RPT-CEZ may announce MOL deal on Thursday - dep minister

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By Jan Korselt

Czech power firm CEZ may announce an agreement on taking a stake in Hungarian oil group MOL on Thursday, but talks on a mine purchase are likely to drag on into 2008, a senior official said on Monday.

Deputy Industry Minister Tomas Huenner, who is also vice-chairman of CEZ's supervisory board, told Reuters he expected the deal with MOL may be finalised in the coming days.

"Probably, they will be ready to announce major progress in both deals mentioned ... but I expect the negotiations on Mostecka (miner) not to be finalised this year," Huenner said.

CEZ, the biggest central European company with market capitalization of $44.9 billion, said earlier on Monday it would announce "major progress in planned acquisition deals" in a press conference on Thursday, but gave no further details.

CEZ has been in talks to take an up to 10 percent stake in MOL, worth about $1.56 billion, as the Hungarian company fights off a takeover approach by Austria's OMV . CEZ and MOL also plan joint venture to build power two plants in Hungary and Slovakia.

Huenner did not specify the amount of shares to be purchased, but confirmed media reports that CEZ would have a guarantee of a minimum yield on its investment and an option of a repurchase of the stake by MOL.

The majority state-owned CEZ has also been in talks to take over lignite miner Mostecka Uhelna from private holders, valuing the firm at about 28 billion crowns ($1.53 billion), according to Czech media.

A group of four private investors owns 51 percent of Mostecka, the rest is owned by Czech businessman Pavel Tykac.

Huenner said he believed CEZ still had to negotiate with the minority holder to sell his stake.

"CEZ could acquire a majority from the other four, but it would have a 49 percent partner there, with whom it probably does not feel totally comfortable," he added.

Huenner said CEZ aimed to purchase a controlling stake in Mostecka, while a minority interest in the company could be divested to other investors due to regulatory reasons.

CEZ already owns neighbouring miner Severoceske Doly, the largest lignite firm in the country.

An acquisition of Mostecka would secure long-term fuel supplies for CEZ's power plants in north-western Czech Republic and settle a dispute over long-term coal supplies that are key for CEZ's plans to replace its ageing Pocerady station.

CEZ is seeking 22 billion crowns in the courts in compensation from the mining group for a failure to sign a long-term deal.

CEZ stock closed 0.9 percent down at 1,376 crowns on Monday, outperforming Prague stock index PX , which dropped 1.8 percent. (Editing by Louise Ireland)

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Keywords: CZECH CEZ/ACQUISITIONS

[PRAGUE/Reuters/Finance.cz]