THE DREAM OF MARCEL BĂRBUŢ - TO SEE HIS COMPANY LISTED AdePlast goes to the BSE, even though he could have gone to the banks

AdePlast plans to invest 19.5 million Euros in a new plant of rockwool, and has turned to the Bucharest Stock Exchange for financing.

"I could have probably continued to borrow money from the banks, but I wanted to take the company on the stock market", said Marcel Bărbuţ, the owner of AdePlast, who will sell approximately 33% of the company to investors, through the IPO that begins today.

From the stock market, AdePlast wants to raise between 13 and 15 million Euros. Furthermore, the company has also asked for a state aid of 7.3 million Euros, for creating jobs, but the representatives of the company say that the investment in the rockwool plant does not depend on whether that aid is approved or not.

• Marcel Bărbuţ: "I've always wanted to take the company public"

From the very moment he created AdePlast, Marcel Bărbuţ knew one thing - that he wanted to take the company public.

"From the very beginning, I've wanted to take the company public", he told us in an exclusive interview, and he went on to say: "When I created AdePlast, I went on a trip with my associates and took them to Austria to visit a plant. I told them that that was the level we had to reach. I have to tell you that right now, AdePlast is bigger than the Austrian plant we visited back then. In all of these years, we've succeeded in borrowing money from banks, we've made investments, but we are still missing certain things".

Marcel Bărbuţ also said that he wants to take the company public on the Bucharest Stock Exchange and that he has not considered doing so on another stock exchange, because he is a Romanian.

In 2009, AdePlast was looking to get listed on Sibex. Even though he says that Teodor Ancuţa, the CEO of Sibex at the time, would have deserved, on a personal level, to get that IPO, Marcel Bărbuţ says that at the time, he didn't feel like it would be a good thing to do.

Considering what happened next at Sibex (the flight of broker Cristian Sima, who had become the next CEO of Sibex), the hunch of Bărbuţ seemed to have been spot on.

• Sobolewski to the brokers intermediating the offer: "Let Bărbuţ do the talking with investors"

Ludwik Sobolewski, the CEO of the BSE, considers that Marcel Bărbuţ has a lot of courage and determination in doing the first private IPO in the last five years. Sobolewski is advising the brokers intermediating the IPO to let Marcel Bărbuţ do the talking with investors, because he knows his business very well.

The owner of AdePlast said that he hopes that the new CEO of the BSE will be lucky for him, considering that he comes from Poland, a country whose stock market is doing very well. "Being lucky is important", Sobolewski replied.

• AdePlast wants one third of the market for rockwool

AdePlast intends to open the rockwool plant at the end of Q1 2015, and to grab up to 30% of the local market, which is currently almost completely serviced by imports.

Marcel Bărbuţ reported: "There has been one plant of rockwool in Vaslui, it was bought off by Rockwool, scrapped and abandoned. There used to be another at Macon Deva. It was acquired by Cristian Nacu, who upon seeing that he needed to invest in it, shut it down.

There is also Saint Gobain, in Ploieşti, but it has 70s technology. It makes rockwool at a density of 30 kg per cubic meter. For thermal insulation systems, a density of up to 100-130 kg is needed. For roofs, a density of up to 2-300 kg".

Rockwool is a thermal insulator and it is fire-resistant.

Aside from the local market, AdePlast intends to export this product to Bulgaria as well as Moldova, which don't have factories.

By 2020, apartment buildings will be required to have thermal insulation, according to European Directive 20/20/20.

According to the prospectus, the rockwool which will be manufactured will have a density ranging between 30-200 kg/cubic meter, which covers the entire range of rockwool products for which there is market demand, most of which are currently being imported and not manufactured locally.

Marcel Bărbuţ said that aside from the IPO, he has also asked for a state aid: "We have also filed the paperwork for a state aid. Two years ago, we made another try to be granted one, but we were turned down by the former government. Bosch got one, we didn't. We will try again".

Răzvan Paşol, the CEO of Intercapital Invest, one of the intermediaries of the IPO, said that the investment in the rockwool plant does not depend on the state aid. "If the state aid gets approved, there will be other shareholders left for other projects, including acquisitions", he said (see insert).

• Bărbuţ: "Zentyss, as good as acquired"

One takeover target for AdePlast is Zentyss, a provider of insulation materials for construction, with which AdePlast is currently conducting negotiations.

Marcel Bărbuţ told us: "We have essentially acquired Zentyss, which manufactures XPS (extruded polystyrene) in Romania, with the raw materials we give it. We also sell the products. They basically do processing for us. We will keep their brand as well, but we will build our own. And with that we will have the entire range of thermal insulation products, except for netting and dowels".

The owner of AdePlast also explained: "The acquisition of Zentyss is currently in testing. We will acquire them, but we need to talk to the bank. Its "hair" is kind of long, and that would be a "haircut". So we don't have to pay money, we can negotiate and give them stock in AdePlast instead".

Marcel Bărbuţ says that he wants Adeplast to reach a turnover of 100 million Euros in three years. He is also eyeing expanding its exports to Hungary, Austria and even Germany.

• Cash dividends of 3 million Euros

Through its prospectus, AdePlast has pledged a dividend policy which it considers attractive.

The company may fully distribute the annual net profit in the form of dividends, starting with 2014, only if it meets the requirements imposed through the loan agreements concluded with UTB (ed. note: UniCredit Ţiriac Bank), including the financial ratios stipulated in the loan agreements concluded by the issuer with UTB, the prospectus of the offer states.

According to him, the dividends will be payable in cash in an amount of up to 3 million Euros/ year and provided the cashflow of the issuer will allow the making of those payments. "Any dividend whose payment exceeds 3 million Euros or exceeds the limits of the cashflow will be payable through issuing shares to the existing shareholders", the prospectus also states.

• Răzvan Paşol: "We expect several thousand investors"

"AdePlast is an exceptional investment product", considers Răzvan Paşol. He said that he is betting on at least a few thousand investors participating in the AdePlast offer. "We are hoping to have as many investors as possible participating in a Romanian company, that is profitable and growing", said Paşol.

The broker also said that AdePlast is the first IPO with a price stabilization mechanism, meaning that the company will have the ability to buy back stock from the market, of up to 10% of the value of the IPO. This will also be the first IPO were orders will be revocable.

Aside from the traditional Romanian investors - pension funds, investment funds, SIFs or the Proprietatea Fund -, Răzvan Paşol expects foreign investors will participate in the offer as well, except for those in countries where restrictions exist.

"There are regional investors that are eyeing Romania and we are waiting for them", said Mr. Paşol.

The maker of construction materials is putting up for sale 16,500,000 shares (representing 33.3% of the increased share capital following the IPO).

The IPO will be structured in two tranches: that of the Major Investors (subscriptions of over 500,000 lei), which represent 85% of the total number of shares put up for sale and that of Small Investors (subscriptions of less than 500,000 lei), 15% of the total.

The investors that subscribe on the retail tranche can subscribe at prices ranging between 3.52 and 4.06 lei/share (including the ends of the range), and the small investors will be allowed to subscribe at a fixed price of 4.06 lei/share.

The price of the IPO will be established depending on the subscription of the major investors as follows - if the subscription rate is less than 120%, the price in the IPO will be equal to the lowest subscription price, and if the subscription rate will be less than 120%, then the price in the IPO will be equal to the price at which the tranche of major investors is subscribed at 120%.

Investors on the small tranche will receive a discount of 3% in the first four working days of the IPO, and of 2% in the remaining days.