Croatia lifts the curtain on Hungary MOL suspension (2)

Thursday, January 29, 2009 03:57:00 PM

(Adds details)
Croatia will seal a new shareholders agreement with Hungary's MOL on national oil and gas group INA and buy INA's gas storage facility, Reuters cited state radio as reporting on Thursday. MOL has today asked trading in its shares to be suspended on the Budapest Stock Exchange (BSE) presumably because of these information, which however are not earth-shatteringly new.

2009.01.29 14:20
Trading in Hungary MOL shares suspended, Croatian deal suspected (2)

Croatia, which has been in talks with MOL regarding the outsourcing of INA's loss-making gas segment, said today it would buy the Okoli gas storage facility from INA and found a new company to control gas supply and distribution.

"The (state-owned) gas pipeline operator Plinacro will pay 514 million kuna (USD 91.34 million) for the Okoli gas storage facility and the funds will be secured through a loan guaranteed by the government," Reuters cited state radio as reporting after a cabinet session.

The government also said it wanted to keep its 44% stake in INA for now, thus confirming its intention to abandon plans of share swap with MOL, in line with previous comments it had made in the last two months.

Trade of MOL shares in Budapest has been suspended at the company's request, pending an announcement.

The government also said it would set up a new state-owned company to be in charge of natural gas supply and distribution.

While Croatia would keep is 44% holding in INA, a new shareholders agreement would be signed with MOL. This would give more management rights to MOL than before: out of the six Board of Directors members, MOL would delegate three and Croatia the other three. The deal would extend the period during which MOL would not be allowed to sell INA shares by two years. And the government would have pre-emptive right on the papers should MOL become a target for hostile takeover.

The new shareholders agreement is to be signed by Croatia's Deputy Prime Minister Damir Polancec and MOL Chairman-CEO Zsolt Hernádi on Friday.

MOL had a 25% package in INA for years until it bought a 22.15% stake in it in a public tender last September.

The above information are neither hot nor cold from MOL's perspective, given that:

- the detachment/sale of INA's gas business would be unequivocally positive, since - as a means in politics - it represents a huge risk. At the same time, we'd need to know more details to give a judgement on that;
- if the Croatian government decides not to sell INA shares, MOL might be able to buy enough on the market to swing to above 50% at last. The question is whether the new shareholders agreement will leave a door open for that possibility or not. If it does not, it will be negative for MOL since it will not be able to consolidate INA's numbers.

http://www.portfolio.hu/en/cikkek.td...