Fondul Proprietatea is trying to sell its Hidroelectrica stake, worth almost USD 900 million

Aurel Dragan 05/09/2018 | 09:14

Fondul Proprietatea held an Ordinary Shareholder Meeting (AGA) in which it presented its activity for the first part of the year and the activity of its main stocks. As of today, the shareholder structure shows that of a total of 6,235 investors only 17 percent are Romanian individuals, meaning those who could be from the former owners that had to be compensated by the state.

One of the changes in the fiscal law is that dividends can be paid quarterly, and not just yearly as the old law stated. And while Fondul Proprietatea is all about rewarding its shareholders, it will not switch to a quarterly dividend distribution according to Johan Meyer, CEO of Franklin Templeton Investment Management Ltd UK, Bucharest Branch and portfolio manager for FP.

“As far as Fondul Proprietatea is concerned, it would be an extremely difficult and complicated exercise as things stand now. The income from dividends in the portfolio is concentrated in only a few months, there may be situations where it is not necessarily a surplus of capital, but you may be asked to pay a dividend. Also, as things stand at the moment, the situation is ridiculous too, to be honest, if profitability at the end of the year is not in line with dividends paid during the year, if profitability is lower, you could be forced to try and sue the shareholders to return the dividends, so it’s a ridiculous situation, and that’s not what we have encouraged our investors to ask for annual commitment, which we are currently making,” said Meyer.

As far as the main stock in the portfolio is concerned, that is Hidroelectrica, with a value of almost USD 894 million, 36 percent of FP value, the fond discusses the sale of shares held with Hidroelectrica with several stakeholders in quite large areas.

“We are discussing the project that we have with several stakeholders in quite large areas. We are not at the point where we need to make an announcement, but it is a process that is under way. As I mentioned at the General Assembly of Shareholders, Hidroelectrica not only represents the crown jewels for Fondul Proprietatea but also for Romania. Even nowadays, when green energy is so discussed and so relevant to the way of production and consumption in the future, a Hidroelectrica company with 100 percent hydro power generation is an extremely valuable asset and we want to make sure that this is reflected in the discussions we have with any interested parties,” said Meyer.

Asked to explain why Hidroelectrica is the most important company in the portfolio, but it is still on sale, Johan Meyer said it depends on what can be done with the funds from the sale.

“On the one hand, it is our duty to create value for shareholders, and at present, yes, it generates dividends, but if we also would be willing to pay twice to say the value we have listed in our portfolio, we as managers we would not do the job if we did not analyze the offer and it would certainly be up to us and the shareholders to do with the money we received: to distribute, to invest or to reinvest them or to reinvest them their names,” explained Meyer.

The contract with the consortium of investment banks for company listing has not been extended by shareholders, and the Government should review this process and select a new consortium to redistribute the listing process and carry it forward. Johan Meyer also said that Hidroelectrica is absolutely critical to creating value for the Fund.

Fondul Proprietatea wants the government to access the capital market by listing CN Airports in Bucharest to finance the expansion of this airport.

“The first thing people see when they arrive in Romania is the airport, it is the” face of Romania “and has the extraordinary potential to leave a beautiful impression. Given the record passenger traffic, which will continue to rise according to estimates, it is certainly necessary to increase the airport capacity of Henri Coanda Airport for the good management of passenger flows. We encourage the Government to access the capital market by listing CN Airports in Bucharest to finance the expansion of this airport,” said Meyer.

Bucharest National Airport (CNAB) achieved an operating profit of RON 269.3 million lei in the first semester, up 19.1 percent from the first half of 2017. Income in the first six months of 2018 (excluding the influence of joint venture income) amounted to RON 440 million, 8.3 percent more than in the first half of 2017 and 26.5 percent more than in the same period of 2016.

Also during this period, turnover amounted to RON 425.31 million lei, 10 percent higher than the same period of 2017 and 29.6 percent as against the first half of 2016. In turn, the gross profit (EBITDA) increased by 21.4 percent compared to 2017.

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