Slovnaft sends documents to prospective suitors

During the last week in October, the oil refinery Slovnaft sent potential investors documents on the company, including a shareholders agreement, a letter of acquisition, a three-year business plan and an ecological audit. The final reading of documents by Slovnaft top officials and advisors took place in London on Friday, October 22.

Slovnaft President Slavomir Hatina, who is trying to secure a strategic investor for the refinery, said that preparations for the sale were "three or four days" behind schedule. Hatina expected bids to start arriving after the documents were sent.

Hatina said that the recent turmoil at the National Property Fund (FNM) privatisation agency, whose president and deputy chief were sacked last week, has not affected relations between Slovnaft and the FNM. "The deals I made with former FNM President Ľudovít Kaník are still valid," he said. "The [September 16] revision to the large-scale privatization law gave the government some decision-making power in this sense. As soon as the government decides it has no claims towards [Slovnaft owner] Slovintegra and Slovintegra has no obligations towards it, Slovintegra is ready to return 10% of Slovnaft shares [to the government]," explained Hatina.

Slovnaft's nine-month operating profit is better than predicted at the beginning of the year. A depreciation in the exchange rate of the Slovak crown during the first six months made the cost of repaying Slovnaft's loans much more expensive than expected. As of June 30, Slovnaft had created provisions in the amount of 2.2 billion crowns against its debts.

Curiously, it is these provisions that now generate hope of better full year results. The reserves were created at 44 crowns to the dollar, but rates now fluctuate between 40 and 41 crowns to the dollar, meaning that Slovnaft's results may be better than expected by some 1.2 billion crowns if the exchange rate holds steady through December.

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