The conditions accompanying the 50 million-dollar loan that Greek Group OTE will grant to the Romanian national telecommunication operator have not been settled yet, as they are currently negotiated, and will be submitted for approval to the RomTelecom Board on December 13, 2001.
Moreover, Communications and IT minister Dan Nica considers that a share capital increase is out of the question for the time being, as the consultant for RomTelecom privatisation has not been selected yet.
The Board of Greek telecom operator OTE last week decided to grant an operational loan worth 50 million dollars to RomTelecom or Cosmorom, maturing in six months.
The news prompted the hypothesis that the loan actually concealed a purchase of RomTelecom shares and a share capital increase, as it is quite unlikely that the Romanian operator will be able to pay the loan back in due time.
Furthermore, according to an official press release, OTE clearly said it was willing to turn the loan into shares.
“A decision to turn the 50 million-dollar loan into shares has not been made yet and cannot be made, as this is a decision to be made by the Board next week (i.e. this week). The Extraordinary General Assembly of Shareholders (AGEA) is the only one that can make a decision regarding the share capital, and this assembly has not convened. Moreover, the state has the veto right within the AGEA,” Nica says.
The 50 million dollars are supposed to stand for a short-term operational loan to be granted to RomTelecom, and the management would decide on the manner to pay the loan back.
However, it is quite likely that the shareholders within the AGEA should decide a change in the share capital, by using other means.
One of them is the possibility that RomTelecom should not distribute dividends this year and the profit should thus be pumped into the share capital, while the new shares would be distributed according to the stakes previously held by the shareholders.
According to Nica, any decision to be made will be enforced in compliance with the surveys that will be drafted by the consultancy to be appointed between January 15-30, 2002, as this will aim to enhance the company’s market value.
Moreover, from the financial standpoint, the residual shares cannot be sold at a price lower than in 1998, namely 80.15 dollars/share.
“The reason is that the company has developed in the meanwhile. Some 1.5 billion dollars have been invested ever since and the technical performances, such as technical capacity, network digitalisation and the new services, have significantly improved as compared to 1998,” Nica said.
However, the IT&C minister admits it is possible for the loan to be turned into RomTelecom shares if the company fails to pay the loan back in due time.
According to a press release sent last Wednesday, the MCTI (Communication and IT Ministry) officials say that the 50 million dollars stand for “working capital” and, if the amount fails to be reimbursed, “the legal and contractual provisions regarding the penalties and claims, including possible forced execution, will be enforced.”