The Romanian state keeps "Rompetrol" listed on the Stock Exchange

• The Ministry of Finance claims that determining the fair price for the shares of Rompetrol would be impossible without the stock market setting a price for them

• Florin Ilie, ING: "The price that RRC shares are currently trading at does not reflect the company"s fair value"

Brokers were expecting "Rompetrol Rafinare" to be delisted from the Bucharest Stock Exchange, after the Kazakhs of KazMunayGaz, had acquired 98% of the company, but the Romanian authorities have other plans.

An ordinance of the Romanian National Securities Commission (CNVM), released Wednesday evening, reveals the position of the Ministry of Finance on the intention of the Rompetrol Group to remove "Rompetrol Rafinare" from the Stock Exchange.

The Ministry of Finance opposes the delisting of "Rompetrol Rafinare", and considers that removing the shares of RRC from trading prejudices the interests of the Romanian state, arguing that without a regulated market to provide a quote for the shares, the evaluation of their fair value would be impossible to evaluate.

Furthermore, the officials of the Ministry of Finance argue that the delisting of "Rompetrol" would hurt the rights of the Romanian state as bondholder and future shareholder of the company.

"Rompetrol Rafinare" currently has a free-float of just 290 million shares, which represent 1.37% of the company"s share capital.

In the last three months, since the conclusion of the takeover offer made by the Rompetrol Group, around 15.5 million shares of RRC were traded on the exchange. The low liquidity of these shares raises doubts about the price determined by trading is relevant when it comes to determining the true value of the company, which is precisely one of the arguments invoked by the Ministry of Finance.

"The price that Rompetrol shares are currently trading at is not does not reflect the company"s current value", says Florin Ilie, the head of the equity markets department of ING Bank, who explained: "1.37% is a very low free-float. The trades of the last six months with RRC shares confirm their lack of liquidity, as everyone expected the company to be delisted. I therefore consider that the current quote of Rompetrol shares does not represent the true value of the company".

Over the last months, the price of RRC shares fluctuated between 0.0653 lei and 0.0721 lei/share, below the price from the takeover bid of 0.075 lei.

Yesterday"s price of 0.066 lei/share puts the company"s market capitalization at 1.39 billion lei.

• A potential solution for the state to make an easy exit

The state"s intention to keep "Rompetrol Rafinare" listed on the Stock exchange also needs to be considered from the angle of a possible sale of the stake it will receive in "Rompetrol", after the conversion into stock of part of the 600 million dollars bonds it holds in Rompetrol, which are coming to maturity in September.

"It is very important for the state to hold shares in a company listed on the stock exchange because this provides it with the possibility of a an easier exit from the company. For years, the state has wanted, at least judging by its statements, to float companies in its portfolio, such as Romgaz or to bring bigger stakes of Transgaz and Transelectrica, as it is extremely difficult for it to make an exit from this company. Furthermore, it is easier to evaluate a public company than a closed one", said Andrei Petrescu, portfolio manager at "Prime Transaction".

According to the representative of "Prime Transaction" the situation of "Rompetrol Rafinare" will only become clear after the 450 million lei share capital increase will be completed and the bonds will be converted into stocks, following which the state will become a minority shareholder again: "The free-float of Rompetrol Rafinare could change once the share capital increase is done and the bonds are converted into stocks. We will have a clearer picture then".

ON Wednesday, the Romanian National Securities Commission (CNVM) suspended the right of the Rompetrol Group (the majority shareholder of "Rompetrol Rafinare") (RRC) to squeeze-out the remaining shareholders of RRC. This right will remain suspended until the clarification of the legal status of the bonds issue of 600 million dollars owned by the Ministry of Finance in "Rompetrol Rafinare", following the conversion of the company"s historical debts.