Minister: Deadline for due dilligence ahead of Ina-Mol buyout deal is Q2 2020

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The Lazard Bank, which advises Croatia's government on the announced buyout of the Ina oil firm, will not complete its report before the end of March, but will certainly do so in the second quarter of the year, Croatia's Energy Minister, Tomislav Coric, said on Thursday.

The New York-based Lazard were hired as consultants in August last year after Prime Minister Andrej Plenkovic had announced that the government would try to buy back the 49 percent stake in Croatia’s Ina oil company which is held by Hungary’s energy group Mol.

Mol and Croatia’s government – which retained some 45 percent of the company – have been at odds for years over Ina’s investment policy and management. The value of the company is unclear.

Back then, Coric said that a due diligence report for the deal would be completed in six months’ time. But on Thursday, Coric said that it may take longer than that and that the deadline has been pushed to Q2 2020.

“That process is ongoing, and won’t be completed for another month. Hence it won’t be completed in the first quarter (of the year). It is expected to be completed in the second quarter,” Coric told reporters on Thursday.

In December 2016 Prime Minister Andrej Plenkovic announced that the government had decided to regain ownership of Ina by buying back Mol’s entire stake in the company. At the time, based on share prices, Mol’s stake was valued at 14.5 billion kuna (1.9 billion).

Plenkovic’s announcement came soon after Croatia had lost an arbitration case at the UN’s international trade court UNCITRAL, which ruled that contracts signed by former Prime Minister Ivo Sanader 2009 and Mol, which gave Mol controlling rights at Ina, were valid, even though a Croatian court had sentenced Sanader for taking a bribe to sign the deal.

The original sentence was later rescinded over a technicality, and sent back for a re-trial. In the re-trial, in which Sanader was indicted together with Mol’s CEO Zsolt Hernadi, both defendants were found guilty in December 2019.

In the meantime, the government had formed an expert council in January 2017 to negotiate with Mol about the possible buyout of Ina shares owned by the Hungarian energy group. In April 2018 they selected a joint bid by Morgan Stanley, Intesa San Paolo, and Privredna Banka Zagreb banks in a tender for investment consultants for the buyout. However, in August 2019 the government replaced them with Lazard.

Coric had announced that due diligence was expected to take six months, which would allow Croatia to present Mol with an offer in Q1 2020. The key issue which the sale depends on is the valuation of the company, as it is unclear what price Mol would ask for its share.