Elektroprivreda Crne Gore AD Niksic

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The state-owned vertically integrated utility of Montenegro, Elektroprivreda Crne Gore AD Niksic (EPCG), was incorporated as a joint stock company on March 18, 1998. EPCG is principally engaged in electricity generation, transmission, distribution and supply. As of 2009, EPCG had 867MW of installed capacity, 1257km of transmission lines and served 322,400 customers. The first partial divestiture of government stock in EPCG occurred in 2001-2, by means of the Mass Voucher Privatization (MVP) process. After this process, the ownership structure of EPCG became the Republic of Montenegro (67.7%), MVP Funds (20.2%), citizens and employees of EPCG (12.1%). In 2005, EPCG stock became listed on two Montenegrin stock exchanges, NEX Montenegro and Montenegro Berza. In February 2009, the Montenegrin government launched a tender for the sale of an 18.3% stake in EPCG to a strategic investor. The initial date for submission of final bids for the stake was April 30, 2009, but this was extended first to June 1 and latterly to July 17, 2009. Two parties submitted final bids: a Greek consortium of state-controlled power company PPC and GoldenEnergy One Holding; and A2A SpA [Italy]. In addition to bidding on the 18.3% stake, A2A SpA purchased a stake of approx. 15% in EPCG in a series of block trade transactions on Montenegro Stock Exchange in May 2009. In August 2009, the Montenegrin government accepted A2A's offer of EUR8.4 per share over an offer of EUR11.1 per share from the rival bidder for the 18.3% stake in EPCG. On Sep. 3, 2009, the Minister of Economy and A2A Group signed the contract through which A2A Group purchased an 18.3% stake in EPCG. A2A acquired half of this participation (11.46 million shares) from the Montenegrin government and the other half (11.46 million shares) by means of the underwriting of a capital increase in EPCG reserved for A2A. Following this share sale and capital increase, A2A's holding in EPCG increased from approx. 17% to approx. 34%; the share owned by minority private shareholders decreased from approx. 12% to approx. 11%; and the share owned by the government decreased from approx. 71% to approx. 55%. The total value of the transaction was EUR192.48 million (US$267.55 million), based on A2A's purchase of 22.92 million shares at EUR8.4 per share. As part of the deal agreed with the goverment, A2A then purchased at end-September 2009 an additional approx. 10% holding in EPCG from minority shareholders. This sale was worth EUR101 million, based on the purchase of 12.02 million shares at EUR8.4 per share. Therefore, as of end-2009, EPCG was owned approx. 55% by the government, approx. 44% by A2A, and approx. 1% by minority shareholders. As of August 2011, the contract between A2A and EPGC was ammended to limit A2A's ability to buy more shares in the company given that its performance had not been on course with previosuly agreed targets. The new agreement also allows for teh contract to be extended for 5 more years until 2019 provided that the performance of the company meets a set of new seven indicators.