The prospectus of the listing of Nuclearelectrica, in labor pains

The prospectus of the listing of Nuclearelectrica is currently in the making. The company and the Office for the State's Interests and Industrial Privatization (OPSPI) are working together with the intermediary on the "risks" section, according to several sources close to the situation. The authorities consider that the intermediary is exaggerating the risks, which is why it has returned the prospectus to the Swiss Capital/ BT Securities consortium, according to our sources.

Authorized sources from the Energy Department told us that all the intermediaries with whom they have worked in order to sell on the Bucharest Stock Exchange the shares of the energy companies have told them that the investors need to be informed about the risks, regardless of their extent: "The representatives of the state have asked the intermediaries to stop "hyperbolizing" things, such as, for instance, presenting a simple process as infinitely more complex than it really is. The interest of the authorities and of the intermediary is to make as much money as possible from the sale of 10% din Nuclearelectrica. Investors, especially as the company is being put on offer towards entities especially in the US and Canada, have to know every detail about the company. If they don't have the time to conduct their own audit, investors shouldn't have the ability to produce excuses and then say that they had no prior knowledge of certain details with risk potential. This way, the government and the intermediary of the offer are no longer at risk of subsequently being sued and forced to pay considerable damages. The authorities have understood this aspect and their position was that the intermediary should present the risks accurately. The final details of the prospectus, which will be submitted to the ASF this week, are now being worked out".

The Emergency Ordinance for the ratification of the Letter of Intention with the IMF signed by Romania and which the former approved on June 26th, it is said that the listing of Nuclearelectrica will be done by October this year. Initially, the IPO was set to take place by mid-May, then the Government announced that it will take place this month. The aforementioned sources say: "The deadline stipulated in this letter is extensive. The listing will take place in July, just like the Government announced. The IPOs of Romgaz and Electrica will be postponed until autumn. The Executive has decided to sell the shares in Nuclearelectrica in July, to avoid having too many new listings pile up in autumn".

The Government recently announced that it wants to make a maximum of 300-350 million lei (66-78 million Euros) for the block of shares of 10% in Nuclearelectrica, which it will sell through an IPO on the Bucharest Stock Exchange which will be performed through a share capital increase.

The Government has amended its Decision no. 39/2012 for the approval of the privatization strategy for "Nuclearelectrica", to divide the offering in three tiers. According to the delegated minister for Energy, Constantin Niţă, 85% of the shares will be offered to institutional investors, and the remaining 15% to retail investors, in two tiers, namely small subscriptions of up to 15,000 shares and 5% to those buying over 15,000 shares.

He recently said: "We would like a subscription rate as high as possible, we are betting it will reach about 150% or more for institutional investors, and based on that we are hoping the price will be as good as we possibly can. I would like to get as much as possible, but we need to make a ratio between the share capital, which is somewhere around 2.5 billion lei, and what we can, as nuclear energy isn't very sympathized by investors. You know what happened in Japan, at Fukushima, and that had a negative effect on investors".

The authorities have announced that the price range approved by the Government for institutional investors ranges is 11.20 lei/share to 15 lei/share, including the ends of the interval.

The Romanian state currently holds 90.3% of Nuclearelectrica SA, and the Proprietatea Fund holds the remaining 9.7%. The listing will take place through a share capital increase in which the government will not participate.

According to the evaluation of Nuclearelectrica made by the Proprietatea Fund, at the end of April, 10% of the company is worth about 666 million lei (154 million Euros).