Wednesday, July 20, 2011

Romania seeks to ease Petrom sale with discount

By Ioana Patran

BUCHAREST, July 19 (Reuters) - Romania set a minimum price for the sale of a stake in its top oil and gas group Petrom at a 2.7 percent discount to the market, which may make it easier to sell the whole offering.

The sale of 9.8 percent of Petrom is the largest ever transaction on Romanian capital markets and a key indicator of the government's commitment to privatisations under a 5 billion euros ($7 billion) International Monetary Fund-led deal.

The lowest sale price of 0.3708 lei per share, versus 0.381 at Monday's close, would bring in a total 2.07 billion lei ($684 million). It compares with an initial target of 0.46 per share, which analysts and bankers had said was unrealistic.

"We consider it is a realistic and feasible price to start with," said Economy Minister Ion Ariton. "We expect the final transaction will bring in more than this value per share."

Led by Poland and Russia, emerging Europe is seeking to sell state assets to boost public finances, attract investment and inject foreign expertise into moribund local industries.

Romania has been slow to act for fear of causing job losses, leaving it with inefficient assets draining hundreds of millions of euros a year, and raising questions over whether it will stick the course with its latest sale plans.

A murkier global economic outlook also means buyers are starting to balk at asking prices. Romania's leu hit a seven-month low earlier this month and concern over Europe's debt crisis has also knocked Bucharest stocks.

Nevertheless, Ariton said the government planned to sell 15 percent stakes in energy groups Transelectrica in October followed by Transgaz in December.

"The chances for the (Petrom) sale to take place are pretty high," said Wood & Co analyst Ovidiu Fer.

"It is very positive that they came up with a much smaller price compared to the maximum price, which shows they are really eager to sell."

Austria's OMV holds a majority in Petrom and the government has 21 percent. The sale is managed by Renaissance Capital, EFG Securities, BT Securities and Romcapital.

Trading in Petrom was suspended on Tuesday due to the announcement. The offering closes at 0900 GMT on Friday. ($1=3.027 Lei=0.713 Euros) (Additional reporting by Radu Marinas and Sam Cage; Editing by Mike Nesbit)

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