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Franklin Templeton, the adminstrator of Fondul Proprietatea (FP) expresses its strong disappointment related to the latest statements issued by Mihai Tudose, Minister of Economy regarding his opposition to Salrom’s listing.
In this context, FP administrator states that currently, according to Government Ordinance no. 88/1997 on the privatization of trading companies, the Ministry of Economy, Commerce and Tourism is prohibited to buy shares in state-owned companies, including Salrom.
“As such, the alleged selling offer by Fondul Proprietatea to the Ministry of Economy, Commerce and Tourism would be useless for the Ministry, unless the Government intends to change the legislation in force and allow the Ministry to buy such shares. We are not aware of any intention of the Government to change the current privatization legislation in order to allow the Ministry of Economy to buy the Fund’s shares in Salrom,” a press release reads.
In April, the Government issued a press release where expressed its intention to continue the listing program for other state-owned companies including Salrom. “Analyzing the current Government’s portfolio we identified three categories of state-owned companies which can contribute to the increase of the Bucharest Stock Exchange liquidity: – companies that are majority controlled by the state and which have not been privatized (Hidroelectrica, Portul Constanta, Aeroporturi Bucuresti and Salrom),” a press release announced that moment.
“The statements of Mr. Mihai Tudose, Minister of Economy, surprised us since they directly contradict the above-mentioned press release from the Government.”
Regarding Tudose’s comments made on the strategic nature of the company that, in his view, has to remain under the state control, Franklin Templeton thinks this is not a valid argument against the listing of Salrom.
“First of all, through the listing, as it was proposed by Fondul Proprietatea, the Government will not lose the control of the company since the Fund will be the only seller in the initial public offering; the Ministry of Economy will remain the majority shareholder of the company with 51 percent stake, as it is the case now having the same voting rights in the general shareholders meetings,” the UK investment fund says.
Franklin Templeton points out that the listing will bring numerous advantages to the company, such as increased transparency and visibility and the opportunity to finance the investment plans through the stock exchange as an alternative to bank loans. Also through the listing, the management is incentivized to better perform and increase the company’s value for the benefit of all its shareholders.
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