Court orders PKN Orlen to pay Agrofert over Unipetrol assets

01 July 2009 11:46  [Source: ICIS news]

PRAGUE (ICIS news)--Poland's PKN Orlen has been ordered to pay €77m ($108.5m) in compensation for failing to sell parts of its Czech petrochemical subsidiary Unipetrol to Czech agrochemical and foodstuffs group Agrofert, lawyers for Agrofert said on Wednesday.

The Prague Arbitration Court awarded the payout to Agrofert because Orlen had failed to honour a deal struck in 2004 by Orlen's former management, according to a statement from Pokorny, Wagner & spol., a law firm based in Prague.

Under the agreement, once Orlen had secured a majority shareholding in Unipetrol through a privatisation, it should have sold on certain Unipetrol assets to Agrofert, the law firm said.

Such assets included synthetic rubbers unit Kaucuk, which is now part of Poland's Synthos, and 40% of the petrochemicals subsidiary Chemopetrol, which is now named Unipetrol RPA, the law firm added.

The case went to court after Orlen refused to abide by the deal, saying that the prices for the assets had been set so low that the transaction might infringe Czech law by harming Unipetrol minority shareholders.

Orlen refused to comment on the court decision.

Investment bank Wood & Co noted Orlen said it was fully provisioned to pay out on the claim.

However, it said that Agrofert was still pursuing arbitration court cases for an additional €759m, of which €668m would serve as compensation for the alleged damage to Agrofert’s name by Orlen.

“But it has a very low chance of winning this, in our view”, the bank said.

($1 = €0.71)

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By: Will Conroy
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