Hungary may sell part of its 21.2% stake in national fuels group MOL at the right price if it comes to the country’s safe financing, said Mihály Varga, state secretary of the Prime Minister's Office. He said such situation could materialise in early 2012.
Varga, who is also Vice President of the ruling Fidesz party, also told Gazdasági Rádió in an interview that selling part of the state’s MOL stake cannot be excluded.
The government should not exclude the possibility that “it sells part of this share package or starts to divest it gradually since we cannot foresee what will happen in foreign currency financing or on the FX markets," he said.
“I can imagine a situation that for the sake of safe financing we will need to put part of the state package on sale in early 2012," Varga added. At the same time he stressed the importance of the state having a say in the company that is strategically the most important asset for the country. Further government steps in this regard will be made according to the budget situation and the strategic objectives of the cabinet he added.
After lengthy negotiations Hungary agreed with Surgutneftegaz at the end of May to buy the Russian energy company’s 21.2% stake in Hungarian fuels group MOL for EUR 1.88 billion, i.e. cc. HUF 23,000 per share.
Since the announcement of the transaction MOL’s share price has dropped 13% (to around HUF 20,000) over concerns that the oil company will eventually lose control over its Croatian subsidiary INA and also due to a general gloom in the sector. As a result, we do not believe the state will start selling parts of its MOL stake, which is now at 23.8% thanks to MOL shares that were transferred to the state as part of private pension funds’ assets. This is not the “right price" Varga was talking about, and such a move would also contradict the government’s efforts to step up its role on the country’s energy market.
As Mihály Varga said, in a pessimistic scenario where the European debt crisis spreads out the state may need to resort to selling some of its MOL stake. But in this case the share price would probably also be hit therefore the government could sell the shares for less than it bought them for. And it would be awfully hard to communicate politically a scenario where the state sells its holding in MOL at a depressed price, buys it back expensive and then sells it again for less. Therefore, we believe divesting the MOL package will be a last resort solution.
From the shareholders’ point of view it would be a bad outcome if the papers were to be sold on the stock exchange, but chances of that happening are smaller since the market would likely be able to absorb the offered amount only very very slowly.
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