Suez pourrait entammer une action en justice contre la ville de Pecs

BUDAPEST, Oct 5 (Reuters) - France's Suez Environnement (SEVI.PA) said on Monday it planned to take legal action against a Hungarian municipality that took control of a water utility company partly owned by the French firm.

Earlier in the day, the city of Pecs, in southern Hungary, closed off the premises of the city's water utility, Pecs Vizmu Zrt, and locked out the management after terminating a service contract with Suez Environnement effective Sept. 30.

The municipality has a majority stake in Pecs Vizmu while Suez, based on a 1995 deal, holds 48 percent.

"Without prior announcement, the City of Pecs took control of the company, Pecs Water Works, by force last night. Suez Environnement is preparing legal proceedings to enforce its rights," the firm said in a statement emailed to Reuters.

Suez said the municipality informed the company on Sept. 10 that it wanted to terminate the contract.

"Suez Environnement has indicated having taken note of this intention and then offered to negotiate," the company said.

Ivan Szabo, a lawyer acting on behalf of the municipality told Reuters the municipality had told Suez that it wanted to buy out the French firm's stake in the water works, and that it wanted to terminate the contract with Suez.
Szabo said Suez did not reply and did not attend a meeting proposed by the municipality.
He said the city decided to end the contract after an inquiry found that the company's acquisitions of stakes in other small water utilities and the high water utility fees charged by the firm did not serve the interests of residents.

The municipality, whose mayor is a member of the main opposition Fidesz party, established a firm called Tettye Forrashaz Zrt, which Szabo said would continue operating the water works to ensure there is no disruption in the water supply.

Suez said in its statement that it had "always scrupulously respected" the contract and shareholders' agreement with the municipality. (Reporting by Krisztina Than; Editing by Ted Kerr)

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