The CEO of Agrofert is quoted in this week’s edition of the Czech Euro news weekly as saying that the Czech Cabinet cannot terminate the Unipetrol privatization contract with Agrofert, the tender winner, sooner than at the end of 2002, subject to two unspecified conditions. He also reiterated that Agrofert wants the Cabinet to accept the entry of a strategic investor (PKN Orlen) in the privatization, and cited irregularities relating to supply contracts between two Unipetrol subsidiaries, Ceska rafinerska and Chemopetrol, as a continued source of concern (the two subsidiaries were in sharp conflict over supply terms in the first half of 2002 and the situation there could worsen again at the beginning of 2003, when Ceska rafinerska is to become a cost centre).
Should such a contract termination date--year-end 2002--be accurate, Unipetrol stock will likely face four months of continued uncertainty as Agrofert is likely to play the tender waiting game to the very end. Also, we are of the opinion that the Cabinet cannot change the Unipetrol privatization terms now as the tender has been closed (among others, this would likely trigger a negative reaction from unsuccessful bidders).
Jiri Soustruznik