BECAUSE IT DOESN"T HAVE THE MONEY TO PAY FOR THE APPRAISAL The Agency for State Domains wants to sell the holdings of the Romanian state in the agricultural sector at par value

The state can"t seem to succeed in selling its minority stakes in the agricultural companies, in its attempt to consolidate budget revenues.

For the moment, the sale is deadlocked, because the Government and the Agency for the State Domains (ADS), the institution which specializes in the privatization of agricultural companies, did not agree on the evaluation procedure which would be used for the sale of the stakes.

"In a draft bill, we have proposed a simplified appraisal procedure, which would provide the sale of the minority stakes at the par value, but some people in the government have opposed the idea, and the entire process is now deadlocked", ADS representatives said, who wanted to remain anonymous.

• Pros and cons

The ADS favors selling the stock at its par value (ed. note: - the value set in the articles of incorporation of the issuing company), claiming it does not have enough money to appraise the companies and find out their true value, in order to determine their current value, the quoted sources say.

ADS officials explained: "There are some companies that do not want to do an appraisal because it would cost too much. The ADS does not have enough money to begin these evaluations and that is precisely why we have suggested selling these stakes at a price equal to their par value. In some cases, we run the risk of paying more for the appraisals than we would get by selling the stakes afterwards".

It seems the Government is opposed to the idea of selling the shares at par value, claiming that using that it does not reflect the true value of the shares, which means the state would lose out. The truth, however, is somewhere in between, and selling the shares at their par value can swing both ways.

• Is it a good thing or a bad thing?

For instance, shares of "Unisem" S.A Bucureşti, a company whose line of business is the retail distribution of cereals and seeds, have a par value of 0.1000 lei, whereas on the stock market, the shares were priced at 0.0499 lei yesterday. According to information published on its website, the ADS has a stake of 3.984% in the company. On the other hand, in the case of Samlef " S.A Satu Mare, a company which trades agricultural commodities and livestock, yesterday"s price was 3.100 lei, higher than the par value of 2.5700 lei. According to the aforementioned source, the ADS holds 5.0998% of the company.

• Fuia: "We did not receive the draft from the Commission"

Our sources claim that the draft bill, initiated by the ADS, is now waiting for the Government"s decision, but it was also reviewed by some of the members of the specialized commissions of the Parliament. The same sources claim that the members of the Parliament of the governing parties share the government"s stance.

"We have not yet received this draft bill, but what I can tell you is that the state should sell its remaining minority stakes in the agricultural sector to consolidate its budget revenues", said Stelian Fuia, the chairman of the Agricultural Commission of the Chamber of Deputies.

When asked whether the members of the Parliament support the selling of the shares at par value, Stelian Fuia said: "We"ll see about that, we need to receive the draft bill first".

• A small fortune

The state holds stakes in 26 agricultural companies, and has minority stakes in three of them, most of them being former IASs (state owned agricultural institutes).

The 23 companies which are to be sold, have a combined share capital of 109.9 million lei (approximately 25.6 million Euros), according to data from the ADS. The state has majority stakes in "Societatea Naţională de Îmbunătăţiri Funciare" (ed. note: The National Land Improvement Agency"), "Sericarom" and "Agroprodcom Odorheiul Secuiesc".