Alro between privatisation and give-away

Alro Slatina, one of the best Romanian companies, may become tangled in a scandal in the event that information in the press, saying that a major capital increase by bonus and paid shares is in store, turns out to be true.

Practically, in case the capital increase is operated by paid shares, the Privatisation Authority (APAPS) loses control over the company to private shareholders. Which indirectly means privatisation.

The main winner will most likely be Conef Bucharest, a company dealing in trade, which already holds 10,5% in Alro directly.

However, there are certain rumours that Rafferty, Radiance, Globoid Finance and Anvil Ventures investment funds (holding 15% in Alro together) are controlled by Conef, as well. This means that, indirectly, Conef may end up having the most effective say in Alro.

The company’s Board of Directors, which convened yesterday, discussed the possibility of the capital increase by selling shares reaching $60 million (1,680bn lei). Of the five Board members, four are APAPS representatives while one represents Conef, which directly holds 10.5% in Alro.

This means the decision to give up Alro will be solely up to APAPS. Sources within the company say the capital increase is a decision made by APAPS, not by the company management.

Gheorghe Dobra, Alro general manager, chose not to comment on the rumours about the increase, while APAPS representatives were unavailable for comment.

The shares will most likely be sold for 5,000 lei each. Alro last traded at 23,000 lei on the Stock Exchange, registering a 9% jump on Friday. Its shares were suspended from trading yesterday, on the grounds of insufficient information about the company.

Most capital market analysts say that in case the increase is proposed for the agenda of a future General Shareholders Assembly and is approved, we will be witnessing how APAPS is practically “giving” Alro “away.”

“Anything can happen in Romania. No capital market investor to have bought shares for 18,000-22,000 lei can possibly agree with such a thing. Should a capital increase by selling shares at 5,000 lei be approved, then the current shareholders will practically get a present, not to mention the state losing the controlling interests. It simply makes you sick,” says Mihai Grigore, trader for BRD Invest.

“I can see no reason why the increase should be done. Those at APAPS must be crazy to endorse an increase to leave them with less than 50%,” Harlan Zimmerman, manager of Romanian Investment Company Cyprus, which holds 10% in Alro, told Ziarul Financiar. “The company has no debts, so it most certainly needs no money.”