How the Romanian-German caviar joint-venture failed its listing on the Frankfurt Stock Exchange

• "International Caviar Corporation" of Călan, Romania failed to enter the German stock market because the German Depository has no connection to the Romanian Depository

• Other major Romanian companies could see something similar happen to them: no European Depository has a connection open to ours

A company from Călan fails to get listed on the Frankfurt Stock Exchange, due to technical reasons beyond the control of its shareholders.

The case is typical for other Romanian companies that want to get floated on the foreign stock markets.

At first it seemed that the IPO of the fish farming company "International Caviar Corporation" of Călan (listed on the Rasdaq tier of the Bucharest Stock Exchange) on the Frankfurt stock Exchange seemed to be nearing a successful outcome, after the German bank Mercurius had announced, at the end of 2009, that it was interested in helping the company perform an IPO.

The surprise came up a few months later, after the company"s shareholders found out that the floating of the company on the German Stock Exchange could not be completed due to apparently minor technical issues, but which could nevertheless prevent the flotation from being carried through.

"A representative of the German Central Depository told me on the phone that the listing of a Romanian company on the Frankfurt stock exchange can only occur if a connection is set up between the German and the Romanian Central Depositories. Unfortunately, I was told such a connection does not exist", said Roland Schroeder for BURSA. Mr. Schroeder owns 31% of "International Caviar Corporation".

Adriana Tănăsoiu, the general manager of the Romanian Central Depository, has confirmed that no foreign depository has opened an account with the Romanian Central Depository, thus making it impossible for companies listed on the BSE to be listed on major foreign stock exchanges.

This means that similar attempts by other domestic companies, such as Banca Transilvania, which would like to be floated on the Vienna Stock Exchange, could fail as well, at least for now.

"So far, no foreign Depository has opened an account with us, even though we have connections with Depositories in 16 European countries", said Adriana Tănăsoiu for BURSA, who added: "It all comes down to the individual choice of each institution ... you can go to the supermarket or to the store on the corner ..."

The situation for companies that aren"t already listed on the domestic market and have no contract with the Romanian Central Depository, as they can opt to conclude a contract with a Depository from other countries, if they want to get listed on one of a foreign stock exchange.

In fact, the Bulgarian Central Depository was the only one that followed the necessary steps to open an account with the Romanian depository, but neglected to activate it anymore, after the plans of a company"s dual listing on the Bucharest and Sofia markets fell through.

• The alternative

Volker Bus, the representative of the German Depository, tried to come up with solutions, to allow "International Caviar Corporation" to be listed on the Frankfurt Stock Exchange, but eventually came to the conclusion that it was impossible. Volker Bus explained: "I asked a colleague in Luxemburg if the stock of AMAL were held in custody by another Depository, outside Romania. I was told this was not the case, which is why the registration of AMAL stock can not be performed by any other depository which is under our tutelage".

However, the official of the German Depository mentioned that an alternative to the listing of the company on the Frankfurt Depositary would be the issue of Global Depository Receipts (GDRs), instruments which are similar to derivatives, which would have the stock of AMAL listed on the Bucharest Stock Exchange as their underlying asset.

Adriana Tănăsoiu, the head of the Romanian Central Depositary, discussed the Global Depository Receipts: "The Global Depositary Receipts (GDR) would be traded on the Frankfurt Stock Exchange. They a kind of derivatives, based on AMAL shares. This would entail the issuer of these new instruments buying the underlying shares on the Bucharest Stock Exchange and holding them in the Central Depository, for as long as the GDRs exist".

Until then, the shareholders of the company don"t have anything else to do but to worry about "where to store" the caviar...