English
Concerns that the BSE would be left high and dry by the consortium of intermediaries led by "Renaissance Capital", for the sale of 9.84% of the shares of "Petrom" owned by the Romanian state, were completely invalidated yesterday morning, following the Prospectus of the Public Offering which was approved by the Romanian National Securities Commission (CNVM), which stipulates that the BSE would be paid a fee of 0.135% of the total value of the deal, as it will be used for intermediating the secondary offering.
Starting from the fact that the consortium of brokers handling this secondary public offering was charging a very low fee, some of the market players expected the consortium to try a private offering, to save the money it would have had to spend to use the BSE system.
It would now appear that the consortium is in fact happy with a small compensation, working almost for free.
Out of the maximum 609 million Euros that the deal could be worth, (if we consider the price calculated using a maximum price of 0.46 RON for each of the 5,573,780,260 shares put up for sale), the four brokerage firms of the consortium led by "Renaissance" would earn 1.979 million Euros (the equivalent of a fee of 0.325%, which allowed it to blow its competitors out of the water).
Out of this amount however, 822,000 Euros will go to the BSE (a fee of 0.135%) and almost 49,000 Euros will go to the Central Depository (0.008%), meaning that the consortium will get a little more than 1.1 million Euros, which will allow it to pay its lawyers and employees.
In the end, the profit of the entire intermediation barely amounts to 150,000 Euros, on average, for each of the four brokerage firms ("Renaissance Capital", "Eurobank EFG", "BT Securities" and "Romcapital").
Of course, it"s far from satisfying, considering the high value of the operation.
The 600 million Euros that the government was looking to get out of this sale are precisely the amount that OMV had been intending to increase the share capita of Petrom with, this year. It later gave up on the idea, claiming that its local business was doing great.
The (maximum) price displayed has generated contradictory opinions (as any price always tends to); public opinion, which on principle is attached to the idea of our "nation"s wealth" - in other words, the state"s, as if the state only had the best interest in mind when managing the wealth of the nation (or in the present case, the budget which is in dire need of funding) - well, these professional citizens have expressed their satisfaction at the fact that the price of the offer is four times higher (0.46 lei) than the face value of the shares (0.1 lei); but the Association of Capital Market Investors (AIPC) asked the Government, three days ago, to offer a discount compared to the current market price of the stock, and it also requested that the offer include a minimum price which would be calculated using the average price that the stock of Petrom traded at over the last 52 weeks.
According to our calculations, this would put the minimum price at 0.361997 RON/share.
We can see that the prospectus of the offering has taken certain liberties, as it stipulates that, a "reference price" would be announced depending on the announced subscription intentions, (together with the maximum price announced yesterday), which, according to the Prospectus, "will not represent an amendment to the Prospectus" (how can they possibly claim that price information does not "amend" a Prospectus?!).
That clarification allows avoiding of the provisions of article 189 (b. 2), which allows the underwriter to withdraw following the amendment of the Prospectus, but if we examine the mechanism of the offering, we find that that "legal innovation" is not that toxic and does not hurt investors (they can decide not to adjust their price and allow themselves to be eliminated, without explicitly withdrawing).
One last observation, from a neutral position: the capital market legislation allows the option of including a maximum price in the prospectus, (just as it has been done in the offering of "Petrom"); why?
I mean, why?!
If the market were to push the price of the stock above the one stipulated in the Prospectus, why couldn"t the latter be "amended"?
So, why?!
• Laid off employees to receive severance packages of up to 31,100 lei
OMV Petrom (SNP) will pay severance packages ranging between 18,360 lei and 31,100 lei (4,370 Euros to 7,400 Euros), depending on their seniority, according to the prospectus of the secondary public offering by which the Ministry of the Economy will sell 9.84% of its stake in the company.
In December 2010, OMV Petrom had 24,660 employees, 15% less than in December 2009, when it had almost 29,000 employees. At the end of 2004, when it was privatized, the company had 46,800 employees.
