A crucial day for the offering of "Transelectrica"

According to market sources, in today's meeting, the government will decide on the price at which the 15% stake in "Transelectrica" (symbol: TEL), will be sold.

The final prospectus will include a minimum and maximum price, which will be set by the Government.

At the end of the trading session, yesterday, the price of a TEL share was 17.06 lei, which means the 15% stake in the company was worth 187.58 million lei.

The intermediaries of the offering, which have met the foreign investors, in a "road-show" in Europe, will try to obtain the discount requested by investors.

Domestic and foreign investors alike claim that in order for the offering of "Transelectrica" to be successful, the government needs to grant a discount of at least 10%.

Some of the experts of the capital market feel that, if the state won't agree to offer a discount, the offering might be unsuccessful, which would represent a disaster for the stock market.

Through the agreement with the IMF, the government has pledged to sell, through the "Office For The State's Interests and Industrial Privatization" (OPSPI), 10-15% stakes in the companies owned by the Ministry of the Economy.

The first sale offering, which is part of this agreement, is the one conducted by the "Transelectrica" Romanian National Power Grid Company (symbol: TEL).

The Romanian government currently owns 73.6% of the shares of the company, the Proprietatea Fund owns 13.4%, and the free-float is 12.8%.

On October 12th, the consortium consisting of the Romanian Commercial Bank (BCR), "SSIF Intercapital Invest" and "Swiss Capital" was appointed as the winner of the auction for intermediating the offering of 10.99 million shares of "Transelectrica".

An alternative for the sale of the 15% stake in TEL could be the "openbook" method, namely, allowing subscriptions to be conducted through any brokerage firm.

The "openbook" method allows anybody to see how much has been subscribed, but not the names of the subscribers.

The intermediation consortium, together with the majority shareholder will decide whether this method will be implemented, which will then be specified in the end prospectus which needs to be approved by the CNVM.

Using this method for the secondary public offering of "Transelectrica" would be a novelty, because the other offerings (for example that of Petrom) were conducted using the "closed book" method, meaning that the subscriptions could only be performed through the intermediation consortium.

• Transelectrica will no longer buy energy to make up for the losses of the grid at the regulated price

Transelectrica (TEL) will stop buying energy to make up for the losses of the grid at regulated prices, and will buy that energy from the OPCOM exchange instead, in order to comply with the conditions of the IMF to increase the openness of the energy market.

"Losses in the grid amount to about 2% of the national energy consumption. Up to now, the company would buy this energy through regulated contracts, at regulated prices, which are higher compare to those on the free market. The company is resorting to this solution because the IMF has asked for the regulated agreements in the energy sector to be eliminated", sources from the company, quoted by Mediafax said.

The energy bought by Transelectrica is used to make up for the losses of the grid and represents the company's own technological consumption.

According to data from the OPCOM energy market, which is a branch of Transeletrica, the state owned company has launched two calls for bids for the acquisition of 95,500 MWh of electricity, at a price of 230 lei/MWh. The total volume of electricity to be acquired amounts to approximately 22 million lei (over five million Euros).