Franklin Templeton, Fondul Proprietateaaa‚¬a„¢s administrator brings Romgaz to court

Franklin Templeton Investment Management Limited, investment manager and sole administrator of the Fondul Proprietatea (“the Fund”) announced it will start legal action against Romgaz’s decision to donate RON 400 million towards the Romanian state budget. This measure was taken despite the Fund having raised grave concerns about the impacts that such a short-term measure would have on Romgaz’s profits, its shareholders, corporate governance rules and perception of foreign investors on the Romanian capital market.

Following the November 30, general shareholders meeting at Romgaz, the Ministry of Economy –which controls 85 percent of shares – voted in favor of the proposed donation. As a minority shareholder with 15 percent of shares, Fondul Proprietatea voted against this resolution.

“We understand the need of the Government to finance its budget deficit, but such decisions should only be taken with a long-term perspective in mind. Now that the donation has been endorsed by the Minister of Economy, we can only foresee detrimental effects to Romania’s investment environment. We would add that it could even affect Romania’s ability to maintain its current credit rating,” said Mark Mobius, executive chairman at Templeton Emerging Markets Group.

Despite engaging with the Romanian Government and Romgaz’s management to propose an alternative solution in the form of a special dividend that would treat all shareholders in a fair and an equal manner, Fondul Proprietatea will now start legal proceeding to protect its shareholders by seeking an annulment of this donation.

Launched in December 2005, Fondul Proprietatea was established to compensate Romanians whose properties were confiscated by the former communist government. Franklin Templeton officially took over as investment manager and sole administrator of the Fund on 29 September 2010. Since appointment, Franklin Templeton has commenced the payment of dividends relating to distributable profits from 2008 and 2009 to all registered shareholders as of 27 September 2010 and remains focused on listing the Fund on the Bucharest Stock Exchange in early 2011.