Breaking news: Croatia seeking to buy back oil co. INA from Hungary's MOL
The big reveal
The decision to buy back the formerly privatised INA shares was made in the wake of an arbitration court verdict in favour of MOL vs. the State of Croatia,
Plenkovic stated according to a Reuters report.The acquisition is not going to have an impact on Croatia's government debt, the Prime Minister stressed, adding that the MOL management has already been notified of the planned move.
With a 49% stake, MOL has exercised controlling rights over INA. The Croatian government, despite holding 45% of INA shares, has had no real influence over corporate management.
The INA share price closed at HRK 2,925, or USD 405 on the last trading day, which means that the MOL share is worth HKR 14.5 billion, or USD 2 billion (apprx. HUF 592 billion) at market price. The eventual buyout price to be paid by Croatia may differ from that, however; i.e. it could be higher because the buyer is seeking to acquire an asset that the current owner has had no intention to sell.
Long-standing conflict
In late 2013, MOL initiated arbitration court proceedings against the government of Croatia to protect its interests in that country at the International Centre for Settlement of Investment Disputes (ICSID), claiming that Zagreb had failed to fulfill certain contractual obligations and commitments.In response, Croatia turned to international arbitration in early 2014, claiming that MOL had engaged in corrupt conduct to acquire a controlling interest in INA, it had failed to deliver on contractual obligations for new investment at Croatian oil refineries, and had violated Croatian commercial laws.
The two major shareholders have a long history of conflict rooted in allegations that MOL paid former Croatian Prime Minister Ivo Sanader a EUR 10 million bribe in order to acquire a controlling interest in INA on terms that are against the common good of the people of Croatia. The saga of the long-standing dispute has included allegations and rebuttals, criminal investigations in both Croatia and Hungary, an international arrest warrant against Chairman and CEO Zsolt Hernádi that was later withdrawn, and arbitration proceedings.
Arbitration outcome
The Geneva arbitration organisation has found no sufficient evidence to prove corrupt conduct on part of MOL in the process of the INA acquisition, and has stated that there are no grounds to void the 2009 acquisition contract between MOL and the State of Croatia.
Croatia is most opposed to the verdict and will do all in its power to slow down the process of its execution,
Plenkovic has said.At the press conference, the Prime Minister made it clear that Croatia had already prepared plans for the buyback transaction, regarding which more information will be released in the coming days.
