Unipetrol reportedly offers CZK 150 per Paramo share

As expected, the Czech anti-monopoly office approved the government’s investment incentive (by means of a tax allowance) for Ceska rafinerska (CRaf), a 51%-owned subsidiary of Unipetrol. The investment incentive is for the construction of a fluid catalytic cracker unit, which will enable CRaf to continue production in one of its refineries, and will increase the refinery’s complexity (ability to produce high-margin light fractions from crude oil). The approval was expected. Also, a government commission for the privatization of Paramo, a small domestic refinery, in which 71% stake is held by state, has reportedly ranked short-listed bidders by the tender criteria (the ranking has not been made public). The government should choose the a tender winner (based on commission’s recommendations) in August. Among the bidders are Norex of Canada (reportedly offering a CZK 403 per Paramo share), Unipetrol (reportedly offering a CZK 150 per share) and Cepramo (reportedly offering a CZK 1 per share). No other details were released. It is difficult to evaluate the attractiveness of the transaction for Unipetrol at this stage, as no other transaction conditions are available and Paramo has not yet published its H1 2000 results, which are expected to be much worse than H1 1999.
(Ladislav Kovář)