By Kerin Hope
Athanasios Karachalios, managing director of Hellenic Petroleum, wants to make Greece’s state controlled oil refiner and products distributor the leading petrol retailer in south-east Europe after a €2bn ($2.3bn) merger agreed at the weekend with Petrola, the oil refining arm of the Swiss-based Latsis group.
The merged group would provide the extra resources to fulfil this ambition, he said, and would control four refineries – three in Greece and one in neighbouring Macedonia – with total capacity of 17m tonnes yearly. It would also have th ebiggest oil storage facilities in the region.
“The deal enables Hellenic to make the leap from national refinery to regional player with sales above €4bn,” Mr Karachalios said. “With improved political stability, there are good growth prospects in the Balkans.”
Latsis, a Greek family-controlled group with interests in oil, shipping and financial services, would become a strategic investor in Hellenic with a 25 per cent stake, although the Greek state would retain the right to hire and fire senior managers for five more years.
Latsis would pay €326m in cash for 16.65 per cent of Hellenic reducing the Greek state’s shareholding to 35 per cent. According to a preliminary share swap agreement, Latsis would hold 8.4 per cent of the merged group.
Mr Karachalios has been waiting for the Greek government to make a strategic deal. A preliminary agreement for Russia’s Lukoil to acquire 25 per cent of the group in partnership with Latsis collapsed in January after a year of negotiations.
Petrola’s refinery, situated close to Hellenic’s main facility near Athens, requires substantial investment to meet tighter EU environmental regulations from 2005. But the company has €100m of cash available from a public offering on the Athens stock exchange.
“The additional 25 per cent capacity from Petrola would give us an immediate boost.Our networks in and outside Greece are currently taking up 90 per cent of output,” Mr Karachalios says.
The merger would also give Hellenic access to other Latsis assets, including its tanker fleet and expertise in investment banking foreign currency and oil trading.
Hellenic is already preparing a bid for Beopetrol, the Serbian state-owned petrol chain due to be privatised this year. In Greece, Hellenic has an 18 per cent share of the retail market, with a nationwide chain of 1,300 petrol stations. Last year it acquired BP’s storage facilities in Cyprus and a network of 70 retail outlets.
(From Financial Times 03/06/03)