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Mol to sell 6 mln shares to back convertible securities

Hungarian oil and gas company Mol Rt announced on Thursday that it plans to sign an agreement to sell about 6 million of its treasury shares - about 5.5% of total shares - to off-shore company Magnolia Finance Limited, which will offer capital securities exchangeable for the shares to institutional investors. The securities may be turned in for the shares between 2011 and 2016. Magnolia will offer about €690 million of the capital securities to institutional investors in countries excluding the US, Canada, Jersey, Japan, Hungary and Poland. Calculating with Mol's share price of Ft 21,190 shortly after the start of trading on Thursday, the share packet is worth about Ft 127 billion (€498 million). Because the issue of the capital securities will not be governed by Hungary's Capital Market Act, it will not require approval from Hungarian financial market regulator PSzÁF, Mol said. At the same time Mol sells the shares, it will enter a swap agreement with Magnolia giving Mol a purchase option for the shares under certain conditions.

 

Mol said it does not have any direct or indirect ownership or control of Magnolia. However, in line with International Financial Reporting Standards, it will consolidate Magnolia in its financial reports. The terms of the transaction will be announced after the successful sale of the capital securities, on or around March 10, 2006, Mol said.