The government is willing to offer a discount in the offer of "Transelectrica"

The deal through which the government will try to sell on the stock market a block of 15% of "Transelectrica" (symbol: TEL) is scheduled to begin in mid March, and will have a subscription period of 10 working days, the representatives of the company and of the union that intermediates the partnership said yesterday, in a conference.

Even though in November 2011, the Government, through the Office For The State's Interests and Industrial Privatization (OPSPI) wasn't too willing to offer a discount on the stock of the companies which are up for privatization, the representatives of the union which will intermediate the offer of "Transelectrica" said that it was eventually decided to grant a discount, the size of which is yet unknown. The prospectus will be published in the beginning of March and will include the price and the price discovery mechanism, as well as the precise subscription period.

Dan Weiler, Executive Director of "Corporate Finance and Investment Banking" at BCR, said that the first road-show, for promoting the offer of "Transelectrica", was held on Monday at the headquarters of the Bucharest Stock Exchange, and was attended by retail as well as institutional investors: "We had talks with the representatives of the SIFs, and of investment funds, which expressed their interest in the offer of "Transelectrica". He said that the next meetings will take place in London (2-3 weeks from now) and in two or three more European cities.

Dan Weiler also said that given the small size of the deal, it will not target USA investors.

On October 12th, 2011, the consortium made up of the "Romanian Commercial Bank" (BCR), "SSIF Intercapital Invest" and "Swiss Capital" was appointed as the winner of the call for tenders for intermediating the secondary public offering for the sale of 10.99 million shares in "Transelectrica".

The Romanian government owns 73.6% of the shares of "Transelectrica", the Proprietatea Fund owns 13.4%, and the free-float is 12.8%.

• Profit ten times higher

"Transelectrica" (TEL) ended last year with a profit of 90.27 million lei, ten times higher over 2010. The company posted a loss of 63 million lei in Q4 2011, according to the preliminary annual results sent to the Bucharest Stock Exchange yesterday.

Marian Mache Gheorghiţă, CFO of "Transelectrica", explained the loss experienced by the company in Q4: "In any fiscal year, the first two quarters can not be used for reference, as being decisive when it comes to the profit or the turnover of a company, because at that time, no procurement procedures are initiated, but rather they usually appear in the months of May-June, and are thus reflected in the Q4 results". In her opinion, 2011 was a normal year for "Transelectrica", compared to those that came before it: "Between 2008-2009 the expenses were cut, and then in 2010, we saw a major correction for them".

In 2011, the electricity carrier had a turnover of 2.904 billion lei, up 14.08% over 2010.

In 2011, the company's operating revenues rose 13.86% in 2011, to 2.94 billion de lei, whereas expenses rose 11.13% compared to 2010, to 2.48 billion lei.

In 2011, the company had a stock market capitalization of 1.27 billion lei (295 million Euros).

• Transelectrica wants to take out a line of credit of 150 million lei for the balancing market

Transelectrica wants to take out a credit line of 150 million lei in order to have a "buffer amount" to use for paying for the trades made on the balancing market in the case of delays between the buying and the settlement of the contracts concluded by the companies which use that specific market.

"We need a buffer amount of 150 million lei, in particular for the balancing market, a line of credit which we would not use heavily. We need to be able to cope with the slower payments and the payments which need to be made on time", Marian Mache Gheorghiţă, head of the financial department of Transelectrica (TEL) said on Wednesday.

He went on to say that Transelectrica intends to take out another drawdown line of credit, but did not provide any details on the amount or on the intended destination of the money.

On the balancing market, companies trade energy when there are problems in supplying consumers with energy, and the prices are higher than on other trading platforms of the OPCOM.

The operator of the balancing market, established as part of Transelectrica, serves as the counterparty to every participant of the balancing market, in all the concluded transactions. The operator is also responsible for the registration of participants on this market, for the collection and the verification of the bids as well as for the calculation of the amounts needed for settling the trades conducted through it.