Biofarm gets 2m-euro plot of land from the state for 135,000 euros

The Romanian state is set to receive shares worth 135,000 euros from the drug producer Biofarm Bucuresti in exchange for a plot of land worth 2-4 million euros, according to prices used on the real estate market.
Biofarm announced it would submit a capital increase of 43.25 million RON to the approval of shareholders. The move will be conducted through a contribution in kind by the state, with a plot of land that Biofarm has secured property rights over, with the other shareholders to be granted a right to subscribe in order to retain their stakes.
The state controls around 1% in Biofarm, following the annulment of the privatisation contract through which an American company had taken over Biofarm.
The state will receive 4.33 million shares with a nominal value of 0.1 RON, which total around 135,000 euros. Biofarm is located in the centre of the Capital in the Timpuri Noi area, and the land that will be owned by the company covers approximately 2,300 square metres, according to the company’s manager, Dan Vasile. The state will therefore receive around 60 euros per square metre of land in shares.
The Timpuri Noi plant, located near Biofarm, is now seeking a buyer for its land, at a price of 2,000 euros per square metre. If the real value of the land in the area were half the price asked by the Timpuri Noi plant, the land received by Biofarm could be worth over 2 million euros.
In fact, Biofarm has announced its intention to build production facilities outside Bucharest, so the land can be used for real estate development in a few years’ time.
Biofarm’s shares are trading at a price almost eight times as high as the nominal value, but all shareholders will be able to buy shares at a price equal with the nominal value, therefore the share price will probably drop after the registration date for the capital increase passes.
Biofarm’s private shareholders will be given the right to subscribe 427 million shares at a price equal with the 0.1 RON nominal value, i.e. a total of 13 million euros. The company’s private shareholders will be able to subscribe around 74 shares for every 100 shares owned.
The company’s main shareholders are SIF Oltenia, with 14.33%, SIF Moldova, with 10.7% and SIF Banat Crisana, with 10%. The increase is planned for discussion halfway through next month.
Biofarm’s net profit increased 21.3% in the first half of the year compared with the same time in 2006, to 9.1 million RON (2.8 million euros), whilst the company’s total revenues increased by 5.4%, to 30.9 million RON (9.3 million euros), and total expenditures fell by 420,000 RON to 19.9 million RON.
For 2007, the drug producer budgeted a 66.01 million-RON turnover, up by 14.16%, and expects to see an increase of 4.5% in the net profit, to 13.29 million RON. The company also forecasts a rise in revenues by 15.85% to 67.53 million RON, and an 18.9% rise in expenditures, to 54.24 million RON. The level of investments stands at 13.61 million RON for 2007.