The Bosnian Parliament decided not to approve the government’s decision to sell fuel retailer Energopetrol to the MOL-INA consortium yesterday. The lower house of the federation parliament voted against the sale saying that the deal was unfavourable for the company. Prime Minister Hadzipasic said Energopetrol would have to pay its debt to the state, banks, suppliers and workers and was likely to face negative capital in late February, which would be followed by the launch of a bankruptcy procedure. Reuters reports that the Energopetrol workers’ union supported the government proposal for the sale, fearing for their jobs if the deal fell through. According to the prime minister, the government will continue talks with the MOL-INA consortium, although Mr Hadzipasic said he was not overly optimistic.
Note that MOL-INA filed the highest bid (USD 136m) for a 67% stake in the Bosnia's largest, but indebted, fuel retailer company last year. However, it now seems that the political aspect of the sale (i.e. the sale of a significant Bosnian state-owned asset to a Croatian company) is still in the spotlight. Although we believe MOL offered a fair price for the assets, political dissent in Bosnia appears to have blocked the deal. Although we have yet to see any comments from the company on the decision, we expect the news to be slightly negative for the share price. We maintain our hold recommendation on the stock and our target price of HUF 22,650.