Bloomberg News

Poland Selling Utility PGE Stake to Help Finance Budget Gap

February 28, 2012

(Updates with sale details from first paragraph.)

Feb. 23 (Bloomberg) -- Poland may raise as much as 2.5 billion zloty ($796 million) from the sale of a stake in PGE SA, the country’s largest power utility, two people familiar with the transaction said.

The government is seeking to sell as much as 7 percent to institutional investors today, with the price range set at 19 zloty to 19.2 zloty a share, said the people, who declined to be named because the information is private. PGE sank 4.7 percent to 19.32 zloty at 4:47 p.m. in Warsaw, valuing the company at 36.1 billion zloty ($11.5 billion). The transaction is set to be the biggest state sale since the 5.4 billion-zloty public offering of coal producer Jastrzebska Spolka Weglowa SA in June.

“They’re returning to market and trying to get more money for their budget,” Ed Kuczma, who helps manage $35 billion at Van Eck Associates in New York, said by phone.

The government is seeking to raise 10 billion zloty this year from state-asset sales, compared with 13.1 billion zloty in 2011, to help fund spending after posting a deficit equal to about 5.6 percent of gross domestic product last year. Poland sold 10 percent of the utility for 4 billion zloty in 2010, part of an effort to raise 25 billion zloty.

Returning to Market

Treasury Minister Mikolaj Budzanowski, who supervises most state-owned companies, declined to comment when asked about the sale at a news conference today. The government holds stakes in 400 companies, including power producers, chemical companies as well as PKO Bank Polski SA and PZU SA, the country’s largest financial companies.

Warsaw-based PGE sold shares for 23 zloty apiece in its initial public offering in 2009. Poland currently owns 69 percent of PGE, according to data compiled by Bloomberg.

Polish Prime Minister Donald Tusk said Dec. 6 he would cut the budget deficit to 2.9 percent of gross domestic product this year, from a record 7.8 percent in 2010.

--With assistance from Veronica Navarro Espinosa, Julie Alnwick and Zachary Tracer in New York and Piotr Bujnicki and Marta Waldoch in Warsaw. Editors: Pawel Kozlowski, Tim Farrand

To contact the reporters on this story: Alexis Xydias in London at; Maciej Martewicz in Warsaw at

To contact the editor responsible for this story: Emma O’Brien at

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