Investors team up in bid for Rafineria Gdanska
By : Bogda Zukowska
Five companies shortlisted for Rafineria Gdanska's (RG) privatization will team up into three consortia to bid for a stake of up to 75% in the refinery, according to state-owned Nafta Polska (NP), the firm in charge of oil industry privatization.
Due diligence started last week and bidders have until March 12 to submit final offers, including proposed price and investment commitments.
While NP would not reveal the names of the bidders, a source close to the deal, who wished to remain anonymous, said the shortlist includes: U.S.' M.W. Kellogg, a company called Rotch Energy, Hungary's MOL and Poland's Konsorcjum Gdanskie (KG) and Kredyt Bank (KB). CDM Pekao analyst Robert Jankowski refused to comment on the likelihood of bidders winning the deal and on their strategies for the refinery.
With a 22% market share, RG is the second largest refinery in Poland. Its performance last year improved, mainly due to the rise in international oil prices. Sales for 2000 totaled zl. 6.9 billion ($1.64 billion) compared to zl. 4.9 billion ($1.17 billion) in 1999. Additionally, net profit surged by almost 50% year-on-year, reaching zl. 173 million ($41.2 million). "It may be cruel for customers, but the more they pay at the filling station, the better the chances are for RG to get a good price for its stake," said Janusz Kwiatkowski, an NP spokesman.
However, the company's positive results are overshadowed by debts amounting to zl. 1 billion ($238 million). "The potential investor has to restructure the company's financing and develop the network of filling stations, to make the whole business more profitable," said KG head Andrzej Voigt, during last year's company announcement that it will bid for the refinery. RG has only about 250 filling stations, and the potential profit from RG's own fuel-distribution network is great.
Konsorcjum Gdanskie (a group of 14 domestic private fuel distributors with 118 filling stations) will be the only entirely Polish wholly owned bidder. Last year, the company announced it would spend up to $200 million for the refinery, but that less than $100 million would go toward its purchase of the stake. The rest would be invested in debt restructuring and capital boosts. KG refused to say whether it's on the shortlist or if it's likely to join forces with other bidders. KB is the only bidder that has confirmed it's on the shortlist.
But Maria Witke, head of the KB's PR department, refused to comment on the subject, although she said the final offer will depend on the results of February's due diligence.
MOL grabbed the headlines last December when industry watchers speculated about possible cross-sharing between the Hungarian group and Polski Koncern Naftowy Orlen, Poland's largest oil company. MOL's attempt to bid for RG would be consistent with its strategy to be a major industry player in the region.
M.W. Kellogg is owned by U.S.' Halliburton, the largest energy and construction company in the world. With assets worth $10.7 billion and revenue totaling $9.8 billion (for the first nine months of 2000), Halliburton will be the major player on the shortlist and will probably not look for a partner in the bid.
"It was the bidders' initiative to team up and we welcomed it," Kwiatkowski said. "We prefer to deal with less, but stronger, potential strategic investors."
He said shortlisted companies had joined forces to help their chances of winning the deal. "Our requirements are difficult to meet for a single company," Kwiatkowski said. "We expect from bidders industry expertise and an ability (to gain) project financing. "
