By Jessica Hodgson
LONDON--RWE AG (RWE.XE), Germany's second-largest utility by
market value, is moving ahead with a plan to dispose of net4gas, a
Czech-based long distance gas transmission business, which is
expected to fetch around 1.4 billion euros, people familiar with
the matter told Dow Jones Newswires.
Net4Gas is one of a clutch of assets being sold by RWE as the
firm struggles with slumping energy consumption across Europe and
seeks to reposition itself in the wake of Germany's decision to
pull out of the nuclear market.
RWE in May reported a drop in first-quarter earnings, saying the
renewed economic downturn is depressing energy consumption across
Europe. It has responded by cutting costs, selling assets and
trimming investment. RWE intends to sell assets worth 7 billion
euros by the end of next year and cut costs by 1 billion euros
through 2014, which could include job cuts.
People familiar with the matter said that a number of bidders
are expected to submit offers for net4gas in time for an indicative
bids deadline of July 27th.
Companies expected to bid include Polish state-owned pipeline
operator Gaz-System SA, which sees Net4Gas fitting into its
strategy to build a north-south pipeline across Poland to supply
its southern neighbors with gas, which it in turn plans to import
via its liquefied natural gas terminal being build on the Baltic
coast. Gaz-System said it plans to bid earlier this year.
Energeticky a Prumyslovy Holding (EPH) also plans to bid for
net4gas, a spokesman said. EPH is a Czech closely-held entity with
investments focused on the energy and industrial sectors of central
Europe.
A number of energy and infrastructure funds, including funds
controlled by Macquarie Group Ltd. (MQG.AU), Global Infrastructure
Partners LLC, and Australian investment fund IFM Investment Funds,
are also expected to look at the asset, people familiar with the
matter said Tuesday, although the people caution that the auction
is in its early stages and many of those assessing the asset may
not bid at the final stage.
Funds controlled by German insurance giant Allianz SA (ALIZF) in
a consortium with Borealis Infrastructure Management Inc.--part of
Canada's Ontario Municipal Employees Retirement System--are also
expected to look, the people said. Czech financial investor KKCG is
also expected to bid, the people said.
RWE is under great pressure to deliver on its asset sales, with
analysts noting recently that the company is some way off achieving
its stated target by the end of 2013.
Net4Gas, despite its strategic importance, isn't considered as
attractive an asset as it has been in the past, in large part
because new alternatives like Nord Stream have been coming. And
with plans for other pipelines like South Stream proceeding, there
could be more competition yet.
RWE declined to comment on net4gas.
-Write to Jessica Hodgson at jessica.hodgson@dowjones.com (Sean
Carney, Marynia Kruk, Jan Hromadko and Marietta Cauchi contributed
to this article.)