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Orlen – Lotos merger. New deadline for implementation of remedial measures – decision of the European Commission

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Preparations are underway for the merger of PKN Orlen and Lotos. The European Commission gave PKN Orlen consent to extend the deadline for the implementation of remedial conditions until January 14, 2022, informed the concern from Płock. The planned takeover is to take place in the first half of 2022.

The previous deadline for the implementation of remedial measures for the merger of Orlen and Lotos, set by the European Commission, was to expire on November 14 this year.

Implementation of countermeasures – what does it mean?

In order for the entities controlled by the State Treasury to merge, Orlen must sell some of the assets of the Gdańsk-based company. It goes, among others by 30 percent refineries, 80 percent its stations and part of its logistics infrastructure. This is called countermeasures against monopoly.

PKN Orlen explained that “the complexity of the process in a very demanding macroeconomic environment requires additional time to negotiate with partners in order to obtain the best possible transaction conditions and enable corporate decisions to be made also on the part of the partners”.

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“PKN Orlen is finalizing contracts with partners for the implementation of remedial conditions, which will guarantee the further business development of the companies involved in the proceedings. At the same time, activities are carried out to prepare both companies for the merger process” – reads the release.


Orlen fusion with Lotos – deadline

At the same time, representatives of the Płock concern assured that the extension of the deadline did not affect the completion date of the Lotos acquisition process. This is to take place, according to the schedule, in the first half of 2022. The company estimates that the decision-making process of the European Commission, after presenting the Commission with the method of implementing remedial measures, may last about three months.

“Our goal is to choose such business partners who will guarantee energy security and dynamic development of the connected companies. We are at the last straight stage leading to the signing of contracts with partners. The extended deadline agreed with the European Commission for submitting documents related to the implementation of remedial conditions gives us the comfort of fine-tuning This is the time we intend to make good use of “, said the president of PKN Orlen, Daniel Obajtek, quoted in the press release.

As he emphasized, “the priority is to carry out the transaction in such a way that it is beneficial for the Polish economy, both companies and their clients as well as shareholders who believe in the business sense and the success of this strategic project”.

Orlen fusion with Lotos – conditions

The remedial measures designated by the European Commission in July 2020 include: sale of 30 percent shares in the Lotos refinery along with the accompanying large package of management rights. This is expected to give the buyer the right to nearly half of the refinery’s diesel and gasoline production while providing access to vital storage and logistics infrastructure. Another condition is the sale of nine fuel depots to an independent logistics operator and the construction of a new jet fuel import terminal in Szczecin, which – after completion – would be handed over to this operator.

The EC also ordered the sale of 389 fuel stations in Poland, which constitute approximately 80 percent. Lotos chain, sale of 50 percent. Lotos’s participation in a joint venture with BP, dealing in trading fuel for jet engines. In addition, making available to competitors in the Czech Republic up to 80 thousand. tonnes of jet fuel through an open tender procedure, sale of two bitumen production plants in Poland and delivery to the buyer annually up to 500 thousand. tons of bitumen or the so-called heavy residues.

PKN Orlen reminded that on October 14 this year. The extraordinary general meeting of Grupa Lotos shareholders adopted resolutions which allow for the presentation of remedial measures to the EC and made it possible to implement an intra-group reorganization on November 2, consisting in the integration of the entire refinery complex in one entity – Lotos Asfalt. “The separation of the refinery in Gdańsk is a milestone in the implementation of the remedial conditions” – underlined.


The stages of the merger of Orlen and Lotos

As the company said, a set of conditional sale agreements will be submitted to the EC to investors of all assets indicated by Brussels in the conditional concentration decision, as well as a set of corporate approvals on the part of PKN Orlen and the Lotos Group, allowing for the implementation of measures. For the final merger of both companies, it will be necessary to obtain the consent of the shareholders of both companies. Shareholders will vote in favor of the merger after obtaining the binding consent of the European Commission to the concentration, Orlen reminded. The process of taking over the capital of Grupa Lotos by the Płock concern was initiated in February 2018 by signing a letter of intent with the State Treasury, which holds 53.19% of shares in the Gdańsk-based company. votes at the general meeting of shareholders.

Main photo source: lotos.pl

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