English
The Proprietatea Fund has opposed the restructuring of Romania"s energy production through the creation of "Electra" and "Hidroenergetica", due to the fact that it is a minority shareholder in the most valuable companies that will be included in the two energy colossi. Last year, the Fund went to court in an attempt to block the two spin-off and merger projects that the companies filed with the Trade Registry.
The Proprietatea Fund is proposing a different restructuring solution: listing "Hidroelectrica" and "Nuclearelectrica" on the stock exchange and using the capital rasied to finance the two companies.
The management of the Proprietatea Fund said: "The reasons that have prevented us to agree to the restructuring was the fact that no long term strategy has been devised and the fact that including Hidroelectrica and Nuclearelectrica into the new companies would affect their profitability. In other word, the assets and the profitability of Hidroelectrica and Nuclearelectrica would be used to cover the losses and needs for financing of the other companies involved in the merger. Such a move would be detrimental to the current shareholders of Hidroelectrica and Nuclearelectrica".
They said that some of the thermoelectric companies that will be included in the two projected energy giants are now profitable thanks to the selling of emissions certificates, but which in 2013 will need to begin buying themselves. The managers of the Proprietatea Fund are concerned that after 2013, it will come to a point where these companies would post great losses and their existence would be threatened. Moreover, they think that the spin-off and merger will reduce transparency.
The officials of the Proprietatea Fund added: "As an alternative, we believe that Hidroelectrica and Nuclearelectrica would be ready for getting listed on the stock exchange even earlier than at the end of 2011. The three energy complexes - Craiova, Rovinari and Turceni - should begin restructuring processes right away in order to have their costs down, to ensure long term profitability. Also, these companies should be auctioned off after the restructuring process would be over. Hidroelectrica and Nuclearelectrica could be potential buyers for them, using the funds they would raise through the IPO".
• Maximizing profits isn"t always the first concern of the managers of state owned companies
The main objective of any company should be to maximize shareholder value. Any management decision needs to be made with that goal in mind. The officials of the Proprietatea Fund claim that unfortunately, there are some state owned companies that don"t always follow this principle, and he gave the example of the donation of 400 million lei that "Romgaz" made to the state budget, or that of the contract between "Hidroelectrica" and "ArcelorMittal", in which the former chose to sell energy at a price 40 lei/MWh below the average market price.
The officials of the Proprietatea Fund said: "We strongly believe that an adequate system for holding the managers of companies responsible should be implemented, because I have already seen situations where no one takes responsibility for some major decisions made by those companies".
So far, the Fund has publicly announced that it would go to court over the decision made by Romgaz to donate a large part of its profit to the state budget and that it would sue the members of its Board of Directors that approved the decision. "Romgaz" is the only state-owned company in the portfolio of the Proprietatea Fund that was forced to make such a donation.
In the case of the "Hidroelectrica" - "ArcelorMittal Galaţi" deal, the management of the Proprietatea Fund declined to answer whether it would sue over the decision of the Board and of the managers.
The officials of the Fund also declined to comment on the rumor that they were negotiating with the ministry of the Economy to find a solution to the aforementioned problems.
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