Lotos May Sue PKN Orlen over Merger Comments - Reports
by AFX News Limited
August 30, 2007
Poland's second largest oil company Grupa Lotos
may take legal steps against larger peer PKN Orlen over comments about the potential merger between both refiners, which may hurt its 5.6 billion zlotys investment plan, the daily Parkiet reported Thursday without giving its sources.
A spokesman at Gdansk-based Lotos declined to comment on the report.
Lotos is in talks with banks to secure 70 percent of financing for its refinery upgrade plan, which will boost the capacity by three quarters to 10.5 million tonnes and at least double the company's sales over the next five years.
Lotos chief executive Pawel Olechnowicz warned earlier this week that speculation about a merger with PKN, which produces four times more oil than its Gdansk-based peer, could prompt banks to raise the cost of credit.
In a separate report, the daily Puls Biznesu said Thursday that Lotos has estimated its potential losses from the failure to secure bank financing at 2.141 billion zlotys. The company could run out of cash for the plan in the third quarter if talks with banks fell through, Lotos analysis show, according to the paper.
PKN's chief executive Piot Kownacki is pushing for the merger between the two state-controlled refiners, which would create a company with a market value of around US$10.8 billion, arguing it would help fend off competition from foreign oil majors.
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