MOL has signed an 825 million euro multi-currency revolving credit facility with a syndicate of international banks. The proceeds of the facility will be used for general corporate purposes and to refinance MOL's 600 million euro revolving facility signed in 2003. The facility has a maturity of 5 plus 1 plus 1 years with bullet repayment and carries an initial interest rate of Euribor plus 18 basis points, subject to a margin grid based on the ratio of net debt to EBITDA. MOL commented that the new syndicated loan facility is the ever largest euro loan transaction for the company with the best ever terms.
Our view: At the end of the first quarter MOL's net debt to equity ratio stood at a negative 12%, since it had more cash than debt. In May, however, the company bought own shares for almost EUR 1bn, which should push gearing up (close to 5%) by the end of the second quarter. This is still very low when compared to the long-term targeted 30-40% gearing of oil&gas comapnies. No surprise for us that MOL was able to refinance the existing loan at very favourable conditions. At the moment MOL doesn't need more credit, however, once it sees an acquisition opportunity it has room for further EUR 2-3bn debt, in our view. The news should have no direct impact on the share price, we believe.