* Lotos shares drop by as much as 19 percent
* Unicredit gives less than 50 percent chance of survival
* Lotos dismisses bankruptcy risk, says in good shape
(Adds regulator on legal steps in paragraphs 7-8)
By Patryk Wasilewski
WARSAW, Nov 24 (Reuters) - Lotos <LTOS.WA> denied on Monday
it was in financial difficulty after its shares plummeted on a
Unicredit report highlighting some of the underlying worries
about the company's exposure in the global credit crunch.
In the first sign of a major Polish company being seriously
impacted by the crisis, Lotos shares dropped by as much as 19
percent on Monday, hitting an all-time low of 11.04 zlotys after
traders said Unicredit slashed its target price for Poland's
No.2 oil refiner to zero from 25 zlotys.
Unicredit, which gave a less than 50 percent chance of the
company surviving, said in its report the cut was linked to a
significant rise in Lotos' debt levels needed to implement an
extensive, long-term investment programme.
Lotos said in a statement its investment plan was not at
risk and it called the report an attempt to discredit the
company in the eyes of investors.
"The management board states that the company is in a good
condition. Its liquidity, both short and long term, is under no
threat," the statement said.
"In particular, suggestions of potential bankruptcy have no
backing in facts," Lotos said, adding that it would take legal
action on the matter.
The Polish market regulator KNF said on Monday it was
investigating the report for potential malpractice and price
manipulation.
"The KNF is looking into the Unicredit report issue and the
prices for signs of Lotos price fixing. We are also checking
whether Unicredit did not break regulations regarding
recommendations," said KNF spokesman Lukasz Dajnowicz.
A market source who saw the report told Reuters: "Unicredit
said it does not see any value in the company and estimates its
survival chances at less than 50 percent.
BAD TIMING
Other analysts based in Warsaw were not as negative about
Lotos' outlook, but said the timing for an extensive investment
programme was particularly bad.
Kamil Kliszcz, an analyst at BRE Bank said: "The timing is
not the best as the company is being forced to take significant
loans in current market conditions. This also coincides with two
quarters of weak financial performance by the company."
Lotos had a 238 million zloty ($77.47 million) net loss in
the third quarter and its chief financial officer Mariusz
Machajewski at the time did not rule out that it would continue
to be hit by financial losses in the fourth quarter.
Lotos took a $1.75 billion loan in June to finance its
long-term investment plan that is supposed to boost its refining
capacity to 10 million tonnes from 6 million tonnes. The debt
level may even rise to 70 percent of capital, Machajewski said
in August.
Lotos shares have shed over 70 percent this year, more than
the market, as falling oil prices and fears of global recession
took a heavy toll. At 1340 GMT shares were down 7.8 percent at
12.58 zlotys.
The Lotos case is the first indication that the ongoing
global credit crunch might affect even the heavyweights of
Polish industry, especially those with significant credit
exposure or investment needs.
Economists say Lotos is unlikely to be the last such case as
Poland's economy, which saw robust growth of 6.7 percent last
year and is expected to reach 5.2 percent in 2008, heads for a
major slowdown in 2009 and access to credit falls sharply.
"I think a lot of companies will have similar credit
problems. I would say this is a baseline scenario for the entire
region in 2009," said BNP Paribas economist Michal Dybula.
"This will impact corporate operations and I would be
expecting pink slips (redundancies) to start being handed out
after the New Year."
(Editing by Chris Wickham)
