MOL Denies Chairman, CEO Would Step Down - Agency

BUDAPEST (Dow Jones Newswires), Sep. 17, 2010

MOL Friday categorically denied that the company's Chairman and Chief Executive Zsolt Hernadi would step down before his mandate ends in February 2014.

"Hernadi continues to consider the implementation of MOL's approved strategy as his task," Dora Somlyai, MOL's communications director, told Hungarian State news agency MTI.

Somlyai's comments came in reaction to a report Friday in Hungarian business daily Vilaggazdasag, citing several unnamed sources, that Hernadi would be ousted by the new, Fidesz-party government by the end of September and replaced by Istvan Kocsis, the current CEO of Budapest public transport company BKV Zrt.

Kocsis has already dismissed the report, saying that he hadn't negotiated with anyone on the issue.

According to Vilaggazdasag, Hernadi has ties to the Fidesz party, but his decision to lay off Fidesz-affiliated managers after the party lost the general election in 2002 wasn't tolerated by the party, which won the 2010 general election by a large margin.

MOL is a publicly traded company, whose board of directors is elected by the shareholders, and the chairman is elected by the board of directors. The Hungarian government doesn't have a stake at present in MOL.

"The change of the chief executive in an independent company like MOL cannot be pulled through without agreement of major shareholders," KBC Securities analyst Olin Kyrylenko said in a note.

Hernadi leaving MOL and Kocsis replacing him would be negative for MOL, Kyrylenko added. If Hernadi left, there would be a significant increase in political risk associated with MOL shares, a possible change in MOL's business strategy, and the merger and acquisition strategy could also come into question, Kyrylenko said.

KBC has a 'hold' rating on MOL shares, with a fair value price of HUF18,498.

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