I"M SCAREd OF SLEEPING ALONE! Predator at "Petrom"

Do you remember "Predator" with Arnold Schwarzenegger?

A team of commandos in the Central American jungle is being hunted by an alien - a bug-like beast, taller than a man and equipped with weapons superior to those of the humans.

The insect wasn"t invisible.

It was just transparent.

It could be observed, because it distorted the vegetation when it passed.

Furthermore, leaves would still move, thus allowing its shape to become approximately visible.

This is kind of what is happening now with the Public Offering of "Petrom".

The capital market legislation is bending; the Code of the Bucharest Stock Exchange is being ignored; the Romanian National Securities Commission treats regulations like they were made out of putty; the Board of Directors of the Bucharest Stock Exchange turns its back.

In "Predator", those were the hints that the beast was passing.

Yesterday, the stock of "Petrom" was scheduled to see the introduction of nominee accounts on the market of the Bucharest Stock Exchange (BSE).

As a result, the beast will remain invisible, even after the Secondary Public Offering is over, because in the case of nominee accounts, the owners of the shares are unknown, and the registry of shareholder features the name of the brokers or of their custodians instead.

The CNVM has approved the switching of the stock of "Petrom" to nominee accounts, three days after the beginning of the Public Offering, changing the rules of the game mid-way, - a leaf crumpled as the beast passes.

Loud footsteps, breaking of withered branches: the maximum price mentioned in the prospectus (0.46 lei/share) is in fact the highest price that the stock traded at last year, on the BSE (April 8th, 2011).

But, in the annexes to the Prospectus, it is written that the price would have to be determined by combining three methods: 1) the patrimonial method; 2) the return method; 3) the market method (considering the listing on the BSE).

The provisions are recorded in the Contract between the State, as seller, and the Consortium of Intermediaries.

The contract was broken, like a dried branch under the weight of a huge bug; the price was set using only one method - the third (which we can hardly call a method - "the study" only lasts about thirty seconds).

The next step, another noise, the huge insectoid beast is even closer: minister Ion Ariton yesterday announced that the reference price for Petrom (0.3708 lei/share) represents the average price for the last year; why do so only now, eight days after the beginning of the Offering?

The average price of the last year could have been calculated in just two minutes, prior to the beginning of the Offering.

Why now?!

Is the reference price the result of the "Book Building process", like the Prospectus claimed?

Absolutely not.

Does the "Book Building process" take place during the Public Offering? (otherwise what"s the point of the "road show" ?!), or has it ended one month ago before the Offering began, like the Prospectus stipulates in the Appendix section?!

Speaking of which: why aren"t the appendixes available on the Internet?

Why are the Appendixes only available as a few printed copies, but are not presented to the public?

The Appendix is part of the Prospectus of the Secondary Public Offering approved by the Romanian National Securities Commission.

The investing public was presented an electronic document, accessible using a few internet websites: the document in question has 243 pages; but the Appendixes include 3-400 pages.

I repeat: the Appendixes are part of the Prospectus!

So this means that the prospectus actually includes about 600 pages.

Did the Romanian National Securities Commission approve the incomplete presentation of the Prospectus of the Public Offering?

Did the CNVM approve the unequal dissemination of information pertaining to the public offering?!

We are near the bug!

It is standing just beside us.

Its silhouette skews the entire capital market.

Oh, no!

It is spreading terror around it.

The members of the Board of Directors of the Bucharest Stock Exchange fan out like grouse, when they hear its footsteps; they don"t dare to comment on the regularity of the Secondary Public Offering, when all the rules of the market have been trampled beneath its feet.

I can"t sleep anymore!

Valentin Ionescu, the general manager of the BSE said that a Protocol was concluded with the Consortium of Intermediaries.

A protocol?!

As in, not a contract?!

You mean to tell me that a deal of about 700,000 Euros, gets concluded based on a "protocol"?

What if, after the secondary offering ends, the Consortium changes its mind and refuses to pay that amount, is the BSE going to sue them based on a "protocol"?

Good luck winning that lawsuit.

Because the consortium could prove at any time, that the BSE did not provide it with any service, for the duration of the Offering.

Meaning the BSE is asking for money it doesn"t deserve.

Of course it is possible, but unlikely.

Because indeed, the BSE did not provide the Consortium with any of its specific services; but in reality, it did provide it with a huge service: it camouflaged the insect.

The BSE agreed to "lend" it its own face, to conceal the alien behind the intermediary; a so-called secondary public offering performed through the stock exchange, which is in fact a private placement reserved for a specific investor.

Why didn"t the BSE conclude a contract with the Consortium?

Simple.

To avoid putting the Romanian National Securities Commission on the spot, as the latter has issued the Instruction no. 2/2010 which stipulates: "The contracts concerning the performing of a public offering/takeover bid [...]concluded between the market/system operator, the bidder, and the intermediary of the offering [...] may not include provisions that would cause the provisions of the Law no 297/2004, of the Romanian National Securities Commission regulations, and of the market/system operator to become inapplicable".

If it had concluded a contract, the BSE would have broken the regulations of the CNVM.

But it didn"t, it just concluded a Protocol.

The instructions of the Romanian National Securities Commission say nothing about "protocols".

You can hear the breath of the beast.

Tek-tek-tek.

A terrifying noise, like that made by a giant locust.

In the Appendix, which isn"t made available to the general public, it is clearly written that the services provided to the state by the Consortium must stipulate, "the conclusion of the Contract with the Bucharest Stock Exchange needed to perform the Secondary Public Offering..."

No, the Consortium didn"t end the agreement with the BSE, as a service stipulated in the Contract with the State.

The latter is keeping absolutely mum.

The Romanian National Securities Commission is keeping silent.

Just like the BSE isn"t making a sound.

Let"s keep still - the beast is right in front of us (Schwarzenegger did the same thing, he kept real still, which kept him from being killed).

But maybe it"s just an impression.

Maybe it"s just the rustling of the leaves, the steam rising from the hot earth, the cracking of dry wood.

Maybe it"s just the hysteria that the Russians want control of our energy sector.

Of course, a beast that is big enough to bend our laws, make the market regulators and its officials go silent, and to force every Romanian authority, including the government to be complicit in a shady sale, under the guise of a secondary public offering, could be a "hyshchynik" (ed. note: "predator" in Russian).

A "hyshchynik" which the European Union doesn"t want, as it attempts to free itself from its dependence on energy provided by the Russian Federation.

The anger of the European Union, if we were to sell 9% of "Petrom" to the Russians, is reason enough to explain all the games that the Authorities are playing with the Secondary Public Offering.

But, perhaps it"s just an impression.

Maybe the deformation of the landscape, which takes the shape of a "hyshchynik", is a mere coincidence.

After all, it"s only a movie.