Catalyst for Fondul Proprietatea investors

Bucharest, 21 June 2016 – Franklin Templeton Investment Management Limited United Kingdom Bucharest Branch, in its capacity as Investment Manager of Fondul Proprietatea SA (“the Fund”), welcomes the closure of the insolvency proceedings of Hidroelectrica following the syndic judge’s decision on 21 June. After a long period in insolvency, Hidroelectrica emerges as a healthier and stronger company, prepared to capitalize on its enormous potential and to list on the stock exchange.
“We would like to congratulate the judicial administrator Remus Borza for Hidroelectrica’s outstanding results over the past four years and for his dedication, commitment and contribution to the restructuring of Hidroelectrica. From a loss-making company Hidroelectrica became a highly profitable, efficient and competitive one. The judicial administrator made remarkable efforts over the past four years and, despite the numerous challenges, managed to increase Hidroelectrica’s revenues and reduce operational costs, which allowed the company to return on a positive cash flow and subsequently exit insolvency” commented Grzegorz Konieczny, Portfolio Manager of Fondul Proprietatea.
He added: “We are concerned to see that even though the company’s exit from insolvency had been expected since last year, Hidroelectrica still does not have an independent Supervisory Board selected and appointed in accordance with Ordinance 109/2011. This might pose significant risks for the company in the near future. We urge the Ministry of Energy to accelerate the appointment process of the new Supervisory Board that should follow up with an appointment of professional executive management team. Especially now, after the insolvency exit, Hidroelectrica needs strong and determined management in order to protect the value that has been created during the process, to create further value for Hidroelectrica’s current and future shareholders as the next important milestone is to successfully list the company in Bucharest and London.”
The closure of the insolvency proceedings opens the way towards Hidroelectrica’s initial public offering, the first listing of a Romanian state owned company in more than two years and the largest listing in the history of the local capital market. Fondul Proprietatea is a strong supporter of the company’s IPO, which represents a great leap towards the upgrade of the local stock exchange to the emerging market status.
Fondul Proprietatea advocates for Hidroelectrica’s dual listing on both the Bucharest Stock Exchange and the London Stock Exchange, which would benefit the Romanian capital market, as well as ensure access to a larger pool of demand at the time of the IPO and afterwards, as well as greater visibility for the company. In order to contribute to a successful dual listing, Fondul Proprietatea has proposed to sell during the IPO a 5% stake out of its 20% holding in Hidroelectrica, and also a 3.74% stake representing the subscription rights the Fund has in the share capital increase process, besides the 15% stake the state intends to list.

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