Lotos cries foul over report
The value of Lotos shares fell by over 19 percent on the news, but recovered to finish the day down approximately six percent at zł.12.82. The stock ended the week at zł.12.35.
Lotos countered the report, saying that such claims were ungrounded as the company had good liquidity and valuable assets. "There is no reason to worry about the condition of the company," Lotos president Paweł Olechnowicz told the media. He also claimed that the report was heavily biased and appeared to be an attempt to foster a hostile takeover of Lotos. The company is considering legal action against UniCredit.
The Polish Financial Supervision Authority launched an investigation last week to verify the report's accuracy and whether any laws were broken. UniCredit may face a fine of up to zł.1 million if irregularities are found in its report.
Compounding investors' confusion is the fact that a total of four brokerages issued analyses of Lotos between November 19 and 26, each with very different recommendations. Before the UniCredit report was issued, DM IDMSA set the stock to "hold" with a target price of zł.31.7. Following the UniCredit report, DM BZ WBK analysts set the stock to "buy," at zł.38, and a day later Deutsche Bank recommended selling with a target of just zł.8.
Lotos had long-term debts worth zł.2.17 billion and zł.4.1 billion in short-term debts at end of Q3. It has increased its debt in order to finance about 70 percent of its zł.5.2-billion "10+" investment program.
As WBJ went to press, UniCredit had not issued a public statement on the issue and representatives of the firm were refusing to comment.
