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State to shed its Unipetrol control
By Jiri Kominek The government is planning on reducing its 63 percent stake in petrochemical giant Unipetrol to below 50 percent. A government privatization commission recommended Oct. 30 that the state should substantially reduce its share in Unipetrol. Finance Minister Ivan Pilip did not specify whether the sale of Unipetrol shares would be done through a public tender or by some other method. The commission decided that the Finance Ministry should submit a report within two weeks on how to proceed with the privatization, which the government hopes will be completed by the end of 1997. The National Property Fund currently holds the government's 63 percent share in Unipetrol. While analysts greet a Unipetrol stock listing on the Prague Stock Exchange, many brokers suggest that investors refrain from buying shares of the petrochemical giant until its management demonstrates its ability to manage all holdings. In short, analysts are saying, "Look, but do not touch" until Unipetrol becomes more transparent. "The present share price of 120-130 Kc, in our opinion, fully corresponds to their fundamental value," Pavel Capouch of Stratego Invest told Czech news agency CTK. Analysts are concerned that politicians holding posts at the company have done virtually nothing to enhance its credibility. Unipetrol lost 10.6 percent of its value during its first six weeks of trading on the Prague Stock Exchange. "In our opinion, this was the result of investors' shift to a more realistic view of the company," said Martin Vojta, analyst at Patria Finance. He added, "Our sales and profits estimates do not justify a 'buy' recommendation." Unipetrol Holding, whose nominal assets are worth a reported 18.13 billion Kc ($549 million), consists of four main subsidiaries: the Ceska rafinerska refinery (51 percent owned), petrochemical producers Chemopetrol (100 percent) and Kaucuk (both 100 percent), and the Benzina fuel retail chain (100 percent). Other Unipetrol holdings include Torol and K-Petrol, as well as the retail fuel chains of Chemopetrol and Kaucuk. The Czech weekly Tyden reported Oct. 27 that prior to reducing its share in Unipetrol to 51 percent, the government first intends to raise its stake in the holding company from 63 percent to 75 percent. It plans to do so by transferring 50 percent of its 100 percent stake in pipeline and fuel storage company CEPRO, 73 percent of its share in chemical-processing firm CHZ Sokolov, and 36 percent of the chemical firm Spolana. Finance Minister Ivan Pilip said on Oct. 30 that only the government's 73 percent stake in CHZ Sokolov would be transferred to Unipetrol to increase the firm's basic share capital. Critics of the earlier proposal argued that the government risks allowing a strategic company to fall into foreign control. While the proposal, made by the Ministry of Finance and the Ministry of Industry and Trade, recommends the sale of Unipetrol to an institutional investor such as a U.S. investment fund, the report's authors nevertheless warn that the state's share should not fall below 51 percent.
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