IT'S ON The directorate of SIF3: "Frăţilă is getting ready for a hostile takeover of SIF Transilvania"

The directorate of SIF3 Transilvania claims that shareholder Constantin Frăţilă is getting ready for a hostile takeover of SIF3, in a press release that advises shareholders to reject his proposals, which will be brought up for discussion in the General Shareholder Meeting of October 20th. The reaction of the management of SIF3 comes after new items were added to the agenda of the General Shareholder Meeting, at the request of Frăţilă, with the shareholders called to approve on the filing of a liability lawsuit against the members of the Directorate of SIF Transilvania: Mihai Fercală, Iulian Stan (executive vice-president and deputy CEO) and Mihăilă Ion (former executive vice-president), all of whom, according to the group that has rallied behind Frăţilă, have exceeded their mandate.

The proposals of the shareholder were also justified by the failure to comply with the special power of attorney form and the failure to publish the list of the 63 shareholders that have asked the dismissal of Constantin Frăţilă from the Supervisory Board, in the meeting of the Ordinary General Shareholder Meeting of August 11th/12th 2014.

The directorate of SIF3 says: "The argumentation used by the Frăţilă group reiterates the alleged illegal use of the special power of attorney to hold the secret vote in the General Shareholder Meetings; just like on every previous occasion, the Frăţilă group deliberately glosses over the following: the authority which regulates the capital market (CNVM/ASF) did not dispute the legality of special power of attorney model during the audits it conducted at SIF Transilvania in 2010 and 2013; this model of special power attorney was validated through court rulings as part of lawsuits which had Frăţilă Constantin among the plaintiffs as well (decision no. 49/2006 of the Braşov Court of Appeal); in 2013 Frăţilă Constantin was elected as member of the Supervisory Board of SIF Transilvania by using the same model of the special power of attorney; neither then nor nor now did Mr. Constantin Frăţilă worry that he could be accused of lack of morality".

The representatives of SIF3 say that they did not make public the list of the 63 shareholders that the Frăţilă group is referring to in order to comply with the legal requirements, which make it the shareholder's obligation to do so.

SIF3 shareholders will also have to decide on the reduction of the salary of the executive president, Mihai Fercală.

The monthly compensation of the president of the Supervisory Board is currently set at the equivalent of 7 times the gross average salary paid by the company, whereas the compensation of the president of the directorate is set at 12 average salaries, the request of Constantin Frăţilă states.

Frăţilă wants the president of the Supervisory Board to receive a compensation equal to 3 monthly average gross salaries, and the president of the Directorate to be paid the equivalent of 5 monthly average gross salaries.

Among other things, Constantin Frăţilă has also requested for his proposals which were rejected by the shareholders in the Extraordinary General Shareholder Meeting of August 11th, to once again be included on the agenda of the next Extraordinary General Shareholder Meeting of SIF3: namely, the dismissal of the administrators and executives of the companies that SIF3 has in its portfolio if they fail to achieve the profit targets set through the Revenue and Expense Budget, as well the non-payment of the compensation of the executives and administrators of companies in which SIF3 is a majority shareholder if, during a fiscal year, their net asset falls compared to the previous fiscal year.

The directorate of SIF3 claims that through his proposals, Frăţilă is getting ready for the hostile takeover of SIF Transilvania: "So far, the group of Frăţilă has asked the shareholders over and over again to vote on specific decisions, despite the fact that the shareholders had already rejected them (examples: the use of the cumulative voting method when electing the members of the Board, the participation of employees in the distribution of profit, decisions of the shareholders of the SIF concerning the directors and companies in the portfolio, the level of the remuneration of the management bodies of the SIF, the filing of a lawsuit for liability against the CEO). This constant harassment of the shareholders and of the executive management of the company now reaches a climax with the revelation of the true purpose of all the actions of the Frăţilă group, coordinated by Mr. Constantin Frăţilă: the hostile takeover of SIF Transilvania by the group of shareholders rallied around Frăţilă, which holds about 5.001% of the share capital of SIF Transilvania, a group which he is coordinating. The preparation for this takeover has begun the moment Mr. Frăţilă Constantin entered the Supervisory Board, continued with repeated calls for the holding of the General Shareholder Meeting and votes resolutions which shareholders had already made a decision on, went on with the invoking of populist issues to mislead, by alleging violations of the law, through mind-boggling requests addressed repeatedly to financial auditor PricewaterhouseCoopers, and now, through a method which is meant to falsely reflect the extreme concern of a shareholder for the destiny of SIF Transilvania: the persons that get sanctioned by the ASF should get dismissed by law from the positions they hold within SIF Transilvania, and no less than as soon as the sanction is publicly announced. In reality however, the Frăţilă group, which has been endlessly trying to bring the liability lawsuit against CEO Mihai Fercală, which has extended the scope of its attempts to bring the liability lawsuit to include the president of the Directorate as well, the same Frăţilă group which is behind the sanctions applied to the members of the Directorate in 2014 by the ASF, is seeking to decapitate the management of SIF Transilvania and the takeover of the company both through acquiring a controlling interest, as well as by taking control of the Supervisory Board (which he has just been revoked from) and of the Directorate.

All of the actions of the Frăţilă group are clearly harassment, abuse of his position of shareholder, the use in ill-faith of the rights conferred by the holding of shares, against the legitimate interests of the other shareholders and against the fundamental interest of the company".

In the context of its fight against Mr. Frăţilă, the management of SIF Transilvania publicly submits a complaint to the Financial Oversight Authority and all the authorities and competent institutions on the concrete actions taken by the Frăţilă group to conduct a hostile takeover of SIF "Transilvania".

Contacted by BURSA, Constantin Frăţilă told us that he would prefer to read the press release of SIF3, before issuing an opinion.

Fercală and Frăţilă are also at odds at COMCM Constanţa, a company which is part of the portfolio of SIF Transilvania, where recently, both SIF3 and Constantin Frăţilă each announced that they have elected the board of the company: SIF3 on the first summoning of the General Shareholder Meeting, and the management of COMCM, on the second summoning.

The ASF later decided to intervene, and suspended the trading in the COMCM shares, until the situation was resolved.