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ANALYST VIEW - Hungary's MOL says may sell new shares - KBC

Wednesday, September 2, 2009 09:25:00 AM

Hungarian oil and gas group MOL is in talks with banks to obtain financing for the company's future investments and may sell new shares as part of the funding programme, CEO György Mosonyi told Bloomberg. KBC Securities said that while there is little chance for new shares soon, the market could respond to the news negatively, fearing potential share dilution.

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“According to our information MOL prefers banking loans and corporate bonds rather than capital increase. Convertible bond, however, can be an option where MOL can issue new share to put behind," commented Péter Tordai, analyst at KBC Securities in Budapest on Wednesday.

“These shares would be set aside until the bond expires and likely vote with the management thus providing an effective defence against a takeover attempt. Although we see little chance for new shares soon, market reaction might be negative on the potential share dilution," he added.

Tordai noted that sentiment is “very sensitive on news where investors feel that MOL management is driven by defence goals rather than the economic rationale."