Central Depository Resumes Proprietatea Fund Share Conversion

05.18.2011 By Florentina Dragu

Romanian Central Depository Tuesday resumed the conversion of compensation rights into shares in restitution fund Fondul Proprietatea, after a de-facto suspension of over four months.

Conversion procedures were suspended on January 11 and were scheduled to resume on May 2. However, the process wasn't resumed until yesterday, market sources told MEDIAFAX Wednesday.

Contacted by MEDIAFAX, the Central Depository declined to comment on the number of conversions made so far, citing data confidentiality.

Last week, the government decided to push until end-July the term by which property owners wrongfully expropriated during communism are to receive shares in Fondul Proprietatea.

The government said that issuing a large number of shares in Fondul Proprietatea over a shorter interval could lower the share price considerably.

Romania's Finance Ministry owns 36.79% (5 billion shares), in Fondul Proprietatea. The ministry is supposed to cede nearly one third of its holding to private individuals who opted to convert their compensation rights into shares over the January 11-May 2 period.

Setting a two-month deadline for conversion procedures limits the decline of government's stock in Fondul Proprietatea. At the same time, the authorities will benefit from a larger dividend payout from the last year's profit.

Three weeks ago, the ministry requested Fondul Proprietatea pay out a gross dividend of 0.03141 lei (around EUR0.0076) a share from 2010 profit, double compared to the initial recommendation made by administrator Franklin Templeton.

Fondul Proprietatea will pay total dividends worth RON432.7 million (EUR105.7 million), equal to 95% of the 2010 net profit.

Romania would cash some RON160 million.

Additionally, the ministry asked that only shareholders registered by May 10 benefited from the payout. Franklin Templeton proposed May 16 as registration deadline for shareholders.

Wednesday, Fondul Proprietatea's shares closed down 1.14% at RON0.519 in Bucharest. (EUR1=RON4.1184)