DEC stake would boost Gdanska before IPO
If the government gives Rafineria Gdanska some 30% of rail distributor Dyrekcja Eksploatacji Cystern (DEC), it will boost the oil refiner and retailer's value before its initial public offering (IPO) in the second half of 2000, analysts said.
"It's simply more assets and more value for Rafineria Gdanska," said Michal Mierzwa, an analyst for Centrum Operacji Kapitalowych Banku Handlowego. "Everyone would reevaluate (the refinery) with the additional assets." But until the fuel carrier completes the due-diligence process before its own privatization, it is impossible to say how much Gdanska's value would increase, Mierzwa added. Piotr Wozniak, an analyst at CDM Pekao Securities, said Gdanska's additional value will depend partly on how much a strategic investor will pay for the remaining 70% of DEC, and who that investor will be.
The Treasury Ministry has discussed the idea in connection with steps to privatize DEC (see related article above). Giving DEC shares to Gdanska's would not be the ministry's first attempt to fortify the refinery before its IPO, analysts said. Last year the ministry offered 300 gas stations in the Gdansk area at below market value after the government merged retailer Centrala Produktow Naftowych (CPN) with refiner Petrochemia Plock to create PKN. Gdanska turned down the offer because it simply couldn't afford the stations.
Should the ministry decide to give it shares in DEC, Gdanska would be restricted from using the fuel carrier as leverage against competing oil companies. Exorbitant rates for using DEC which has a de-facto monopoly on rail movement of fuels would obstruct the government's intended liberalization of the Polish fuel market, Mierzwa said. This was one reason why PKN was not invited to take part in negotiations for the remaining 70% in DEC, Mierzwa said.
About 45-50% of Rafineria Gdanska will be publicly traded, including a 15% employee share tranche. Analysts expect a further 30% of the refinery to be sold to a strategic investor. With its 1999 financial figures still unavailable, the refinery's present value is unknown.
In 1998, Gdanska grossed zl. 3.7 billion ($1.06 billion) on sales of 3.5 million tons of processed crude oil.
