How OMV could affect the state's plans for the Petrom offering

Austrian group OMV, majority shareholder of Petrom, (SNP), could need a capital increase this year to refinance some of the loans taken out to make acquisitions in Turkey (Petrol Ofisi) and Tunisia, and a decision could be made by the OMV management in the coming period, say market sources.

Analysts of investment banks who monitor OMV shares, among whom Austria’s Erste and Raiffeisen, have been talking about the possibility of a capital increase since the beginning of the year, but OMV officials have not made any such announcement so far. That is why investors are eagerly awaiting today’s conference in which OMV will announce its quarterly financial results, as well as next week’s general meeting of shareholders (on May 17th), in the hope of learning more about the Austrians’ intentions.

Why is the decision that OMV’s Vienna bosses are set to announce important for Petrom? Because a prospective capital increase of the Austrian group could attract a share of the amounts that foreign investment funds were preparing for the Petrom offering, through which the state plans to sell 9.84% of the company’s shares. Scheduled for mid this year, the Petrom offering is the biggest in the history of the local stock exchange, worth 560 million euros at the current share price.

“Everybody is looking at what OMV is doing. Naturally, a capital increase would affect Petrom’s offering. But it depends at what price the two offerings are conducted. If the price is better at Petrom, it would be the other way around,” a local broker said yesterday.

However, analysts do not believe the two offerings will compete against each other, even if they were to overlap.