Orlin said in a statement published on Monday evening that the sale of part of Lotus’ assets was carried out in accordance with the market valuation of these assets. Płock referred to the Supreme Audit Office's report, according to which Saudi Aramco paid PLN 7 billion, PLN 200 million less for the Lotos portion than it was entitled to.
In July 2023, the Financial Supervision Bureau prepared a report on, among other things, the merger of Orlin with Lotus after the inspection by the Ministry of State Assets. The as-yet-unpublished document was found by TVN24's Black and White journalists Lukasz Fračak and Dariusz Kubik. According to the Supreme Audit Office, Saudi Aramco paid PLN 7.2 billion less for the Lotus stake than it was entitled to..
A more comprehensive discussion of the entire report obtained by TVN24 reporters is already available, including Jacek Sassen's translation. On Tuesday, January 23 in the program “Black and White” on TVN24 at 8:30 pm and also on TVN24 GO.
On Monday evening, Orlin's press office published a statement regarding “the alleged findings of the Supreme Audit Office in connection with the merger with Groupe Lotus.”
Orlin regarding the valuation and sale of Lotos assets
“Orlen’s merger with Grupa Lotos was of key importance to enhance the country’s raw material and fuel security,” according to the Bück-based company. “Thanks to this deal, the Gdańsk refinery is also provided with the necessary funds for the investments necessary to adapt its business to the requirements of the EU climate policy,” we read in the statement.
According to Orlin's assurances, “the sale of part of the assets of Lotus, resulting from the implementation of the remedial measures indicated by the European Commission, was carried out in accordance with the market valuation of these assets, in full compliance with the legal provisions and under the supervision of state authorities.” “With this in mind, the Supreme Audit Office’s allegations regarding the Orlin-Lotos merger are not justified,” she added.
“The evaluation and sale of Lotos' assets took place on market terms,” Orlin's press office reported. “The valuations were prepared by independent external consultants. The entire process was carried out in accordance with the law, and the transaction was approved by the European Commission. The valuations were also accepted by the statutory auditors and shareholders of Lotos and Orlen,” we read. .
In Płock's opinion, “In this context, it is inappropriate to use the book value of Grupa Lotos as a reference point, which has no relation to the market value of the company.” “At the time when Orlin was finalizing the merger with Grupa Lotus, approximately 150 companies on the stock exchange were valued at less than their book value.”
Who was interested in buying Lotos assets?
Information provided shows that inquiries regarding the sale of Grupa Lotos assets “were directed to dozens of selected companies, of which only a few responded.” It was noted that “credible strategic investors or even infrastructure funds from Europe or North America were not interested in purchasing the refinery or logistics assets.”
According to Orlin, “This is a direct result of the acceleration of the energy transition.”
“The fuel market is systematically shrinking, and more refineries are closing in Europe. This only proves the validity of the merger of Grupa Lotos with Orlen in order to create a strong entity capable of implementing the costly strategy of shifting its assets towards emissions neutrality,” she said.
Impact on Gdańsk Refinery
The company's press office said in a statement that “from the beginning of the merger of Orlin with Lotus, the European Commission expected the entire refinery in Gdańsk to be sold.” “However, Orlene negotiated to retain a majority stake in the separate company, of which it is the operator and which it can effectively manage today,” he added.
Płock also emphasized that as a result of the merger with Lotos, the State Treasury “has not lost its influence on the operations of Polish refineries.” “Moreover, as a result of the acquisition of Grupa Lotos, and later also PGNiG, the state treasury increased its stake in Orlen – before the merger with Grupa Lotos it was 27.52 percent, and after all completed acquisitions it was almost 50 percent.” – It was written.
It was added that “70 percent of the shares of the company operating the refinery in Gdańsk remained in the hands of Orlin, who has a decisive influence on the company's corporate decisions.” As we read in the statement, representatives of the Polish concern “constitute the majority of the members of the Board of Directors and the Supervisory Board of this company.” It was also emphasized that “the shareholders agreement was developed based on the best market standards and protects Poland’s interests.”
According to Orlin, the countermeasures accompanying the merger with Lotus did not pose a risk to Poland's fuel security. He stressed that “(…) one of the important effects of the merger is the increased ability to negotiate favorable contracts and strategic partnerships with reliable suppliers and increased spending on investments, which enhances the security of supplies of raw materials and products.”
Agreement with Saudi Aramco
It was emphasized that the basis for Orlen's merger with Grupa Lotus is the agreement with Saudi Aramco, which “effectively secures interests and ensures fuel security in Poland.” It was noted that the contract was examined by the Office of Competition and Consumer Protection.
In the statement, Orlin also commented on allegations that the joint venture agreement has veto power. “Every joint venture agreement lists, without exception, the issues that can only be decided jointly – it is for this purpose that such agreements are primarily concluded. No investor would decide to acquire a minority stake in any business if he had to make all the decisions without We read: “The exception is made to his larger partner, because that will not protect the minority partner from depleting his value.”
It was also confirmed that the contract with Saudi Aramco stipulates that the rights of minority shareholders “shall not lead to paralyzing the business or harming the entity’s profits.”
Orlen emphasized that due to its strategic nature, the entire merger process with Grupa Lotos was carried out under the continuous supervision of the corporate bodies of all companies, and given the importance of the deal in the context of Poland's energy security, and also in consultation with all relevant state authorities.
As emphasized, the state authorities were “provided with access to all necessary information.” “This also concerns the Minister of State Property (Jacek Sassen – editor)” – it was added.
Main image source: Novikov Alexey/Shutterstock
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