VILNIUS - The board of Mazeikiu Nafta last week saw the resignation of supervisory board chairman Pyotr Zolotarev amid a flurry of criticism over the refinery's recent sale to Poland's PKN Orlen. The company is quickly moving to replace its board members before the sale is finalized on Dec. 15.
Zolotarev said that Poland's PKN Orlen may not be in a position to purchase the Lithuanian oil refinery unless the Polish state finances the purchase, the Verslo Zinios business daily reported on Nov. 24.
"I have doubts as to whether the sale of Mazeikiu Nafta to the Poles will be transparent," the paper quoted Zolotarev as saying.
The calculation of Mazeikiu Nafta's value was based on future cash flows, which demonstrate that PKN Orlen could suffer losses from the acquisition after paying interest to lenders, the outgoing chairman said.
"When you look at the price that [PKN Orlen] is ready to pay for the shares, it looks like the Polish government's money will be used to buy the [Lithuanian] company, because only the government can provide financing for free. Otherwise, the deal will be loss-making for PKN Orlen," Zolotarev said. "This may mean that the Poles did the analysis incorrectly. This does not seem likely to me, because they have professionals working for them... or they are going to overpay for the company for some other purpose."
The Poles said earlier that the purchase of Mazeikiu Nafta would be financed by Western banks. According to business daily Verslo Zinios, Goldman Sachs, one of the world's largest investment banks, is among them.
Zolotarev said he had the impression that the Poles were planning to resell the Lithuanian refinery shortly after the acquisition.
"My impression is that this may not be the last sale of this company and that there will be another deal soon," the outgoing supervisory board chairman suspected. "Besides, I am deeply worried about the tense atmosphere at Mazeikiu Nafta and attempts to conclude, using all possible means, highly questionable deals, both on the sale of the plant to the Poles and oil purchases from Venezuela."
Zolotarev announced his resignation as chairman of the supervisory board last week. Another member of the supervisory board, Oleg Sheyko, is also stepping down.
The supervisory council moved on Nov. 24 to replace Zolotarev with Martin Julian Parr, the executive of Yukos Services UK and a former member of Mazeikiu Nafta's council, as the new supervisory council chairman.
A new supervisory council of Mazeikiu Nafta is expected to be appointed on Dec. 14. It would then appoint a new management board, which has only three members following the resignation of four Yukos representatives earlier this month.
The new management board candidates, replacing the members of Yukos that stepped down on Nov. 9, include; Daniel Feldman, manager of Canada-registered international energy corporation Big Sky Energy Corp, Dariusz Formel, executive director of the business organization department at PKN Orlen, Krystian Pater, PKN Orlen executive director for refining, and Paul Nelson English, Mazeikiu Nafta's CEO.
The management board comprises seven members plus three government representatives.
"They should safeguard the interests of Mazeikiu Nafta," Saulius Specius, an aid to the prime minister, told the Baltic News Service on Nov. 26. The board was elected prior to the Dec. 14 shareholders meeting "for the sake of order, not urgency," he pointed out.
The Polish concern had the chance to appoint its representatives to Mazeikiu Nafta's board after the European Commission issued its permission for PKN Orlen to buy the Lithuanian oil complex, Gytis Kaminskas, a partner with the professional law partnership Jurevicius, Balciunas ir Bartkus, told the news portal VZ Online.
The election of Mazeikiu Nafta's CEO to the board was a sign of confidence in English, Kaminskas noted.
Lithuania's government and Polish oil concern PKN Orlen aim to complete the $2.34 billion purchase of Mazeikiu Nafta on Dec. 15.
"I currently have no information that would make me think otherwise," Economy Minister Vytas Navickas said on Nov. 27.
To finalize the deal, certain legal measures should be taken and technical issues coordinated. The key precondition is the purchase by PKN Orlen of 53.7 percent of Mazeikiu Nafta from Yukos International.
In line with the agreements signed in May and June, PKN Orlen will pay 4.04 billion litas (1.17 billion euros) to Yukos International UK and 2.31 billion litas (668.98 million euros) to the Lithuanian government for its 30.66 percent stake in the oil complex.
On Nov. 7, the European Commission issued permission for the Polish oil concern to acquire up to 100 percent in Mazeikiu Nafta stating that the deal would not affect effective competition in the European Economic Area.
