged to be built on site.

EPCG is based in Nikšić, Montenegro’s second-largest city. It has 877 MW in installed power capacity. The company operates the country’s only coal power plant – Pljevlja, hydroelectric plants Perućica and Piva, and five small hydropower units.

It owns 100% in the country’s power distribution system operator CEDIS, coal mine operator Rudnik uglja Pljevlja, its Serbian subsidiary EPCG d.o.o. and EPCG-solar-gradnja, which designs builds and maintains photovoltaic systems. EPCG also holds 51% in Zeta Energy, based in Danilovgrad.

EPCG’s shares currently trade at EUR 3.6 apiece, translating to EUR 425 million in market capitalization. The book value is almost two times higher.