Mol Drops to 15-Month Low on CEO Arrest Warrant: Budapest Mover

Mol Nyrt. fell to the lowest in more than 15 months after Croatia issued an arrest warrant for Chief Executive Officer Zsolt Hernadi over a bribery probe into the Hungarian refiner’s purchase of a subsidiary in Zagreb.

The stock dropped as much as 2.5 percent and closed 1.9 percent down at 15,700 forint in Budapest, the lowest since June 2012. About 142,000 securities changed hands, 2 1/2 times the three-month daily average.

The shares extended losses after Hungary’s government said Mol should be prepared to sell its stake in INA Industrija Nafte d.d. Croatia and Mol are in dispute over the Budapest-based company’s ownership of the $7.3 billion refiner. Former Croatian premier Ivo Sanader is serving a prison term for corruption related to the 2009 agreement that gave Mol control.

“The arrest warrant casts a dark shadow on ongoing talks between Mol and the Croatian government over INA’s management rights,” analysts led by Jozsef Miro at Erste Group Bank AG’s brokerage in Budapest said in an e-mailed note today. “We expect lengthy negotiations that will delay INA’s restructuring.”

Croatia has issued a European Union warrant against Hernadi, police spokeswoman Jelena Bikic said by text message late yesterday. Mol will defend itself and its employees by all legal means against the “outrageous actions,” the company said in a statement to the Budapest bourse. Hernadi will be able to lead Mol even as the warrant may keep him from traveling abroad, it said.

Hungary would evaluate possible legal steps to counter damages resulting from Croatia’s “unacceptable” effort to “intimidate” Mol, the government said in an e-mailed statement.

Ownership Talks

Croatia, the European Union’s newest member, has sought to re-assert control over INA since the 2009 deal. Mol has a 49.1 percent share in the $7.3 billion company, while the government owns 44.8 percent. Officials from the two sides agreed on Sept. 18 to meet once a month to discuss cost control, investment and profit sharing, and other issues.

Croatia expects to continue the negotiations with Mol and will stick to the agreed schedule, Economy Minister Ivan Vrdoljak, who heads the negotiating team, told reporters in Zagreb today.

Mol has dropped 4.4 percent in the past three months, the fourth-biggest decline among 16 eastern European energy companies tracked by Bloomberg. Four analysts recommend investors buy the shares of Mol, while 10 have a hold rating and five say sell, according to data compiled by Bloomberg.

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