Acquisition process of Mazeikiu Nafta seemingly accelerated. Two representatives of PKN Orlen were elected to the management board of Mazeikiu Nafta, MN stated on Friday. With this, the extended board replaced the tree former Yukos delegates and elected Paul Nelson English, CEO of Mazeikiu Nafta, to the management board. In the same time PKN reports that the agreement on financing Mazeikiu acquisition should be signed this week. The company has so far collected US$ 400m in cash to finance the transaction.
The company forecasts that the bridge financing, which is to be provided by the banks, will be paid back from the means collected from the issue of 7-10 years euro bonds in worth of PLN 900m. The issue might take place in Q4 2006 or Q1 2007.
Our view: The two news indicate to us that it is now almost sure that the acquisition will go through. We reiterate our previous calculation that MN fair value decreased by some US$ 300-400m after the crude supply interruption and the explosion of one of the vacuum distillation unit. This means some PLN 3 per PKN shares, what we believe is mostly priced in already. Therefore, we do not see a significant market reaction to the news today.