RomTelecom may go to BSE in 2004

The Romanian State can sell the stake it will come to retain in RomTelecom on the stock exchange as of January 1, 2004, Communications minister Dan Nica announced after signing an agreement with Greek company OTE.
The new agreement between the two parties eliminates the provision granting the Greek company pre-emption rights over the remaining stake in the national telecommunications operator, included in RomTelecom’s privatisation contract closed in 1998.
“The past two weeks’ negotiations allowed us to eliminate those provisions and conditions that prevailed on the remaining RomTelecom stake held by the Romanian State, which could have led to a decline in the value of shares or could have even made it impossible to sell them. Following the negotiations, these absurd conditions were eliminated so that we can now sell the stake of the State on the Stock Exchange,” the minister explained.
The Government approved the continuation of RomTelecom’s privatisation process, with OTE set to subscribe a $242.62 million stake.
The deal will be finalised by a contribution in cash worth some $145 million, with the gap to be covered by a debt for equity swap of the receivables OTE holds on RomTelecom, worth 55 million euros ($42.6 million).
At the same time, OTE will buy a stake worth $30.99 million, which will raise the value of the deal to approximately $273 million, with the end of this month scheduled as payment deadline.
This operation, conducted at $31.17/share will enable OTE to get control of 54% in the capital of the national fixed telephony operator. The $30.99 million was to be paid yesterday.
The agreement of the two parties stipulates the obligation of the Greek firm to deposit $250 million in RomTelecom’s account over three to six months. The money is to be obtained from a banking loan secured by OTE. The consultant of the Communications Ministry in this deal was Salomon Smith Barney, with Morgan Stanley counselling OTE.
Minister Nica said the Government chose this option for continuing the privatisation of RomTelecom because it was the only way to address the cash problems the operator was facing and since the $450 million it needed could not be fully covered by banking loans, given its high indebtedness. Nica explained the contract signed in 1998 did not allow for negotiations, as the conditions in that contract practically eliminated the State’s possibility to sell the remaining 65%.