Pogonaru replies to Ciurezu, through proxies

The harsh attack of the CEO of SIF Oltenia, Tudor Ciurezu, against businessman Florin Pogonaru, has received a response, indirectly, from the management of "Prodplast Imobiliare" (PPLI).

After the chairman of SIF5 accused the Pogonaru family of resorting to a concealed spin-off of "Prodplast Imobiliare", to the detriment of the other shareholders, by transferring the main asset - the building which houses the company's headquarters - to a new company, the management of "Prodplast Imobiliare" maintains that, on the contrary, this action is intended to limit the risk of the retail project which is set to be developed.

The management of "Prodplast Imobiliare" (PPLI) has approved, on August 26th, the creation by the company of a new SRL (LLC), by contributing the building of 23, Ziduri Moşi St. of Bucharest - which serves as the headquarters of Prodplast Imobiliare - to the share capital of a joint stock or limited liability company - at the valuation determined by an independent expert, to develop the "Veranda" commercial center.

The shareholders of PPLI had empowered the Board of Directors to make this decision in the General Shareholder Meeting of August 13th, which was subsequently disputed in court by SIF Oltenia, which holds 31% of PPLI.

Tudor Ciurezu, the chairman of SIF Oltenia, claimed that, by spinning-off the building in question and transferring it to another company, the minority shareholders of "Prodplast Imobiliare" would be left part of a company with no patrimony, since the asset in question represents 90% of the total assets of the company.

In a report sent to Sibex, the Board of Directors of "Prodplast Imobiliare" writes that construction of the "Veranda" retail center will begin in September: "Most of the retail spaces have already been leased with 30-year contracts, concluded by companies with an international reputation (e.g. Carrefour).

This kind of project also involves risks, which is precisely why, in order to protect the shareholders of PPLI, as well as at the request of the lenders (banks) and of the potential buyers of the project, it was decided to separate the activities of PPLI from the development of the project.

Besides, such limiting of the risk of a project is common in similar situations and is considered a good practice when it comes to developing real estate projects".

According to the management of PPLI, spinning-off the building from the company guarantees the fact that the risks taken on by the parties involved concern the Veranda commercial center exclusively, not Fortul Tunari or other investments or assets of PPLI.

"All of these considerations have made it necessary to separate the activity of the company from the project itself, by transferring the main asset through a contribution to a separate company, a Romanian SRL with a sole shareholder, fully owned by Prodplast Imobiliare", the quoted report also says, which continues: "In doing so, upon a potential sale of the project, the proceeds will be fully booked by PPLI and the resulting profit will equitably be distributed to all shareholders, without discrimination".

The directors of PPLI claim that, during his term as chairman of the Board of Directors of "Prodplast Imobiliare", Mr. Tudor Ciurezu not only backed the project, but he also pushed for the asymmetric spin-off of the company, thus ensuring the move of the plot of land to a separate company. He was a chairman and member of the board PPLI for six years (between 2008 and August 2014). The PPLI report states: "Upon his proposal (ed. note: of Tudor Ciurezu) and with his personal vote (as shareholder of PPLI), as well as of the representative of SIF Oltenia, on August 20th, 2012, in the Extraordinary General Shareholder Meeting of the shareholders of the company, he succeeded in getting the decision to spin-off Prodplast Imobiliare asymmetrically passed, by isolating the plot of land which would be used for the construction of the commercial center.

This decision was subsequently revoked through a vote held on October 30, 2012. Therefore, the intervention of Mr. Ciurezu concerning an alleged asymmetric spin-off at PPLI, which he made last week, is totally unjustified and bound to create confusion and harm the company's image and the project in itself, because the recent decision to contribute capital to a new company undeniably serves the company's interests and of all the shareholders, unlike the past decisions initiated by Mr. Ciurezu, which could be considered as discriminatory for certain shareholders".

The chairman of SIF Oltenia confirms the facts mentioned in the communiqué issued by PPLI: "It is true that as chairman of the Board of Directors at «Prodplast Imobiliare», I have held an Extraordinary General Shareholder Meeting, on August 20th, 2012, which had on its agenda the approval of the spin-off of the company, by transferring the main asset to a new company, according to the Law of companies no. 31/1990, but transparently, based on a spin-off draft which was going to be approved by the General Shareholder Meeting as well, giving shareholders that did not agree to it the option to exit the company, to be compensated. Not to be robbed through a transfer, through the contribution of the building to a new company, which represents a concealed spin-off, which does not allow shareholders to make an exit".

