Board comment on EGM agenda
COMMENT OF THE BOARD OF DIRECTORS OF MOTOR OIL (HELLAS) ON THE ITEMS OF THE AGENDA OF THE EXTRAORDINARY GENERAL SHAREHOLDERS MEETING TO BE HELD ON MARCH 14TH, 2011
Pursuant to article 27 of the Codified Law 2190/1920 as it is in force, the comments of the Board of Directors of MOTOR OIL (HELLAS) S.A. on the items of the daily agenda of the Extraordinary General Shareholders Meeting to be held on Monday March 14th, 2011 at 10:00 hrs at the Headquarters of the Company at 12A Irodou Attikou street at Maroussi are presented hereunder.
With regard to the first item on the agenda
“Approval of issuance of three common Bond Loans, according to article 6 of Law 3156/2003, for amounts of up to 200,000,000 EURO, 50,000,000 EURO and 50,000,000 EURO respectively and provision of authorisation to the Board of Directors to negotiate the specific terms with the Banks / Financial Institutions and attend to the procedural matters relating to the issuance of the loans. The loans in question will replace existing short term bank liabilities of equal amounts” the Board hereby notes the following:
During 2010 the Company acquired the shares of the companies “Coral S.A.” (previously “Shell Hellas S.A.”) and “Coral Gas AEBEY” (previously “Shell Gas A.E.B.E.YGRAERION”) while the new Crude Distillation Unit (new CDU) of a processing capacity of 60,000 barrels per day was put in operation.
The acquisition of “Coral S.A.” and “Coral Gas AEBEY” as well as the new CDU investment concern a time frame well beyond that of one accounting period. The financing of the acquisitions and the new CDU project was facilitated through the increase of the credit lines granted to the Company from the credit institutions with which it traditionally does business. As a result, a restructuring of the Company’s existing bank liabilities, by converting part of its short term to long term debt, is deemed necessary.
With regard to the second item on the agenda
“Approval of issuance of two common Bond Loans, according to article 6 of Law 3156/2003, for the amounts of up to 100,000,000 USD and 50,000,000 EURO respectively and provision of authorisation to the Board of Directors to negotiate the specific terms with the Banks / Financial Institutions and attend to the procedural matters relating to the issuance of the loans” the Board hereby notes the following:
Following the developments in the fronts of acquisitions and investments mentioned earlier, it is necessary that the Company adapts to the new conditions (enhancement of its activities – increase of Refinery processing capacity by 50%). To this end, additional funding must be secured, to finance the Company’s permanent higher working capital requirements, part of which denominated in USD which is the currency in terms of which the supply of crude takes place.