Unipetrol: new transparent tender - the best solution

The industry minister, J. Rusnok, said yesterday that he sees only two alternatives with regard to Unipetrol privatization: Either Agrofert (the tender winner; Agrofert is seeking a price reduction) buys the state’s 63% stake on the terms agreed in the tender (the minister said that the selling price could be renegotiated downward to reflect recent flood damages to Unipetrol), or other parties would be offered the opportunity to buy the stake on the same terms originally agreed with Agrofert. Otherwise the tender will be canceled and Unipetrol privatization would become a question of medium-term strategy for the government.

We think Agrofert will not complete the transaction even if flood damages were reflected in a reduced selling price given that the main reasons behind Agrofert’s recent request for a price reduction are (i) the dismal H1 results of some Unipetrol subsidiaries, (ii) the prohibited participation of PKN Orlen, a would-be Agrofert partner in the acquisition, and (iii) the situation in Ceska rafinerska.

We would be concerned about transparency issues in the event alternative buyers are invited to make offers at this stage; nevertheless, transparency never seemed to bother the previous Cabinet during Unipetrol’s privatization.

We believe that a new tender would be the best solution.

Jiri Soustruznik