Romania's AVAS Asks Petrom To Annul Spin-Off Deal

Romania’s privatization agency AVAS, which owns 20.6% in oil and gas company Petrom (SNP.RO), asked the company’s majority stockholder OMV AG (OMV.VI) to annul the Petromservice takeover deal, fueled by the high acquisition price.

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AVAS, which owns 20.6% in oil and gas company Petrom (SNP.RO), filed a legal complaint Friday against a shareholders’ decision to increase the company’s 2007 investment budget.

AVAS asked for a partial annulment of the shareholders’ decision to revise the 2007 investment budget.

The company said the first court hearing is scheduled for March 6.

Petrom, majority-owned by Austria’s OMV AG, beefed up in November its 2007 investment budget with an additional 114 million lei (EUR1=RON 3.6521) to a total RON3.865 billion.

The Romanian state, which holds the 20.6% stake in Petrom through AVAS, voted against the budget revision.

Petrom’s spokesman Dan Pazara said at the time AVAS received all the necessary documents in due time, but added the agency asked for more detailed documents a day before the meeting.

Sources in AVAS said that through the budget rectification, Petrom paid part of the deal with Petromservice. Petrom’s representatives corroborated this information.

Petrom (SNP.RO) bought last autumn some of Petromservice divisions for EUR328.5 million. Petrom also took over 9,800 Petromservice employees.

Petrom said it planned to invest some EUR90 million over the next few years in upgrading the company.

Romania's Competition Council authorized the deal end-January.

Petromservice split from Petrom, majority-owned by Austria’s OMV, in 2002, when the oil company outsourced its maintenance operations. It maintains and operates oil drilling units, pipelines and oil fields.

Petrom is the largest corporation in Romania and the largest gas and oil producer in Southeastern Europe. In December 2004, Petrom was privatized and became a part of OMV AG (OMV.VI), which is the majority shareholder.

Other shareholders are AVAS with 20.64%, investment fund Fondul Proprietatea with 20.11%, the European Bank for Reconstruction and Development with 2.02%, and the remaining 6.21% is distributed among other individual and corporate shareholders.

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