Croatia, Hungary PM’s support INA/MOL oil share swap

“The two prime ministers said they supported the talks between the two companies and the plans to go for a share swap, if both sides agree,” Croatian government spokesman Zlatko Mehun told Reuters by telephone from the Adriatic resort of Dubrovnik, where the two leaders met at an international conference. “Now, the rest is up to the owners and the management,” Mehun said after a meeting between Ivo Sanader and Hungary’s Ferenc Gyurcsány. Gyurcsány told reporters in Dubrovnik: “This transaction should enable both Croatia and Hungary to create added value on both sides,” Crotian business website business.hr reported.

INA is 25% owned by MOL while the Zagreb government owns 44%, having distributed 14% of the biggest state company to war veterans and INA employees, and listed 17% of the stock in Zagreb and London. Once the government’s stock in INA fell below 50%, it was obliged to enter new talks with MOL on redefining the shareholders’ accord. MOL has said it wants to boost its stake in INA. Government officials told Reuters last month the talks were likely to extend towards the end of the year. The government is also obliged by law to reduce its holding in INA to 25%, which should happen before the country joins the European Union, probably around 2011.

A share swap would help MOL boost its stake without spending cash and would put its shares in another set of friendly hands as it seeks to fend off hostile approaches from Austrian rival OMV. It has already parked its stock in a series of lending agreements with friendly banks and Czech utility ČEZ. MOL outbid OMV in the race for INA in 2003, when the Zagreb government sold 25% to the Hungarians for $505 million. INA has upstream and downstream segments and is involved in gas and oil exploration and drilling in Africa and the Middle East. It is a dominant fuel retailer in Croatia and is also present in neighboring countries. (Reuters)