Bid on Inchon Oil to be finalized
(China Daily)
Updated: 2005-08-20 09:01

A final decision on the bidding for South Korea-based Inchon Oil Refinery Co by six multinational rivals, including China's largest chemicals trader Sinochem, is expected within days, Sinochem sources said on Friday.

"The bidding is still in progress, and we expect the South Korean refinery to make their final decision (on the preferred bidder) maybe as soon as in the next three or four days," a senior official at the oil subsidiary of Sinochem on Friday told China Daily in a telephone interview, declining to be identified.

The official refused to elaborate on the price of the Sinochem offer, citing it as "too sensitive."

Zhang Xinghua, a director at the Sinochem president's office, did not comment on the proposed acquisition, but said it was the oil subsidiary that had previously handled bidding. And as for whether the group company is carrying on the current situation, Zhang said "it is not appropriate to disclose this information before the acquisition is finalized."

Six bidders including SK Corp, S-Oil Corp, a group led by STX Corp, Morgan Stanley Emerging Markets Inc, Sinochem and a group led by Citigroup were to submit offers by the 4 pm Seoul time deadline on Thursday, Bloomberg reported, citing Suh Myung Su, one of the judges at the Incheon District Court managing the sale.

They aim to sign a binding agreement in October, it said.

Liu Gu, a senior energy industry analyst at Guotai Jun'an Securities (Hong Kong) Ltd, said it is still difficult to predict whether Sinochem will finally win the bid, since the proposed acquisition has not been a smooth ride, and other bidders are offering more money.

In January, creditors led by Citigroup rejected a 685.1 billion won (US$673 million) offer from Sinochem, saying it was too low.

Citigroup earlier said it may try to buy the refinery for 780 billion won (US$767 million).

Inchon Oil, which has a 275,000 barrel-a-day refinery, was declared bankrupt for defaulting on 20 billion won (US$19.6 million) of loans in 2001 and went into court receivership in March 2003. Citigroup is Inchon Oil's largest shareholder with a 25.7 per cent stake.

Inchon Oil's sales rose 28 percent to 2.5 trillion won (US$2.4 billion) in 2004, while operating income more than doubled to 164.5 billion won (US$162 million), according to statistics from the South Korean refinery's web site.

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