On Tuesday at 11.52 a.m., trading of Rompetrol Rafinare (Petromidia) shares on the Bucharest Stock Exchange was halted after the company released the details of a capital increase operation through the market’s trading system.
Petromidia’s release astonished brokers and investors alike, who were sufficiently curious to calculate the amount Petromidia was asking from investors: 137 billion euros.
More than five hours later, during which time both brokers and the media had been asking if it had not in some way been a mistake, company representatives admitted an error had indeed been made. At 5.30 p.m., Rompetrol was still calculating how large a capital increase was needed to achieve what it had been approved for in the first place: the takeover of another company in the group, Rompetrol Downstream. The release was still being displayed on the BSE website at 5.50 p.m., by which time many brokers had already left for home, devising ways to come up with the money for the increase.
Almost every broker and investor on the stock exchange believed the information to be accurate, particularly because the Stock Exchange checks the releases issued by companies before publishing. Some brokers had developed their own theories, many were calculating how much they were entitled to subscribe, while others were simply outraged at not knowing what the release was all about.
“This is a very smart move. Patriciu clearly found an investment fund that would feed several tens of millions of euros into Petromidia and is giving it the opportunity to buy shares during the capital increase. The fund probably bought some shares from the market and will buy the rest upon the increase. There isn’t several million euros worth of Petromidia shares available to buy on the Stock Exchange. Anyway, whoever wants to buy a great deal would push the price beyond the 1,000 ROL set for the capital increase,” one broker said in connection with the Petromidia release yesterday.
Petromidia traded for around 900 ROL in recent days, a price that would have been considered good by an investor wanting to buy several million euros’ worth of shares.
“A number of 5,239,052,300,100 shares are approved for issuing in view of subscription at the par value of 1,000 ROL, with the subscription price equal to the par value.” In other words, Petromidia was offering its shareholders the possibility to subscribe 5.2 million billion ROL, the equivalent of 137 billion euros. The amount the company mistakenly announced it was planning to raise would have equalled Romania’s Gross Domestic Product for two years or nearly 50 times the foreign currency savings currently held by banks. The release said that shareholders would be allowed to subscribe 300 new shares for every share held. At 6 p.m. Petromidia published the correct release on the BSE website, clarifying that the number shares would be around one thousand times lower and that shareholders would be allowed to subscribe 300 shares for every 1,000 shares held.
“I calculated that I would have had to come up with ten million dollars to maintain my interest in this company,” said an investor, holder of tens of thousands of dollars in shares, yesterday afternoon.
vlad.nicolaescu@zf.ro