The National Property Fund has set a deadline for Agrofert to pay for the state’s 63% stake in Unipetrol today. Agrofert said it will comment on the privatization issue today, though in an interview in HN daily Agrofert CEO, A. Babis, has already said that Agrofert and the NPF reached a preliminary agreement about canceling the privatization. The agreement must be approved by the Cabinet. Mr. Babis cites the Ceska rafinerska shareholder structure (51% owned by Unipetrol, 49% owned by IOC consortium, but the management in the company is biased in favor of IOC), depressed (petrochemical) markets, and flood damages as the main reasons for the decision not to complete the privatization. The privatization cancellation was widely expected, and we expect a new tender to start relatively soon.
Though the stock could rise somewhat, we maintain our hold recommendation since (i) it is far from sure that more credible bidders will participate in a new tender, (ii) the operational performance of the main subsidiaries worsened significantly in 2002, and (iii) some of the subsidiaries were among the hardest hit by the recent floods.
Jiri Soustruznik