Earlier this morning, Petrol published an announcement on the Ljubljana Stock Exchange providing further clarification regarding the divergence between the Management Board and the Supervisory Board as regards the execution of the Company strategy.

The divergence between the Management Board (MB) and the Supervisory Board (SB) of Petrol, Ljubljana as regards the execution of the strategy relates to proposals made by the MB that would lead, if approved, to significant departure from the Strategic Business Plan for the period 2018 – 2022.

The SB further states that the MB never provided the SB with any credible materials on which a decision could have been based. The SB states that they have requested on several occasions for such materials to be prepared as the materials provided contained errors of several hundred million in cash flow calculations and in the amount of debt required to finance the investments. The SB deemed the materials provided by the MB to be misleading and was unable to take any decisions based on them. The SB further states that the materials, which were not approved but would lead, if approved, to significant departure from the Strategic Business Plan for the period 2018 – 2022, were discussed by the SB and the MB at several SB meetings in October 2019.

The SB called, on several occasions, for additional explanations to be provided by the MB and for the materials to be revised in order to be able to carry out a thorough examination of all aspects of such considerable departures from the strategy. The significant departure from the strategy relates both to the amount and the dynamic of investments required in the future as well as to the amount and the type of sources of finance needed to carry out the investments.

As the SB expressed doubts as to the accuracy and credibility of the calculation of the required sources and types of finance, the materials were indeed revised several times, but did not reflect the comments made by the SB and its requests for additional clarification and revisions. In this respect, the SB deems that the materials contained misleading information as the envisaged amount and type of debt (including a more expensive, subordinated debt) were deeply erroneous. The importance of the dynamic and amount of the envisaged investments as well as the related risks were also highlighted by Standard & Poor’s in their credit rating justification, pointing out a key risk of making large investments (of EUR 521m, according to the strategy) mostly outside the Company’s core activities in the coming years.