WHAT WILL THE STATE DO? The market is asking for a 10-20% discount on the "Transelectrica" offer

Equity market players are clamoring for a discount of 10% to 20% on the offer for the sale of 15% of the shares of "Trans­electrica", and the seller, the Romanian state, needs to decide very soon whether it will give in to that pressure.

According to official statements made so far, the authorities are willing to grant a discount compared to the price on the stock market, but it is unknown as of yet if it will match the expectations.

The offering is scheduled to take place this month, meaning that the authorities are due to publish the prospectus in the coming days, which will include the price and its discovery mechanism, as well as the precise subscription period.

The state, together with its intermediaries, will need to carefully ponder the ten days dedicated to for the subscription of the offering, because its success could depend on the international context, where the tensions in Iran and Greece are causing investors' mood to shift from one day to the next.

A new failure after that of the secondary public offering of "Petrom", last summer, would be a disaster, some analysts claim, who say that it might be better if the government postponed the offering, if the markets are not auspicious.

Other voices claim that the block of "Transelectrica" shares does not necessarily have to be sold at any price, and that the government should postpone the offerings included in the program concluded with the IMF for a few years.

The program to sell stakes in companies in the energy sector has caused the anger of citizens. Part of those who have been protesting for weeks against the government, have recently staged a demonstration against the Ministry of the Economy, asking for the program to be abandoned.

On October 12th, 2011, the consortium comprising the Romanian Commercial Bank (BCR), "SSIF Intercapital Invest" and "Swiss Capital" was appointed as the winner of the call for tenders for the the intermediation of the secondary public offering of 10.99 million shares in "Transelectrica".

In order to promote the public offering, the representatives of the intermediation consortium have organized several meetings with foreign and domestic investors.

The first road-show was held in the beginning of last month, at the headquarters of the Bucharest Stock Exchange, and was attended by institutional as well as retail investors.

Last week, the offering of "Trans­electrica" was presented to investors in Warsaw, Frankfurt, Stockholm and Tallinn, and in the beginning of this week a road-show was held in London.