Petrom puts off eurobond issue

The National Oil Company (SNP) Petrom has pushed back for September the eurobond issue worth 150 million euros, company sources told Ziarul Financiar.

According to the above-quoted sources, the delay was triggered by unfavourable circumstances on the European financial markets, which are quite reticent towards emerging economies because of the Argentina crisis that might also spread in Brazil.

Moreover, activity on these markets is much weaker during the summer period. Petrom was originally supposed to launch its bond offer in June, but it postponed it in order to keep clear of the national bond issue.

Romania derived 600 million euros from the international capital markets, with 10.6% in interest rate, maturing in seven years. Fitch IBCA and Moody’s granted Petrom a rating matching Romania’s country rating, while, according to financial estimates, the company’s offer was to be oversubscribed.

The delay follows statements made at the end of last month by Misu Negritoiu, ING Bank Romania vice-president, saying that the event “would take place soon.”

The bond issue, managed by Dutch banks ING and ABN Amro, will not be guaranteed by the Finance Ministry. Consequently, Petrom is the first Romanian company to launch a bond issue without benefiting from government support.

Between 2001-2003, Petrom will invest about 240 million dollars in order to restructure the refining sector, so as the company can increase the output of Euro 3 fuel. Part of the amount will be secured by selling the bonds.

Arpechim refinery will benefit from investments worth over 150 million dollars, while the retooling programme aimed at Petrobrazi refinery will take 86 million dollars in investments.

All Romanian refineries must meet the Euro 3 standards for auto fuels produced by the end of 2004, as these norms will enter effect starting with 2005.

SNP Petrom last year posted net profit standing at 2,228 billion lei (98.1 million dollars), while total revenues amounted at 57,854 billion lei and expenditures totaled 55,805 billion lei.

Another significant event for Petrom will take place next month, when the company is to be listed on the Bucharest Stock Exchange.

Trading was supposed to start this month, but this was also postponed as the Stock Exchange is “numb” this time of the year and since only a small number of shareholders picked up their personal codes.

SNP main shareholder is the Ministry of Industry and Resources, which owns 93.2 of capital (36,545 billion lei), while private shareholders own 6.7 of the company shares, accounting for 2,655 billion lei.