Hungary Asks MOL to Consider Croatia INA Stake Sale -- Update

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By Margit Feher

BUDAPEST--The Hungarian government Wednesday asked oil and gas company MOL Nyrt. (MOL.BU) to consider selling its 49.1% stake in Croatian peer INA d.d. (INA.ZG), while rejecting efforts by Zagreb to regain control over INA by issuing an arrest warrant for MOL's top executive.

"The Hungarian government--representing the Hungarian state, the biggest single owner in MOL--requests MOL's management to review the company's portfolio and (if it decides so) prepare the sale of the INA shares it holds to the Croatian government or to a third party," the government said in a release.

The Hungarian state holds a 24.6% stake in MOL, which owns a 49.1% stake and management rights in INA. The Croatian government owns 44.8% of INA.

Croatia Friday issued an arrest warrant for MOL Chairman and Chief Executive Zsolt Hernadi who had failed to show up for questioning in connection with a corruption case in which the former Croatian prime minister Ivo Sanader was convicted.

Mr. Sanader was jailed for 10 years in November for taking millions of dollars in bribes from MOL for granting the company full management rights over INA in 2008. He was prime minister from 2003 to 2009.

The Hungarian energy utility has totally fulfilled its obligations toward INA under its management agreement and has invested nearly 3 billion euros ($4.06 billion) in INA over the past few years, whereas the Croatian government only partially or didn't satisfied its obligations, the Hungarian government said in its release.

The Hungarian government, which is also seeking to regain control over various energy firms through some stake buybacks and acknowledges that the state has the right to decide in which sectors it wants to own assets, regards Croatia's course of action as unacceptable, Hungary said.

"Exhorting pressure with means outside the realm of economy...is unacceptable in the European Union and Hungary cannot leave these steps unanswered," the Hungarian government said.

Hungary's government decided Wednesday that its Foreign Minister Janos Martonyi won't attend a summit in Croatia Thursday.

Hungary will explore the legal possibilities on what civic and criminal measures it could take to "remedy the grievances suffered by MOL and the Hungarian State," the Hungarian government added in its release.

MOL said earlier Wednesday it would defend itself over the "outrageous actions" against Mr. Hernadi, which aimed at "intimidating both the company and its chairman."

Croatia's state attorney, the Zagreb country court and the justice ministry didn't immediately respond to phone calls seeking comment. The Croatian government was also unavailable to immediately comment.

(Veronika Gulyas in Budapest contributed to this story.)

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