E.ON AG (EOAN.XE) Tuesday confirmed it is in talks over a possible sale of minority stakes in its Hungarian power distribution assets, shedding some light on which assets the German utility is considering to sell in a drive to further reduce its debt pile.
In a written statement E.ON Energie AG, E.ON's Munich-based central European power generation and retail unit, said it is in talks with the Hungarian government and state-owned electricity utility MVM Zrt. regarding the sale of minority stakes in its regional power distribution units.
E.ON, the world's largest investor-owned utility by market value, added that the talks are in accordance with a memorandum of understanding signed between the parties in June 2009.
It declined to further comment on the ongoing negotiations.
E.ON has pledge to sell at least EUR10 billion worth in assets by the end of 2010 to streamline its business and reduce the debt pile which stood at around EUR42.6 billion at the end of Sept. 30 last year. So far, E.ON has sold around EUR6 billion worth in assets.
E.ON's debt has grown dramatically over the last three years or so after the company invested billions of euros in a rapid expansion of its business across south and western Europe as well as Russia and massive investment in renewable energies across Europe and the U.S.
E.ON's statement On Tuesday came in response to comments made by MVM Chief Executive Imre Martha, who said Monday that his company is interested in acquiring stakes in E.ON's Hungarian units before the end of 2010.
Martha had said that an asset swap between the two companies was a possibility, adding that due diligence and talks about defining the basis of such an asset swap are underway.
E.ON owns three regional power suppliers in Hungary, E.ON Del-dunantuli Aramhalozati Zrt., E.ON Eszak-dunantuli Aramhalozati Zrt., and E.ON Tiszantuli Aramhalozati Zrt., supplying power to about 2.5 million clients.