Largest closed end fund makes a tender offer for its shares

THE NEWS:

Acceleration of the fourth buy-back programme by means of a Public Tender Offer initiated by Fondul Proprietatea SA

Franklin Templeton Investment Management Ltd. United Kingdom Bucharest Branch (“the Fund Manager”), in its capacity as Sole Administrator and Fund Manager of Fondul Proprietatea SA (“the Fund”), informed shareholders that today it has submitted for approval to the Financial Supervisory Authority (the “FSA”) the application for a buy-back tender offer for the purposes of carrying out the fourth buy-back programme approved through the Shareholders’ Resolution no. 9/28 April 2014. The Fund Manager would also like to inform shareholders and investors that it has contracted Raiffeisen Bank S.A. to assist in the execution of this operation.

For this offer, the Fund intends to repurchase 750,000,000 shares from its shareholders.

Full details of the offer will be announced after receiving the approval from the FSA, which should take place within 10 business days according to the regulations in force.

In light of this development, the Fund would also like to report that the daily execution of the buy-back programme on the regulated market has been suspended from 16 October 2014; any restart after the closing of the offer will be announced in due course.

MY COMMENT:

The rummor is that the tender will be at 1.05 RON per share – at 13% premium to current share price. It is another attempt by the manager to narrow the NAV discount that currently stands at 25%. The fund manager faces termination, if it fails to narrow the discount below 15%.