BEHIND ENEA’S DECISSION TO CUT OFF BOGDANKA

On Friday (24th Aug) companies listed on WSE were floating in the sea of red, especially the ones from energy and mining industry. Among these companies, undisputedly the leader title went to Bogdanka, who’s stocks decreased by almost 30%. Commentators were linking that situation with termination the contract for deliveries to Kozienice power plant by Enea. Surprisingly, Enea’s with its 8.84% decrease was also the leader, among the energy groups. What was the plan behind terminating the agreement with Bogdanka? Long-term strategy of building self-efficiency or simple short-term strike for better position in negotiations?

Official statement, posted on Friday was saying that both companies couldn’t reach the consensus in regards to the level of prices for 2016, but that theory was quickly disproved by Bogdanka’s CEO Zbigniew Stopa. Enea’s vice-chairman of the Management Board Paweł Orlof was pointing out, that Bogdanka’s prices were too high as for the current market situation. It is hard to believe though, that the company really thinks that Kompania Węglowa’s “Black Friday” would last longer than a year and that the Silesian coal will be a good replacement of LWB’s product,  considering both production and transportation costs.

Another explanation linked with Silesian mining is connected with rumors about Enea taking over Katowicki Holding Węglowy (inspired by the interview with Krzysztof Zamasz, Enea’s CEO). And although this story is more convincing than simple turning to coal from southern Poland, such an action would require many investments in KHW’s facilities, not mentioning drudgery with the labor unions after any declaration about restructuring HR model in the mines. Long story short: acquiring KHW would be classified as acting to the detriment of the company.

Other commentators suggests that this move could be a beginning of long-dated acquisition process. In the above mentioned interview K. Zamasz did not ruled out the possibility of taking over Bogdanka. Some stakeholders are terrified by the possibility of LWB going back under the MoT’s wings; it is not required to have a vivid imagination to picture SRK forcing Bogdanka to hire employees from Silesian mines being under liquidation. Analogy to the European immigration crisis, with Silesian producers being Italy and Greece, Ministry of Treasury being EU and LWB being Poland or Hungary seems like a right picture.

The most probable reason is the most trivial one – Enea is just using its biggest cannons to force Bogdanka to decrease the prices for next year. So far 2015 was one of the worst periods in LWB’s history and Enea just simply decided to undermine them even more and achieve better prices for 2016. Taking into consideration that Bogdanka is still the best option for long-term cooperation due to the reasonable VC/price ratio and distance to Kozienice power plant, in following months we will probably see Krzysztof Zamasz and Zbigniew Stopa shaking hands again.

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