Shares of the Proprietatea Fund keep making new lows

• Former asset owners are getting ready to ask the state to give them more shares to compensate for the fall in the price of the stock

The price of "Fondul Proprietatea" (FP) shares yesterday fell to a new low of 0.48 lei, trading even lower than the last unofficial price of December 2010, at which they were exchanged at the Central Depository.

The fall of the shares of the Proprietatea Fund comes just as the authorities passed a series of measures which were intended precisely to avoid a steep fall of the price of the shares of the Proprietatea Fund, measures which, according to the National Authority for the Restitution of Properties (ANRP), could negatively affect the compensation process.

About two weeks ago, the Government passed a Decision which stipulated that the ANRP would be allowed to issue payment and/or conversion deeds when "a distortion of the market for the shares of the Proprietatea Fund would take place, causing the price to drop". Later, the ANRP announced that it asked the Government to allow it to gradually issue conversion deed for the 1.5 billion shares which will be distributed to former asset owners in order to avoid distorting the market.

A few weeks ago, Gabriela Anghelache, the president of the CNVM, said that flooding the market with 1.5 billion shares of the Proprietatea Fund would most likely cause the price of the stock to fall abruptly, and the goal of the Decision of the Government was precisely to prevent something like that from happening.

Still, the market invalidated the expectations on the reasons why the price of the shares of the Proprietatea Fund could fall: the stock continued to fall even after the authorities implied that the 1.5 billion shares would be distributed to the former asset owners, in order to avoid distortion the market.

Nicolae Ivan, former chairman of the "Proprietatea Fund" and representative of investment fund "Cartesian", which reported holding shares in the Proprietatea Fund, was saying, two weeks ago, that the coming onto the market of new shares of the Proprietatea Fund was not a strong enough reason to cause the price to drop. He stressed that the distribution of new shares could have perhaps even pushed the price up, as a result of the increase in free-float, especially since there was no guarantee that the new shareholders would sell their shares, as soon as they received them.

If we were to follow this line of reasoning, one couldn"t blame the collapse in the price of the Proprietatea Fund on the release, even in drips, of part of those 1.5 billion shares that the ANRP announced it would distribute. Besides, the Authority has announced in the beginning of the week, that it has issued conversion deeds for 296,059,462 shares, the largest block of shares that was sent to the Central Depository until now having been of 239,385,665 shares.

• Marius Murgu: "There appears the question whether those who sold their shares prior to the listing weren"t the realistic ones"

The fall of the price of the Proprietatea Fund is causing the discontent of the former asset owners who these days lost even more than half of the value they received as compensation.

Some of the former asset owners, for whom the value of their compensation was calculated at a price of 1leu/share, are now ready to go to court, claiming that they are being discriminated in comparison with the former asset owners who will be compensated at the average weighted price that the stock of the Proprietatea Fund traded at over the last 60 days.

"The paperwork needed to file a lawsuit against the Ministry of Finance has been drafted and we expect that we will file them with the Court next week", said Marius Murgu, the president of the Association of Private Investors of the Fund, who added: "We are going to demand that we receive more shares, than the number of shares we have already received (which was calculated at a price of 1 leu/share), claiming discriminatory treatment against the former asset owners who will receive shares in the coming period, for which the price of 0.61 lei will be used for calculating their compensation. In truth, the situation is difficult for them as well, since they are unable to get the amount they expected by selling their shares on the stock exchange".

The Proprietatea Fund yesterday reached a market capitalization of 6.68 billion lei, based on the price of 0.485 lei/share. A volume of 55 million shares were exchanged yesterday, at prices ranging between 0.48 lei and 0.498 lei/share.