A FIRST IN THE RIVALRY BETWEEN THE TWO STOCK EXCHANGES SIF Transilvania in favor of floating Aro Palace Braşov on SIBEX

• Sibiu is closer to Braşov than Bucharest is

Even though it was Adeplast that was the first company that was supposed to be listed on the Sibiu Stock Exchange, however this hasn"t happened. In turn, the statement of Mihai Fercală, the chairman of SIF Transilvania, is a firm commitment. That is why this can be considered a first.

Aro Palace is the first company that prefers to be floated on the Sibiu Stock Exchange instead of on the Bucharest Stock Exchange.

• The listing is scheduled for the second half of the year

SIF Transilvania has decided: it will float Aro Palace on the Sibiu Stock Exchange.

Mihai Fercală, the chairman of SIF Transilvania, yesterday said that in the second half of the year, the hotel company Aro Palace Braşov will be listed on SIBEX - the Sibiu Financial and Stock Exchange.

In mid-2009, Mihai Fercală announced that it would float the Braşov-based company by the end of 2009, but he hadn"t yet decided whether it would happen on the Bucharest Stock Exchange or on SIBEX.

At its current valuation, Aro Palace would enter the top twenty largest companies listed in Romania.

SIF Transilvania intended to float Aro Palace last year, and then merge it with the two other companies that it controls - Orizont Turism Predeal and THR Prahova Ploieşti (which are both listed on Rasdaq).

The main holdings of SIF Transilvania in the hotel industry are Aro Palace (86%), THR Marea Neagră (where it holds 78%), Turism Felix (63%) and Continental Hotels (9%).

Aro Palace owns the eponymous five-star hotel located in Braşov, with a capacity of 200 rooms, and other hotels: Capitol (3 stars, 183 rooms), Coroana (2 stars, 100 rooms), Postăvaru (1 star, 60 rooms) and Aro Sport (1 star, 32 rooms). The company also owns four restaurants located in Braşov as well.

SIF Transilvania has major holdings in banking and tourism, with almost 35% of the company"s investments being in lodging.

The talks concerning the floating of Aro Palace on the stock exchange began two years ago. At the time the company hired Rombell Securities to underwrite the IPO. The maximum expected valuation at the time was EUR 12 million. Later, after the apparition of the crisis, the majority shareholder decided to wait for a more favorable environment for the floating the company on the Bucharest on the Bucharest Stock Exchange, but then the alternative of floating the company on the Sibex Stock Exchange appeared (SIF Transilvania is also a shareholder of Sibex. Eventually, SIF Transilvania opted for the Sibiu Stock Exchange.

• Three years of preparations

An IPO requires a company to present audited financial statements for the last three years. For best results, this requires "cleaning house", for instance divesting non-core assets, the upgrading of IT systems or the rescheduling of debt. The basic process of for launching the IPO can take from three to six months. It is advisable to resort to a consultant when trying to pick the right moment for an IPO, as investor behavior can be extremely unpredictable.