Hungarian oil and gas giant MOL Nyrt purchased 158,824 treasury shares yesterday at the Budapest Stock Exchange (BÉT) at an average price of Ft 27,702 ($154), the company announced. MOL's share buyback defense against OMV and will also finance acquisitions and capital expenditure.
Following the transaction, MOL owns 2,763,650 A category shares and 578 C category shares. MOL again rejected OMV's approach, because the company believes a potential merger would not improve efficiency, but would curb competition. The share purchases serve the goal of capital structure optimization. MOL's situation is improving day by day, analysts say.
MOL is seeking to raise a €2 billion ($2.75 billion) loan to fight an unsolicited approach from Austrian oil company OMV banking sources said on Wednesday. The new loan would be additional debt for MOL. It would partly finance MOL's share buyback defense against OMV and will also finance acquisitions and capital expenditure, sources close to the deal told Reuters Loan Pricing Corporation. Lenders have been given until Monday to respond to the company's request for proposals, sources added. MOL is resisting OMV's overtures after OMV increased its stake to 18.6% from 10% two weeks ago and proposed talks to create closer ties.
MOL began aggressively buying around 11% of its stock this week, which analysts estimate brings MOL's control of its own shares to 31.5% and has already cost the company almost all of its $1.5 billion free cash. OMV is lining up a €13.5 billion ($18.5 billion) loan with banks including Barclays and J.P. Morgan, according to sources familiar with the situation, but MOL's control of its shares and government support could frustrate a takeover, analysts said. MOL is an aggressive loan market borrower, according to bankers close to the company. The company last tapped the syndicated loan market in July last year for a €825 million ($1,13 billion) loan, which paid a slim margin of 18 basis points over EURIBOR.
Wolfgang Ruttenstorfer, CEO of OMV, criticized MOL's strategy and company management methods, especially its move of buying treasury shares, writes daily Financial Times. The move is said to have devoured almost all of the $1.5 billion cash-stock of the Hungarian oil company, the paper said. MOL should spend its money on investments instead, grasping the opportunities in Central Europe, Ruttenstorfer said, reiterating at the same time that he would very much like to see an OMV-MOL merger and the birth of an over €60 billion ($82 billion) company. In an attempt to thwart recent attempts of a takeover by the Austrian peer, MOL had lent shares while continuing purchases of its own. According to the company, it currently holds 20% of its own papers, while analysts say the figure may actually be twice as much, despite the fact that Hungarian laws forbid listed companies to hold over 10% of their own shares.
According to FT, MOL's management and president-CEO Zsolt Hernádi personally have an ally of crucial importance and of political influence: OTP Bank Nyrt's president-CEO Sándor Csányi. OMV's position might look hopeless, concludes the daily but Ruttenstorfer said OMV is really interested in an OMV-centered consolidation of the oil and gas sector of Central Europe and prepared to wait for two or three years for it.
Abu Dhabi's International Petroleum Investment Company (IPIC) of the United Arab Emirates, one of the major shareholders of Austrian oil and gas company OMV agrees with and supports OMV's endeavors to acquire Hungary's MOL Nyrt. IPIC has always supported OMV's plans to expand in Central East Europe, said IPIC president Khadem Al Qubaisi. He also refuted the rumors on IPIC negotiating the sale of its 17.6% stake in OMV to Gazprom. Rather, IPIC plans to boost its stake in Austrian firm and strengthen the cooperation of the two companies, which are considering the launch of a joint exploration of both crude oil and natural gas in CEE and Pakistan. (Gazdasági Rádió, Reuters)
MOL has confirmed on Thursday that has started talks with banks to organize a €2 billion credit facility.
“The Budapest-based company, which has asked several banks for offers on the loan, wants to borrow the sum as part of normal operations” and has access to further loan facilities, Szabolcs Ferencz, a company spokesman, said by telephone to Bloomberg today. The new loan may take as much as four months to arrange, he added. “We sent out a letter to banks, ” Ferencz said. “This is fundamentally a normal operational loan. We have large development projects. Naturally, nothing ever can be excluded, ” including using the money for more share buybacks. (Bloomberg)