The offer price was determined on the basis of the assessment carried out by the advisor Mediobanca and also taking into account the capital value of EPCG, below which the Government of Montenegro would not have sold the quota especially if you consider that a part of the privatisation was carried out through an increase in capital.
On 29 August 2016, A2A SpA and the State of Montenegro signed the new Shareholders' Agreements for the management of the Montenegrin company EPCG; the agreement ended on 31 December 2016 and was renewed until 30 June 2017.
The main points of these new agreement were: i) the maintenance of the A2A management rights in EPCG, with main executives appointed by A2A, ii) the necessary sharing of decisions, between A2A and the Montenegrin government, on some "confidential matters" particularly important for EPCG, iii) the possibility of exercising a put option - valid until 1 July 2017- on the entire shareholding held in EPCG by A2A towards the State of Montenegro, upon expiry of the shareholder's agreement.
Up until and including 30 June 2017, A2A SpA had close contacts with the Government of Montenegro, in order to define a renewal of the agreement, but they did not find a consensual solution.
Therefore, on 3 July 2017, A2A SpA, having noted the impossibility of further extending the Shareholders' Agreements, exercised its put option. The put option involves the transfer of the entire shareholding held in EPCG by A2A, which is equal to 41.75% of the EPCG's total share capital, at the price, already agreed upon between the parties, of Euro 250 million. The transfer will take place in seven equal annual tranches, starting in May 2018. The number of shares fully owned by A2A - which will maintain their associated rights (to vote, to dividends) - will therefore decrease progressively until the transfer of the seventh tranche currently scheduled for 2024.
However, with a press release dated 17 April 2018, A2A announced that it completed the negotiation of an agreement with the Government of Montenegro for the put option exercised on 3 July 2017 to be actually implemented in 4 tranches between 1 May 2018 and 31 July 2019. Such an agreement would therefore lead to acceleration in the exercise of the put option compared to the timing set forth in the Shareholders' Agreement dated 29 August 2016 (i.e. 7 tranches between 1 May 2018 to 1 May 2024).
Finalisation of the agreement is subject to prior approval from the Parliament of Montenegro. Should such approval not be granted by 30 April 2018, the Shareholders' Agreement shall apply, with consequent execution of the first tranche of the put option (transfer of ownership of 1/7 of the shareholding against payment € 35.712 million approx.) starting on 01.05.2018.
As of 31/12/2017, investment in EPCG was booked at € 224 million in the A2A's separate financial statements.
Following the BoD decision of 1 July 2017 to exercise the put option on the entire shareholding in EPCG, the investment was reclassified as "non-current assets held for sale" in accordance with IFRS 5.
EPCG is the only distributor and the key player in Montenegro electricity generation. Since about ¾ of the installed capacity consists of hydroelectric plants, actual production heavily depends on weather conditions.
EPCG plants produced a total of 3 TWh in 2016 (an increase of 4.5% compared to 2015), of which 1.2 TWh came from thermoelectric sources and 1.8 TWh from hydroelectric sources.
The domestic demand for electricity in Montenegro currently stands at 3.5 TWh.
The financial results of EPCG in the last 7 years are as follows: