Lotos shares drop on Unicredit report

Lotos shares plummeted as much as 19 percent on Monday after a Unicredit report highlighted some of the worries the company faces in light of the financial crisis, however, the company denied that it was in financial difficulty.

Shares in the company hit an all-time low of zł.11.04 after traders said Unicredit slashed the target price for the company from zł.25 to zero. Unicredit explained the cut in the report as linked to a significant rise in Lotos' debt levels. The report also gave the company a 50 percent chance of surviving.

Lotos fired back after the report was released stating that the company was not at risk. "The management board states that the company is in a good condition. Its liquidity, both short and long term, is under no threat," the statement said. "In particular, suggestions of potential bankruptcy have no backing in facts." The company also added that it would take legal action on the matter.

Analysts see the report as bad timing when Lotos needs to take significant loans in current market conditions, while others see this as an indication of what awaits other Polish companies. "I think a lot of companies will have similar credit problems. I would say this is a baseline scenario for the entire region in 2009," Michal Dybula, an economist at BNP Paribas told Reuters.

Source: Reuters