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Fondul Proprietatea - Analyst and Investors Days Takeaways

Fondul Proprietatea (FP) held on October 19-20 its first Analyst and Investor Days, with speakers from FP's management and from some of the most important companies for its portfolio like Hidroelectrica, OMV Petrom, Romgaz and Nuclearelectrica.

Key topics

The ongoing restitution process. The decrease of the State's stake in FP (to currently 5%) and the ongoing restitution process would not have any negative impact on FP. The Government has several options to continue this process after all shares in FP would have been distributed:

1. inject new assets into FP, but such injections would be subject to shareholders approval and the subscription will be made at NAV; thus, the State will be disadvantaged since the distribution of the shares will continue to be at market price
2. create another restitution fund similar to FP
3. distribute shares directly in State-owned companies; this option is the one preferred by FP since it would imply that these companies should be listed
4. issue bonds to finance the restitution process; this option will increase Romania's public debt
5. pay cash to settle the claims; it will also negatively impact the country's risk profile by inflating the fiscal deficit

Secondary Listing

- the secondary listing on Warsaw Stock Exchange is encountering some delays as Romanian SEC is analyzing the proposed structure of transaction. FP intends to combine the listing with a shares offering of up to 10% and different methods for acquiring these shares are being considered.

- FP has chosen Warsaw Stock Exchange arguing that it has several advantages over the other alternative options. Due to its size FP would be eligible to enter WIG 20 index which would increase its attractiveness to the strong Polish pension fund industry. The two criteria to qualify for index inclusion are size (FP would be the ninth largest company capitalization wise) and liquidity. This is why FP is strongly in favour of a shares offer.

Portfolio companies

OMV Petrom

- Reaffirmed focus on the E&P segment, with growth potential steaming from (i) significant gains in resource recovery rates following increased use of improved/enhanced recovery methods and (ii) exploration success (e.g. Totea reservoir); offshore potential: first deep water exploration well in Block Neptun to be drilled in 4Q11 – 1Q 12 by the JV with ExxonMobil;

- Gas price liberalization update: although in the last years this has been a highly anticipated event there is still no official schedule in place, but the company pointed out that most likely this could happen at the same time that the current royalties will have to renegotiated, namely by end-2014;

- Gas integrated play: gas fired plant to start commercial operations in 2012, while profitability will be highly influenced by the effective run-rate of the plant, a negative impact is expected from the fact the company has not been allocated any CO2 certificates for 2012;

- Next year capex guidance remained at around EUR 1 bn.

Hidroelectrica

- 2011 proved to be a real weak hydrological year, 2011 power production estimated at 14 – 14,5 TWh, which is some 25-30% lower yoy;

- 2011-2025 strategy: continuous investments to upgrade/revamp existing facilities and add new generation capacities (incl. private capital for green/brown developments), total capex at around EUR 4.7 bn;

- by 2025 the annual average hydrological potential captured by Hidroelectrica's facilities will be increased to 20.9 TWh/year from currently 17.7 TWh/year;

- Update on Tarnita project (greenfield 1,000 MW pumped-storage plant, estimated capex of EUR 1bn): a Government decision is expected within the next weeks to start the process of selecting consultants and investors for the project.

Romgaz

- The company provided an estimate for its current 2P gas reserves which stand at around 470 boe (76 bcm);

- Romgaz said that its replacement rate would be around 100% in 2011 but the average for the past years has been in the region of 60% to 70%;

- Gas production in 1H 11 amounted to 2.9 bcm, down around 10% yoy.

Sursa: http://www.rciro.ro

Tags: around shares would process

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