Poland gives preliminary approval for sale of refinery to Rotch Energy

Sep 16, 2001 02:00 AM

Poland has given preliminary approval for the sale of Rafineria Gdanska, its second-largest oil concern, to Rotch Energy of the UK. Nafta Polska, the state holding company with stewardship over oil assets, approved the sale of 75 % of the Gdansk refinery to Rotch pending the government's amendment of its privatisation strategy to allow for a non-industry investor.
That could conceivably come when the government holds its regular weekly meeting. Rotch is a unit of the Rotch Property Group, the UK's second-largest private-property owner, with a portfolio worth £3.5 bn ($ 5.15 bn). The Polish oil refiner has capacity of about 4.5 mm tons.

The proposed deal has been the subject of tough negotiations since Nafta chose Rotch over Hungary's MOL for exclusivity talks in June. Rotch has faced a grilling over its financial strength and business plan for RG, which was subject to a failed privatisation attempt in 1998.
Rotch, whose proposed industrial partners for the investment include Kellogg Brown & Root of the US and JGC of Japan, is understood to have offered about $ 250 mm for the stake sale, plus as much as $ 600 m-$ 700 mm for investment in expansion over several years.
Rotch offered RG's trade unions one of the most generous agreements yet seen in Polish privatisation, including a five-year guarantee of employment and a pledge to buy remaining employee shares, worth 15 % of total, at a price similar to what it offered Nafta.

Source: The Financial Times
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