Five institutional investors: The share capital increase of "Arcelormittal" Roman is inexplicable

Five shareholders of "Arcelormittal" Roman claim that the majority shareholder of the company, the ArcelorMittal group, is trying to force the General Extraordinary Shareholder Meeting to accept an increase of the company"s share capital with the amount of 568,813,785 lei, (more than 130 million Euros) in order to replenish the company"s share capital, which was affected by the losses it posted in the last fiscal year. "This proposal would involve an increase of the share capital of about 16 times from its current levels", is stated in communiqué signed by SIF2 Moldova, East Capital Asset Management, Banca Transilvania Asset Management, SSIF BROKER and SSIF Target Capital.

According to them, the proposal to increased the company"s share capital is not accompanies by any business plan backed by a revenue and expense budget for the coming period, which would indicate how the huge amounts requested of shareholders will be put to use, to say nothing of the fact that the current board of directors of the company, which is overwhelmingly dominated by employees of the ArcelorMittal group, has systematically declined to provide investors with information concerning the causes of these huge losses, as well as on the contracts that ArcelorMittal Roman concluded with other companies of the ArcelorMittal group.

Investors express their hope that the additional audit report which will be drawn up by the company"s financial auditor, Deloitte Romania, will clarify with fairness and within the spirit of the law all the aspects concerning the operations concluded by Arcelor Mittal with companies affiliated to the ArcelorMittal group.

At the same time, the group of shareholders requests that the Romanian National Securities Commission urgently take all the necessary actions provided by the law to ensure that ArcelorMittal Roman begins to comply with the law again, in particular when it comes to abiding by the principles of transparency and investor protection.

The ArcelorMittal group is being asked to abide by the "operating principles of the capital markets of civilized countries and to forego forcing a share capital increase without providing the other shareholders with complete and accurate information concerning the cause of the losses incurred by the company, as well as the intended use of the amounts that will be raised following the share capital increase".

"If the ArcelorMittal group will impose this share capital increase without disclosing this information, it will be obvious that the only goal of this operation will be to drastically dilute the stakes of the other shareholders, which will be unable to subscribe and pay significant amounts without knowing their intended use and whether there are real chances of eliminating the causes of the losses", the communiqué also states.