Franklin Templeton opposes the governmentaa‚¬a„¢s plans to extract aa‚¬A“donationaa‚¬A from Romgaz

Franklin Templeton, investment manager and administrator of the Fondul Proprietatea strongly opposes the Romanian Government’s attempt to extract a “donation” from Romgaz to help finance this year’s government budget deficit.  Romgaz, a majority state-owned company, is the largest natural gas producer in Romania and a Fondul Proprietatea portfolio holding. Romgaz organized a general shareholders meeting today, during which a vote is to be held on this proposal.

“We are disappointed that they are pursuing this course of action. We reiterate today that we strongly oppose the Government’s proposal to extract a donation from Romgaz to cover its budget deficit. Doing so would be detrimental to Romania’s reputation and set a very negative precedent, damaging foreign investors’ perception of the safety of doing business in Romania and negatively affecting the possibility of having Romgaz listed on the Bucharest Stock Exchange next year,” said Mark Mobius, executive chairman of the Templeton Emerging Markets Group.

The Romanian government approved today the Ordinance 18, which includes three articles (#s 51-54) stating that several majority state-owned companies “have the option” to make donations to the state budget in order to cover this year’s budget deficit. One of the articles sets maximum amounts that several companies can donate; Romgaz is the only company in Fondul Proprietatea’s portfolio mentioned, with a maximum amount of RON 400 million, or roughly USD 130 million, representing 52 percent of cash on the company’s balance sheet and 4.5 percent of shareholder’s equity at the end of 2009.

Launched in December 2005, Fondul Proprietatea was established to compensate Romanians whose properties were confiscated by the former communist government.  An international tender was announced in December 2008, and Franklin Templeton won the Euro 3.4 billion Fondul Proprietatea mandate in July 2009 after being selected from among seven global asset managers. 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 the 2008 and 2009 dividend distribution to all registered shareholders as of 27 September 2010 and remains focused on listing the Fund on the Bucharest Stock Exchange in early 2011.

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D.V.