The "Rompetrol" controversy: still no price for squeeze-out procedure

• CNVM requests a new evaluation of "Rompetrol" companies listed on the BSE

• It is uncertain whether the company which set the initial price will still be accepted as evaluator

• Shares of "Rompetrol Rafinare" (RRC) and "Rompetrol Well Services" were suspended yesterday

The National Securities Commission (CNVM) yesterday rejected the evaluation reports of the two companies owned by "Rompetrol" listed on the Bucharest Stock Exchange, based on which KazMunaiGaz was supposed to launch the squeeze-out procedures for "Rompetrol Rafinare" and "Rompetrol Well Services", and requested a new evaluation.

Also yesterday, commissioner Bogdan Chetreanu said, for "BURSA", that the company which made the evaluation reports for KMG, "Gestaco Business Consulting, was removed from CNVM"s Registry of Evaluators, but claims this is not related to the Rompetrol case, but rather due to another case in which it the company also served as an evaluator, which has also come to the attention of the commission".

"Gestaco Business Consulting" SRL of Brăila made the evaluation of "Istru" Brăila prior to its delisting from the Rasdaq market, which was vehemently challenged by minority shareholders.

Commissioner Chetreanu admits that this could seem like too much of a coincidence, but he says it"s just a chain of events: "It just happened this way, that"s all. It"s just that both issues were discussed in today"s (ed. note: yesterday"s) meeting".

Mr. Chetreanu said however, that the reason the CNVM asked for a new evaluation was that it disagreed with the evaluation methods used by "Gestaco".

"Upon seeing the evaluation report sent by KMG several things were readily apparent: first of all, the evaluator did not take into consideration the approach concerning the companies" cash flows, and second, when calculating the company"s net assets, it only considered the net assets for the entire group, instead of calculating it for each company, as we had asked", Mr. Chetreanu said.

He said that these two irregularities were enough to cause the members of the commission not to open the envelopes which contained the offered buyback price, even though they were received two weeks ago.

"We sent the envelopes back unopened and we asked for a new evaluation, made by a different evaluator, because as of today, Gestaco no longer figures in the Evaluator Registry of the CNVM".

Mr. Chetreanu is actually referring to a decision of the CNVM made three days ago by which independent evaluators are required to submit within 30 days a series of documents which certify their compliance with specific professional requirements in order to be able re-register with the CNVM. During that time the evaluators are required to suspend their activity.

The public takeover offers of "Rompetrol" caused a lot of interest among investors, long time before KazMunaiGaz had even made such an announcement.

A group of shareholders of "Rompetrol Rafinare" (RRC), including parliament member Verestoy Attila, who together own 5% of the company, have requested the summoning of a General Meeting of Shareholders, with a view of electing a new Board of Administration through cumulated voting.

KazMunaiGaz however denied the request. The request of the nine shareholders came a few days after the capital market regulator demanded that the Rompetrol group launch a public takeover offer for the companies it intends to delist and at the same time reveal the price per share paid by KazMunaiGaz when acquiring the company, which could be used by an independent evaluator in order to determine the fair price that Rompetrol Group would be required to pay to compensate minority shareholders of "Rompetrol Rafinare".