Each of the nine members of the Supervisory Council of OMV Petrom will be paid an annual remuneration of 20,000 Euros in 2011, whereas the members of the Audit Committee are paid 4,000 Euros per meeting.
• Petition with the European Court of Human Rights
In January, OMV Petrom filed a complaint with the ECHR, against its treatment by the Romanian courts, and the lawsuits it is involved in, aside from the ones against its employees, have a total stake of approximately 300 million Euros, the equivalent of 58% of last year"s record profit.
The oil company filed the complaint with the European Court of Human Rights (ECHR), following a lawsuit filed against it by Dan and Radu Stegăroiu of Cluj, in which they asked OMV Petrom to return a property of the village of Boldeşti, county of Prahova, the prospectus of the secondary offering states, as quoted by Mediafax.
The two brothers filed the lawsuit prior to the privatization of Petrom, in 2004, when it was taken over by the Austrian gas and oil group OMV, alleging that the property that they are claiming was illegally nationalized.
In 2008, the Court of Appeal sentenced OMV Petrom to pay the two brothers 51 million lei in damages (the equivalent of 13.8 million Euros, at that year"s exchange rate), subject to certain legal conditions.
The oil company appealed this decision, but the appeal was overturned.
In May last year, the Stegăroiu brothers requested the opening of the insolvency procedure against Petrom, but the court of first instance and the court of appeal both rejected the request.
OMV Petrom opened a new avenue of attack, which would clarify whether paying the damages in question were the liability of the Romanian state or of the company itself. The lawsuit filed by OMV Petrom was admitted in April this year, and the decision of the Court of Appeal was modified.
As a result, OMV Petrom proposed "reparations" of 51 million lei, an amount which would however have to be paid by the Romanian state. The decision is subject to an appeal, the prospectus states.
OMV Petrom filed the restitution claim with the National Agency for the Restitution of Properties, which the agency refused to receive. In June this year, the court forced the Agency to accept the application, but the decision can be appealed.
"In January 2011, the company (OMV Petrom - ed. note) filed a complaint with the European Court of Human Rights, in which it challenges the way it was treated by the national Romanian courts", the prospectus says.
Aside from this lawsuit, OMV Petrom is involved in 28,000 lawsuits against former and current employees, of which 4,600 cases where on trial with the courts of first or second instance. The lawsuits against the employees concern the differing interpretations of the collective labor contract, the prospectus states, which nevertheless does not specify the damages that the company is expected to pay.
At the same time, the company, together with the Regional Agency for the Protection of the Environment and the Ministry of the Environment and of Forests, has been sued by several companies, which request the cancellation of the contracts for the sale of several plots of land in the Străuleşti area of Bucharest (where the main headquarters of Petrom is currently located - ed. note), alleging violations of legal provisions concerning the environment.
"The total value of disputed contracts amounts to 55.4 million Euros, of which the plaintiffs have already paid 9.03 million Euros. The date for the first hearings has been set for November 2011", according to the prospectus.
Another lawsuit that the company is involved in, concerning the buying and selling of lubricants and crude, is the one against the Astra Română refinery, which sued Petrom and is requesting the payment of 114 million Euros in damages, pertaining to the October 2004-December 31st 2010 period. The lawsuit is still on trial.
Also, a branch of OMV Petrom in Kazakhstan, Korned LLP, was sued by Shakharmunaigas JSC, which is requesting 16 million Euros in damages for the delayed payment of royalties for the exploitation and production of hydrocarbons.
Shakharmunaigas JSC won the lawsuit, but Korned LLP is considering other actions to achieve the suspension of the payment.
In another lawsuit, the company is being asked to pay approximately 100 million Euros, for illicit use of intellectual property rights.
"Since the company (OMV Petrom - ed. note) has an internal procedure system to monitor and protect intellectual property rights (...) it is highly unlikely that such a complaint would be admitted in court", the prospectus states.
The National Customs Authority (ANV) has confiscated oil products worth 21 million lei (5 million Euros) from OMV Petrom, after finding irregularities in their movement between tax warehouses. OMV Petrom challenged the decision, and the lawsuit is still on trial.
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