Monday, September 19, 2011

SIF2 May Sell BCR Stake to Erste in a $750 Million Buyout

SIF Moldova SA, which was left out of a buyout accord between Erste Group Bank AG (EBS) and four minority shareholders in a Romanian lender, may also consider selling its stake.

The fund, known as SIF2 and not part of a 435 million-euro ($598 million) agreement between Erste and four other funds in Banca Comerciala Romana SA, will continue talks with the Austrian lender by tomorrow to allow a shareholder vote on Sept. 23 or Sept. 24, Chief Executive Officer Costel Ceocea said. Adding SIF Moldova to the deal would boost the transaction’s value to 543 million euros.

“If our shareholders vote for a share sale to Erste, then we would probably enter the same agreement with this maximum level offered by Erste after further negotiations,” Ceocea said in a phone interview today. “If we have the shareholders vote, a transaction could be completed by the end of the year.”

Erste, eastern Europe’s second-biggest lender, agreed with four of the five SIFs to buy their 24.1 percent stake in its BCR unit. The funds would receive a total of 453.9 million lei ($145 million) in cash for their shares and a stake of as much as 1 percent each in Erste through a share swap once the transaction is completed.

“Under the same terms as announced yesterday, SIF Moldova would receive a little more than 4 million Erste shares and 26 million euros in cash,” Erste said in an e-mailed response to Bloomberg questions. “The total value of the transaction with the SIFs would amount 543 million euros.”
Minority Shareholders

The agreement would raise Erste’s stake in BCR to 93.5 percent, while the five SIFs would become one of the biggest shareholders in the Vienna-based bank, with a combined stake of about 5 percent.

SIF2’s shareholders must decide next week on whether to demand a BCR listing of the bank on the stock exchange, sell the stake to Erste or develop structured products, such as derivatives or warrants, according to Ceocea.

When it agreed to buy a 61.9 percent stake in BCR in 2005 for 3.75 billion euros, Erste pledged to list BCR’s shares within three years to give the SIFs an exit option. It agreed with the funds to delay that target date to October this year because of adverse market conditions. Earlier this year, Erste Chief Executive Officer Andreas Treichl said he would now rather add to his 69.4 percent stake than list.
‘Missed Opportunity’

“We were surprised by Erste’s statement because we think there are still several technical and financial details that remain unclear, and we want them to be clarified as soon as possible,” Ceocea said. “The SIFs lost an important advantage in negotiating with Erste because they didn’t stick together and missed the opportunity to obtain a better deal.”

The SIFs will waive their rights to request a listing of BCR and to special dividends, according to the agreement. The four SIFs that signed the agreement are SIF Banat-Crisana SA, SIF Transilvania SA, SIF Muntenia SA and SIF Oltenia SA.

To contact the reporters on this story: Andra Timu in Bucharest at; Irina Savu in Bucharest at

To contact the editor responsible for this story: James M. Gomez at

No comments: