Shares of "Biofarm" in the portfolio of the AVAS remain suspended

The Romanian National Securities Commission (CNVM) has rejected the challenge filed by SIF3 "Transilvania", by which the latter was requesting the partial revocation of the CNVM ordinance issued in August 2011, which had suspended operations with shares owned by the AVAS (the Authority for State Assets Recovery) at "Biofarm" (BIO), "Agrana Romania" (BETA), "Mercur Craiova" (MRDO) and "Casstil Bucureşti" (CAST).

Ion Mihăilă, Chief Financial Officer at SIF "Transilvania" said: "The AVAS owes us money, and because it did not repay it willingly, we have resorted to foreclosure, which involves, among other things, the sale of the assets in its portfolio". He has explained that SIF "Transilvania" has challenged the ordinance of the Commission of August 2011 because it wanted to sell the "Biofarm" shares found in the portfolio of the AVAS, and they were frozen by the CNVM.

In mid-august, the Commission received several notices from the AVAS concerning the reevaluation of the situation of the sale by special orders of the shares held in "Biofarm", "Agrana România", "Mercur Craiova" and "Casstil", which suggest possible violations of the regulations specific to the capital market and of the legislation pertaining to the privatization process.

At the time, the Commission decided to disallow operations involving those stocks, in order to verify their legality.

The ordinances of the Commission were issued after brokers placed sale orders for the blocks of shares owned by the AVAS, over the course of several days in a row, and succeeded in selling 6,000 shares of MRDO and 7.24 million shares of BIO.

In September 2011, sources close to the situation were saying that the CNVM was also investigating the BSE because there is no legal framework concerning the sale of the blocks of shares of the state, in the context of the foreclosure of the AVAS, and the BSE should therefore not have allowed the placing of the sale orders. "The Code of the BSE says that the market participant (ed. note: the brokerage firm used to buy/sell the shares) must receive the order from the owner of the shares".

"However, the court enforcement officer is not the holder of the shares, but rather an entity which forecloses on an institution of the state", sources who did not wish to be named were saying.

The Romanian state owns, through the AVAS, a block of 5.85 million shares in "Agrana" Romania, which represents 4.05% of the company, 31,773 shares in "Mercur" (2.68% of the company), 11.4 million shares in "Biofarm" (1.04% of the company) and 56,465 shares in "Casstil" (65.55%).