Maziekiu refinery to be sold

  • 2009-03-18
  • By TBT staff and wire reports

OIL MONEY: The Lithuanian government has decided to cash in on a deal whereby the Polish company is obligated to buy the remaining shares in the oil refinery.

VILNIUS - PKN Orlen, Poland's largest oil company, is holding talks with the Lithuanian government over the buyout of the remaining 9.98 percent of Mazeikiu Nafta (Mazeikiai Oil) shares, but the prime minister has said that the financial crisis may hamper the deal.

The PM said some adjustments to the deal might have to be made.
The deal is expected to earn 772 million litas (223.77 million euros) for the Lithuanian state.
Prime Minister Andrius Kubilius said that despite difficulties, he expects the deal to go ahead.
"I believe that Orlen 's a serious, solid company that values its reputation 's will meet its obligations laid down in the agreement it signed with the Lithuanian government back in 2006," Kubilius said on Lithuanian Radio.
"As to how these obligations will be carried out 's whether some additional protocols will be put in place 's taking into consideration the rather complicated international financial situation. I believe [we will] find a proper solution based on the good will of both parties," he said.


Lithuania's government sent a formal offer to PKN Orlen to buy out almost 10 percent of Mazeikiu Nafta on March 10 with the deal expected to close on March 20.
Under the agreement, if the government sells its remaining stake in Mazeikiu Nafta (70,750,000 shares) by mid-December 2009, the price of the shares will be $4.02 per share, or $284.45 million in total.

Unofficial Baltic News Service sources said PKN Orlen was unwilling to buy out the shares at this moment 's but under the terms of the agreement penned in 2006, the Polish company is obliged to buy the remaining shares.
Refusal by the Poles would amount to a breach of the agreement.
Under the agreement, PKN Orlen shall buy out the shares in Mazeikiu Nafta within 10 days of the notice being given. The ownership in shares should be transferred to the company the same day.
The Poles now own 90.02 percent of Mazeikiu Nafta.


Meanwhile, Mazeikiu Nafta is laying off scores of employees every month, citing ongoing restructuring, Lietuvos Zinios business daily reported.
The layoffs mean that the town of Mazeikiai now has above average unemployment.
Based on data from the Mazeikiai Labor Exchange Office, over 40 people 's ranging from unskilled workers to heads of units 's leave Mazeikiu Nafta each month.

Mazeikiu Nafta spokesman Jacek Komar said that restructuring is underway at the company, but there is no talk yet of job cuts.
Mazeikiu Nafta hasn't ruled out future job cuts, but said this would not be because of a poor financial situation: the Lithuanian refinery still has a workforce of over 2,900, while an English company of a similar size employs only 800 people.
Two audit firms have established that Mazeikiu Nafta could reduce its workforce by another 20 percent, the spokesman said.