THE PUBLIC OFFERING OF "PETROM" Inside and outside

Based on the principle "let"s make a mess of the law", the players of the capital market involved in the Secondary Public Offering of 9.84% of Petrom, are doing their best to construe the Code of the Exchange to fit their purposes, in spite of the violation of Article 6, Section 4 (Priorities for displaying and executing the stock market orders), which stipulates that the subscriptions must be inserted in the system of the Exchange during the offering, instead of after its conclusion, as the consortium of intermediaries led by "Renaissance Capital" (which includes "BT Securities", "EFG Eurobank" and "Romcapital") would like to do.

In an article published yesterday by BURSA (called "Paragraph 6"), we proved that according to the Code of the Exchange, the trades taking place during the Public Offering could not be concluded successfully, due to a technicality, specified in the regulations of the BSE and which is not there just as window dressing: The Code requires the intermediaries to also provide the "initial number order allocated by the system of the BSE" (the number of the chronological order of the subscriptions).

But, the members of the consortium of intermediaries will not be able to provide that "initial number order", because they will not be inserting the subscriptions in the system of the BSE, storing them in their own electronic systems instead.

Like it was explained yesterday, by the Head of Trading at brokerage firm "EFG Eurobank" Laurenţiu Floroiu, each of the three brokerage firms will keep records of its customers" subscriptions, and will provide the latter with printed certificates containing the date/hour/minute/millisecond of the subscription.

Floroiu says that the three lists would be merged once, after the conclusion of the offering and would only be introduced in the system of the BSE afterwards.

The problem is that, according to its own Code, the BSE can not load the orders, because the final list coming from the intermediary will not contain "the initial number order".

This detail is not some idiotic provision of the Code; its purpose is to ensure that the order of the subscriptions hasn"t been altered, which is something that the current procedure of the consortium can not guarantee.

I am expecting rebuttals which are going to say that the Prospectus clearly states that the allocation of the shares would be done through a "book building" process, which is generally performed outside the market, by a "bookrunner" which keeps the list of subscribers confidential.

My first counter against that argument would be, what happens if I don"t speak English?

The second observation is that, even if I did speak English, that might not necessarily help me know the meaning of "bookbuilding" and "bookrunner", which are highly specialized terms.

These two observations are not derived from an exaggerated dose of nationalism. They are backed by the provisions of the Law no. 297/2004, which requires public offerings to use common language, in order to make them accessible to the public.

But the main objection to this argument, (if I were to stick to wording criticism, I"d probably sting the intermediaries, and my readers would think I have some "scores" to settle, or that I have an interest in "Petrom", or some other personal interest) is that the Bucharest Stock Exchange does not stipulate the possibility of this procedure.

It should invent it, or copy it from other exchanges, but it doesn"t have it for now.

So, what is to be done?!

Are we willing to break the regulations?

Of course, it"s easier to mutilate them by twisting them through artificial interpretations.

Yesterday, I heard an interpretation which claimed that the Public Offering actually takes place outside the market of the BSE.

OK, no problem.

That would be possible.

Unfortunately, for those looking to interpret things that way, the Prospectus states:

"The company is a listed company, whose shares, including the shares which are part of the offering, are being traded on the regulated market managed by the BSE with the symbol < SNP >".

So, no, it actually isn"t outside the BSE market.

Because this is only actually possible in riddles: "What is on the BSE, but isn"t?"

Answer: "The public offering of Petrom".

MAKE

• The opinion of the BSE

• The representatives of the Bucharest Stock Exchange have reacted to the issues discussed by BURSA pertaining to the fact that the secondary public offering of "Petrom" is not compliant with market regulations, which is why they kindly sent us a clarification which we reproduce below.

•

< In order to clarify certain aspects of the offering of Petrom we want you to consider the following opinions.

The Prospectus mentions the following in the "Subscription" section (page 234):

"The Romanian intermediaries which are members of the Consortium will record all the subscriptions received on the next working day after the Closing of the Offering, as long as they are valid, within the Tranche that each subscription belongs to, through the public offerings of the BSE"

The General Framework for the Offering is stipulated in article 225 of Book I, Title III of the Code of the BSE market operator, which stipulates:

"Art. 225 On each of the Markets mentioned in the article 224, the operations must take place according to the rules applicable to each type of security, to the provisions of the Offering Prospectus/offering, the type of offering or of special operation."

Given the strict framework for performing the offering which is explicitly specified in the Offering Prospectus and based on the discussion with the Intermediaries of the Intermediation Syndicate, it has resulted that the offering in question falls under the provisions of Art. 65 paragraph (2) letter b) of Title III, Book I of the Code of the BSE - market operator", as follows:

"Art. 65 (2) The following allocation methods may also be used on the markets intended for public offerings and other special operations mentioned in Chapter XIII: [...]

b) allocation based on specific criteria, according to the provisions of the public offering prospectus or to the characteristics of the special operation."

Under these circumstances it must be mentioned that the public offering will be performed based on an allocation based on previously mentioned particular criteria, given the provisions of the Offering Prospectus.

Art. 66 of Deed III, Book I of the BSE Code - reflects principles concerning the displaying, the administration and the execution of the orders pertaining to the offering, according to the allocation based on particular criteria.

Given the fact that the BSE needs to accommodate the Offering Prospectus with the operational means that it has available, it has the right to issue technical specifications, according to Art. 227 of the IIIrd Title of the Code of the BSE Market Operator, and respectively:

"Art. 227 The present Chapter will be supplemented with the technical clarifications issued by the BSE concerning the procedure for the unfolding of the public offering and special operations within the BSE."

And considering the fact that the Prospectus indicates the fact that the offering in question is being managed exclusively by the intermediaries which are part of the Intermediation syndicate, (being an "order book" of the offering, closed and restricted to the intermediaries in question), the BSE has accommodated these technical clarifications through the protocol signed with the intermediaries in question.

Thus, in order to implement the conditions for the performing of the offering based on particular criteria and given the express conditions for the performing of the offering mentioned in the offering prospectus, the BSE together with the intermediaries which are the members of the Intermediation Syndicate have signed a "Protocol for running the secondary public offering to sell shares in SC OMV Petrom SA", which sets the terms and the conditions for running the offering on the BSE, according to the framework set through the Prospectus of the Offering. >

(Thank you, DANIELA COJOCARU, advisor to the General Manager)