MOL rated 'Sell' by broker on row with govt over Croatian refinery

22 August 2013 17:01  [Source: ICIS news]

LONDON (ICIS)--KBC Securities has reinitiated coverage of Hungarian oil, gas and petrochemicals group MOL with a 'Sell' rating, citing a dispute with the Croatian government over control of refiner INA that poses a threat to the company’s strategy, the Belgium-headquartered equity house said on Thursday.

MOL only owns 49.1% of the refiner but controls the company through a shareholder agreement it reached in 2009 with a previous government. The current government is demanding a renegotiation of that agreement.

In an analysis entitled 'Bumpy road ahead', KBC said: “The Croatian situation leaves us up in the air. Renegotiation of the INA shareholder agreement clearly poses a risk to the success of MOL's downstream efficiency efforts and its CEE [central and eastern Europe] focused strategy.”

MOL should seriously consider divesting its stake in INA – a company it hopes to develop in areas including petrochemical feedstocks – if satisfactory arrangements could not be reached with Croatian ministers, said KBC.

“We believe that MOL should not insist on [keeping its stake in] a malfunctioning INA, but the key question is clearly the price MOL could get for the asset,” KBC concluded.

By: Will Conroy
+44 20 8652 3214

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