STA, 8 November 2019 - The supervisory board of energy trader Petrol, which has been subject to mounting criticism in recent weeks for failing to explain October's unexpected management board overhaul, said on Friday the former management had never put forward credible documentation to support plans that substantially departed from the company's strategy.
The explanation comes after the supervisors cited "significant differences of views with respect to the implementation of the 2018-2022 strategic business plan" on 25 October and later argued the former management did not consent to the disclosure of detailed circumstances.
Friday's press release says the Tomaž Berločnik-led management had been urged on several occasions to draw up credible documents that would allow the supervisors to take an informed decision.
This was done because "the material contained errors in the magnitude of several hundred millions when it comes to calculated cash flow and the amount of new debt needed to finance the investments".
"The supervisory board assessed the material to be misleading, which is why it was unable to adopt any decisions on its basis."
The supervisors wrote that the management's plans departed from the strategy until 2022 in that they involved "multifold" increases regarding the size of the investment and the sources needed to finance it.
The supervisors added the documentation had been supplemented several times as a result of the doubts expressed, "but the remarks and demands of the supervisory board for additional explanations and corrections were not observed".
They are confident the documentation was misleading in that it presented a substantially incorrect amount and type of credit, including costlier subordinated debt.
"The importance of the dynamics and size of the planned investment and the associated risks are also highlighted by Standard & Poor's Rating Services in its credit rating justification, where it notes the key risk of major investment (in the amount of EUR 521 million in line with the adopted strategy) in the coming years, mostly outside of the company's core activities," the supervisory board wrote.
The former Petrol management board retorted by accusing the supervisory board of withholding information.
"We have consented to the disclosure of agreements on early termination to secure equal access to information to the shareholders. Clearly the supervisory board is withholding the content of these agreements so that it can offer its positions to the public," the former managers said in a message circulated by the Zdolšek Law Firm.
"The shareholders' meeting is the body which decides on disagreements between management and the supervisory board when they occur. We hope to be given the opportunity to explain our positions."
Explanations regarding the 25 October management overhaul were recently also requested from the supervisors by the government through the SSH state asset custodian.
SSH announced a shareholders' meeting by the end of this week after assessing the scarce additional explanations provided on 30 October as insufficient. The supervisors in turn said they would discuss the call for a shareholders' meeting at their session next Thursday.
Media reported last week that a legal opinion drawn up for the supervisors had revealed the management had changed the sum total of the planned investment several times. The fresh debt needed to finance it was put at around a billion euros, twice the sum envisaged in the 2022 strategy.
The supervisors subsequently explained they had not approved this and that the strategic plan remained unchanged.
