* Sells to Czech private equity firm
* Deal to net after-tax profit of 380 million pounds
* Helps ease concerns about IP debt financing - analyst
* Czech Coal says will challenge deal on competition grounds
* IP shares rise 6.6 percent
(Adds Czech Coal challenge, updates shares)
By Catherine Bosley and Paul Sandle
LONDON, July 1 (Reuters) - International Power is selling its Czech business to the Czech-Slovak investment firm J&T Group for 581 million pounds ($955 million) after costs, helping calm worries over the British utility's debt.
Czech mining and electricity group Czech Coal, however, said it would challenge the transaction, which includes J&T's plan to sell some of the assets to power group CEZ, on competition grounds.
International Power said it believed the deal would satisfy competition authorities. "We are confident that the structure of the transaction will achieve the necessary regulatory approvals," a spokeswoman said.
The company, which operates in more than 20 countries, had no plans to sell other assets, she said.
Shares in the group were up 6.6 percent by 1534 GMT -- the FTSE 100's second-highest gainer -- after the group said on Wednesday it would make a profit after tax of 380 million pounds on the deal.
International Power, which said it was selling because it saw little scope to expand in the Czech Republic, has $769 million of debt in its U.S. holdings maturing in July 2010 and a $850 million revolving credit facility due in October 2010.
"The sale of the Czech operations as well as other recent disposals should help further ease concerns over refinancing in 2010," said Tina Cook, analyst at Charles Stanley.
The firm agreed in April to sell its Hartwell plant for $148.5 million, less $54.0 million of debt.
JP Morgan said in a note the deal would give investors further confidence leverage would be reduced.
OFFERS CONSIDERED
A spokeswoman for International Power declined to comment on debt refinancing but said proceeds from the Czech sale would be used for general business.
"We don't have any plans to sell any further assets at this time. But we will always consider the offers we receive. When an offer makes sense and is good value for the shareholder, then we will act on it," she also said.
The company said the Czech businesses had attracted interest from a number of parties.
International Power Opatovice owns and operates the 363MW Opatovice coal-fired combined heat and power plant, east of Prague, and has stakes in two other heating and power businesses.
Separately, Czech power group CEZ agreed to buy a 49 percent stake in one of the International Power assets, the Prazska Plynarenska heating plant, from J&T for an undisclosed amount. ($1=.6083 pounds) (Additional reporting by Jan Lopatka; editing by John Stonestreet and Mike Nesbit)