Romania's legislative framework is renowned for its lack of coherence. Ordinances are issued, then come the laws that pass and modify them, only to be followed by new ordinances that change the respective laws. Faced with the numerous confusing situations, many just shrug and give up. However, those who are patient enough to study the documents may stand to gain, financially speaking.
At the beginning of last month, the Romanian Government tried to soothe the capital market, which was in turmoil because of the protests of the main shareholders, represented by French group Renault. According to the Emergency Ordinance on approving the securities law, passed in March, the main shareholders owning more than 90% in a company had to launch public purchase offers for the rest of shares by March 2003.
However, the offer's price was the most delicate issue, while the main shareholders argued they did not have enough time to finalise the assessment studies requested by the law.
Depending on the way the price is calculated, the offer's value in the case of Renault-Dacia for instance can either amount to 15 million dollars or to 60 million dollars.
At the request of majority shareholders, the Government decided last month to issue a new Emergency Ordinance, stipulating purchase offers must be launched on December 1, 2002 instead of March, with the deadline set for December 1, 2003.
After the ordinance was passed, the calm was restored, with market players waiting for December 1 in order to start over with forecasts and speculations regarding the offers' prices.
However, brokerage firm Raiffeisen Capital&Investment yesterday released two preliminary ads announcing the intention of two majority shareholders to launch takeover offers for the companies where they hold more than 90% of shares. The two companies are Koyo Seiko, which owns 91.93% in Koyo Romania (former Rulmenti Alexandria), and Titan Mar, with a 94.8% stake in Marmosim Simeria.
The announcement of the offers and prices surprised and even infuriated many investors and brokers who were expecting such operations only after December 1. Moreover, it had been agreed that the prices were to be set by independent evaluators, authorised by the National Securities Commission (CNVM).
So what is Raiffeisen counting on in order to delist Koyo Romania and Marmosim Simeria from Rasdaq, without its clients Koyo and Titan Mar having to delve too deep into their pockets?
Depending on a certain interpretation, the legal stipulations regarding the delisting offers have created a "void" for the October - December 1 interval, during which the price can be set without evaluators.
Thus, Ordinance 122 issued in October postpones the deadline for launching offers until December 1, 2003 by annulling par 1 of article 138 of law 525. The same article, in par 3, stipulates the price will be set according to CNVM regulations (i.e. by evaluation studies). This can lead to two interpretations: ordinance 122 has cancelled only that paragraph regarding the deadline or it has cancelled the entire article 138.
With article 138 entirely cancelled and article 136 still in force, majority shareholders can launch takeover offers for delisting, at the price they choose, until December 1, 2002.
"We believe that article 138 is entirely cancelled by December 1, 2002. We have thus launched offers based on article 136 and, as long as we close them by December 1, we can start the delisting procedures," says Dragos Neacsu, chairman of Raiffeisen Capital&Investment.
Should the CNVM authorise them, the offers for Koyo Romania and for Marmosim could be launched for smaller prices than estimated by market investors.
Titan Mar offers 3,150 ROL for one Marmosim share, with the Rasdaq quotation standing at 3,500 ROL, while Koyo Seiko is willing to pay 19,000 ROL for Koyo Romania, which is currently quoted at 25,000 ROL.
"The legal situation is not clear. Under the circumstances, we may have no choice. There should be a norm clarifying the situation of article 138, but CNVM cannot draft it," says Paul Miclaus, a CNVM commissioner.
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