A plan to finance acquisitions by raising share capital and selling bonds has prompted investors to dump the shares of OMV, the largest central European petroleum company.
Shares of the Austrian integrated energy and chemicals group, in which Abu Dhabi's International Petroleum Investment Company (Ipic) holds a 20 per cent interest, fell more than 4 per cent in Vienna early yesterday, suggesting investors were unhappy that OMV had decided not to sell assets to meet part of its financing requirements.
Earlier, the company said it was considering selling shares or hybrid debt securities - bonds with a long repayment horizon and options to skip interest payments - as well as asset sales to finance major acquisitions in Turkey and Tunisia.
"What we didn't expect is that they would do both - hybrid and capital increase," Thomas Unger, an analyst with Erste Group, told Reuters. "I do believe some were hoping for an alternate solution, a non-dilutive solution, such as the sale of its stake in [the plastics maker] Borealis."
Borealis, based in Vienna, is a joint venture between OMV and Ipic in which the Austrian partner holds 36 per cent.
Last Thursday, Mark Garrett, the chief executive of Borealis, declined to dismiss suggestions that Ipic might buy out OMV's interest. "There's always a possibility," he said.
"The sale of Borealis could be a viable way to avoid a share sale," Philipp Chladek, an analyst at Raiffeisen Centrobank, told Bloomberg News, estimating the value of the stake at €1 billion (Dh5.22bn).
But such a transaction was probably never on the cards, as Ipic places a high value on the plastics research and technology input it receives from OMV as its partner in Borealis.
As an additional sign that Ipic envisages a long-term relationship with its Austrian partner, its managing director, Khadem al Qubaisi, is one of two deputy chairmen on OMV's supervisory board.
Instead, OMV yesterday announced plans to sell up to 27.2 million new shares through a rights issue permitting its current shareholders to subscribe for one extra share for each 11 already held.
The final subscription and offer price will be determined after a book-building process running from today until June 6, but the price would not exceed €33 a share, the company said.
Any unexercised rights would be placed in a public offering in Austria and a private placement to institutional investors outside the country.
Ipic did not respond to questions about whether it would participate in the rights offering or private placement.
OMV said it planned to use proceeds of the rights issue to refinance its €1bn acquisition last year of 55.4 per cent of Petrol Ofisi, which raised its holding in Turkey's biggest fuel retailer to 96 per cent, and its January acquisition for US$866 million (Dh3.18bn) of the Tunisian oil and gas subsidiaries of the Texas company Pioneer Natural Resources.
OMV said it would issue hybrid notes to maintain its investment-grade credit rating.