Also in 2012, the Board of Directors was empowered to initiate the necessary actions to prepare the phases of the spin-off. We did not work in secret. It was later found that the talks with the real estate developer were taking increasingly more time, it was a matter of long-haul. The necessity of the company's spin-off was not so certain anymore.

For the same purpose of avoiding disinformation of the shareholders, it was decided to summon the shareholder meeting to revoke the earlier decisions. The shareholders did indeed decide to dismiss the decisions of the General Shareholder Meeting of August 20th, 2012.

As chairman of the Board, I did nothing but promote transparent actions which were in the shareholders' interest, to compensate the shareholders who did not agree to the spin-off of the main asset".

Tudor Ciurezu notes a discrepancy between the decision of the General Shareholder Meeting and the decision of the Board of Directors. The directors have decided that the new SRL (LLC) would have as its sole shareholder "Prodplast Imobiliare", whereas in the General Shareholder Meeting, the shareholders had allowed for the new company to be created together with other individuals and/or companies to be selected and co-opted by the Board of Directors of the company.

"Their communiqué says one thing, and the decision of the General Shareholder Meeting says another", Tudor Ciurezu says, who added: "They are now making a SRL with a sole shareholder. But what's stopping them from subsequently co-opting other shareholders, in line with the decision of the General Shareholder Meeting? And furthermore, whys is there still a need for a loan, and for a share capital increase at Prodplast Imobiliare, if a new company gets created?"

The Extraordinary General Shareholder Meeting of "Prodplast Imobiliare" also approved, on August 13th, the launch of a new bonds issue of up to 10 million Euros, which would be listed on the stock exchange, a 46-million lei share capital increase and the taking out of a loan of 35 million Euros over a period of 30 years, to finance the retail center developed near Obor.

The bonds issue and the contribution of the building to the creation of a new company had been proposed by shareholder "Nord" SA, controlled by Florin Pogonaru, who owns 32% of PPLI.

• The management of PPLI notifies the acquisitions of PPLI stock made by SIF5, at rising prices

The management of "Prodplast Imobiliare" (PPLI) warns about the trades made by SIF Oltenia involving PPLI shares: "In order to ensure the equitable access to the public information of investors, as well as to ensure the preservation of an orderly market of the stock issued by PPLI, the company's Board of Directors notifies the fact that, in the periods between the drafting by SIF Oltenia SA of the request for the addition of new items to the agenda of the Extraordinary General Shareholder Meeting and the publication of those additions, Mr. Tudor Ciurezu, in the name and on behalf of SIF5 (as insider), conducted trades with PPLI stock which caused the stock to rise 290% in 5 trading sessions between 14.07.2014 - 29.07.2014 (the price basically increased three times). The price of PPLI thus reached a historic high of 17.38 lei/share".

Tudor Ciurezu declined to comment this information.

On the other hand, he told us that aside from the fact that SIF Oltenia has gone to court, in order to have the decisions of the General Shareholder Meeting of PPLI annulled, he has also filed a lawsuit to have the courts of the General Shareholder Meetings suspended, through a presiding judge's order, until the lawsuit is tried by the court of first instance.

Also, SIF Oltenia has disputed in court the General Shareholder Meeting of "Nord" SA, which approved a share capital increase of 11 million lei and sales of financial assets of up to 6 million lei to finance the share capital increase of Prodplast Imobiliare, through which the real estate developer wants to build the "Veranda" commercial center.

Nord SA, controlled indirectly by businessman Florin Pogonaru, (68.55%), will participate in the share capital increase of the real estate developer and/or the financing of the Veranda project through any legal means, with an amount of up to 17 million lei, according to the decision of the General Shareholder Meeting.

Tudor Ciurezu claims that "Nord" SA did not comply with the legal requirements for summoning the General Shareholder Meeting, after shareholder "Victoria Art &Business Center", controlled by Georgiana Pogonaru, asked for the making of additions to the agenda.

Furthermore, the chairman of SIF5 considers that the decisions of AGA "Nord" were made by abusing its majority position.

Tudor Ciurezu and Florin Pogonaru came at odds, in the beginning of this year, over the block of shares of 6% of BCR owned by SIF Oltenia.