Sale prices are between 24 and 32 RON/share and the sum expected to be obtained stands between EUR 311.7 M and EUR 415.6 M. The shares will be sold on the Bucharest Stock Exchange and London Stock Exchange.
The offer in which the state wants to sell 15 pc of the shares in Romgaz will begin Tuesday, one day later than announced Friday by officials of the Energy Department, because the legislation provides an interval of two workdays between the approval of the pamphlet and the start of the operation, Mediafax reports. The pamphlet of the operation was approved Friday night by the Financial Supervisory Authority (ASF). The offer will last eight workdays, until October 31.
The state wants to sell 15 pc of Romgaz shares at prices of 24 – 32 RON/unit, which will bring a sum between RON 1.38 bln (EUR 311.7 M) and RON 1.85 bln (EUR 415.6 M). The offer will run on the stock exchanges of Bucharest and London. The operation will conclude successfully if at least 70 pc of the respective shares are sold. If this is the case, even if they sold at the minimum price of 24 RON/unit, the state would earn RON 971.2 M (EUR 218.2 M).
A tranche of 15 pc of the shares will be reserved for small investors and the difference of 85 pc will be allocated to institutional investors. Both categories of investors may place subscription orders both for shares and GDRs (deposit certificates with asset on the shares in the offer. The GDRs will be listed on the London bourse and grant investors similar rights to those of shares. Small investors will benefit from discounts only for the first 10,000 subscribed shares, not for GDRs. For the orders placed in the first week the discount will be 5 pc and the second week the discount will be of 3 pc of the final price, which will be established based on the subscriptions of institutional investors. The consortium includes the American bank Goldman Sachs, Erste and BCR. Small investors may subscribe at the top price of 32 RON/share, while institutional investors may place orders anywhere in the interval 24 – 32 RON/share. Retail investors may subscribe minimum 100 shares or 10,000 GDRs (which have active support 10,000 shares), but no subscription limit is imposed for institutional investors.
Substantial investments to keep Iernut power plant in operation
The listing of Romgaz will be the first in which part of the shares will be sold on foreign markets, through deposit certificates with support asset on the shares in the offer. The natural gas producer Romgaz Medias must make “substantial” investments in order to keep operational the power plant of Iernut, Mures County, and by 2016 it must reduce the power of the unit, so that it complies with environment conditions, the company announced. Romgaz took over the Iernut plant in February this year, from another state-run company, Electrocentrale Bucuresti, to the account of outstanding debts worth RON 653 M, representing the price of the gas it purchased from the Medias-based company. Through this transaction, Romgaz became the second company in Romania, after OMV Petrom, which benefits from a government decision that allows gas and electricity producers to use their own gas for the generation of electricity. Until now, Romgaz invested RON 43.1 M in the Iernut plant and anticipates “substantial” investments in this unit. The Iernut plant has a quota of up to 5 pc of Romania’s electricity generation market.
Government might take inappropriate decisions for the company
The top management of Romgaz Medias expects the government will continue having a significant influence upon the company after its listing on the stock exchange and make some decisions that will not be an economic “success” for the gas producer. “The government of Romania will further have a significant influence upon the company after the offer and its interest might not correspond to the interests of the other shareholders in the company. (…) There is no kind of assurance that the new government will continue the strategy started by the previous government with regard to solving the structural problems of the Romanian economy,” reads the pamphlet posted on the site of the Bucharest Stock Exchange, together with the sale announcement and part of the offer characteristics, including the price limits and the sale duration. “Previous experience showed the possibility of major government’s intervention in companies with integral or majority state capital, including in the company (Romgaz). (…) Such conversions may also imply significant risks, inclusively, but without being limited to, legal obligations or actions for Romgaz, or they can prove economically unsuccessful or nonconform to the wishes of minority shareholders,” reads the pamphlet. Observing the government’s decisions might also cause the increase of capital expenses for the company and might delay or prevent a series of operations. The document mentions the government imposing the company to donate RON 400 M to the state budget in 2010, a decisions then challenged by Fondul Proprietatea, minority shareholder in Romgaz.
Over USD 12 M for entering the partnership with Exxon and Petrom
Romgaz will pay over USD 12 M if it joins the partnership ExxonMobil – OMV Petrom aimed at exploiting and developing the Midia perimeter in the Black Sea, but it has the right to do this only if commercial deposits are found there, mentions the listing pamphlet of Romgaz. On 13 February 2013 Romgaz signed an agreement with OMV Petrom and Exxon which gives the state company the option of purchasing 10 pc of the deep sea perimeter Midia of the Black Sea.