Following the sale of a minority shareholding in EP Infrastructure, a.s. (EPIF), announced today, changes will also occur in the shareholder structure of Energetický a průmyslový holding, a.s. (EPH).
– The current shareholders of EPH concluded a series of transactions, through which Daniel Křetínský (94%) and selected members of the existing management of EPH (6%), will become sole owners of EPH going forward.
– The current shareholders, Biques Limited (controlled by private equity structures of J&T partners), Milees Limited (controlled by Patrik Tkáč), and EP Investment S.à.r.l. (controlled by Daniel Křetínský), will receive in total EUR 1.5 billion at closing from EPH for the sale of their shares in EPH representing in aggregate 30% of EPH share capital. Whereas Biques Limited will sell all its shares in EPH, Milees Limited and EP Investment S.à.r.l. will sell each 2.17 % shares in EPH in this share-buy-back transaction.
– Milees Limited will further receive EUR 1.75 to 2.75 billion (plus interest) over time, whereby the final amount payable to Milees Limited will reflect growth in the underlying value of EPH over the coming years.
“For myself personally as well as well as for other partners in J&T, this transaction represents a partial monetization of gains from an extremely successful project. The conditions that we agreed in the exit will allow us to participate on future results of EPH and thus future growth of EPH will remain our common interest. The sale of the shareholding by Milees Limited and Biques Limited allows the founders of J&T to accumulate funds amounting to over EUR 3 billion, which we aim to use, together with other funds that we manage on behalf of our clients, to set-up a new and powerful investment fund. We expect to invest our funds primarily into selected projects of ex-partners of J&T, including those of Daniel Křetínský. Finally, our long-term cooperative partnership with Daniel will continue in other areas, including media or e-commerce,” says Patrik Tkáč, Chairman of the Board of Directors of J&T Banka.
“Both transactions have a different meaning and value from my perspective. While Biques Limited was a passive investor in EPH and we expected and prepared for their exit for some time, the agreement on the exit of Patrik Tkáč through his entity Milees Limited only came up several months ago. While I perceive the agreement to be the right step done at mutually attractive conditions, it was not a simple one for myself personally. Patrik Tkáč was the one, who gave me the opportunity to do business and our joint ownership of all assets was the basic premise of my activities. At the same time, I have to stress, that this transaction will have no impact on our continuing joint ownership of other assets. When it comes to the terms of the transaction, the key element for me is that the payment schedule and other agreed conditions will ensure and support a strong financial profile of EPH and equally enable further growth via acquisitions. From the perspective of EPH, I consider it crucially important that this transaction will enable to fulfill my long-term ambition and my key colleagues in EPH will get the opportunity to participate on the shareholding of EPH” says Daniel Křetínský, Chairman of the Board of EPH.
The shareholder structure of EPH prior to the transaction:
BIQUES LIMITED (representing the private equity structure of J&T) .. 25.67%
EP Investment S.à R.L. (controlled by Daniel Křetínský) .. 37.17%
MILEES LIMITED (controlled by Patrik Tkáč) .. 37.17%
1. Monetization of an extremely successful J&T investment
EPH has entered into an agreement to purchase 30% of its own shares (25.67% or effectively all the shares held by Biques Limited (the private equity structure of the partners from J&T); 2.17% from Milees Limited (controlled by Patrik Tkáč) and 2.17% from EP Investment S.à.r.l (owned and controlled by Daniel Křetínský)). The purchase price for the 30% stake in EPH was set at EUR 1.5 billion payable on closing date, which shall happen simultaneously with the settlement of the sale of the minority stake in EPIF. This is expected in early 2017. The payment for the own shares in EPH will be predominantly financed from the proceeds obtained through the sale of the 30% shareholding in EPIF. This transaction sets the current market value of EPH at EUR 5 billion.
2. Transaction between Daniel Křetínský and Patrik Tkáč
In parallel, a separate agreement was concluded under which Milees Limited, controlled by Patrik Tkáč, sells all shares in EPH under its possession. Milees Limited will sell a 35% stake in EPH (the original 37.17% less the 2.17% sold in the first stage of the transaction) to companies controlled by Daniel Křetínský, namely 2.10% to EP Investment S.à.r.l. that will subsequently control 37.1% in EPH (the original 37.17% less the 2.17% sold in the first stage plus 2.1% obtained from Milees) and 32.9% to EP Investment 2 S.à.r.l. EPH will subsequently cancel its own shares (the above mentioned 30%), which will result in increased ownership proportion for the remaining shareholders.
After the cancellation of own shares in EPH, Daniel Křetínský will hold a 53% stake in EPH through EP Investment S.à.r.l. and the remaining 47% stake through EP Investment 2 S.à.r.l.
At the same time, selected managers of EPH will get an opportunity to buy a stake in the total amount of 11% in EP Investment S.à.r.l., which will represent a 6% indirect shareholding in EPH.
As a result of these changes, Daniel Křetínský will ultimately own 94% of EPH and the remaining 6% will by owned by managers of EPH.
The purchase price for the 32.9% stake in EPH payable to Milees Limited (i.e. 47% in EPH following the cancellation of own shares) is agreed at EUR 1.75 billion with the possibility of a further increase by up to EUR 1 billion depending on future growth in the underlying value of EPH. The final purchase price for the 32.9% will thus be in the range of EUR 1.75 to 2.75 billion plus interest for the period from 1. 1. 2017 until the date of repayment of the purchase price.
The purchase price is not payable immediately at the time of the transfer of the shares, but payments will be spread over a longer period, with certain elements of flexibility on the side of the buyer.