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News - full article
August 9th, 2005
CEC expects letters of intent for its privatization by August 31st
The Finance Ministry is expecting letters of intent from foreign and Romanian banks intending to participate in the privatization of Casa de Economii si Consemnatiuni (Romanian Savings Bank: CEC), the last state-owned bank put up for sale, by 5pm Wednesday, August 31.
The privatization announcement says that participating banks must have had at least 1.5bn euros in equity capital by the end of 2004 and be internationally known financial banking institutions with "investment grade" ratings. In order to evaluate the investors that submit letters of intent the Finance Ministry will turn to the National Bank for a detailed opinion.
If a consortium wants to take part in the privatization, at least one of its members, with at least 51% in the consortium and intending to buy at least one third in CEC, must quality as an investor. The Finance Ministry has specified that after the pre-selection phase based on letters of intent is over, no consortium will be allowed to change its structure. Nor will any pre-qualified individual investor be allowed to form a consortium at a later stage.
The state, as the sole shareholder in CEC, is offering to sell a maximum stake of up to 75%, though not less than 50% plus one share. The Finance Ministry's advisor in the process is US-based investment bank JP Morgan. Letters of intent will have to be addressed directly to Finance Minister Ionut Popescu, who is the head of the CEC privatization committee. After all letters have been received, JP Morgan will hand out a non-disclosure agreement to the investors accepted, the signing of which will give them access to CEC's data room.
The results of the pre-selection process are to be made public by September 9, after which the interested banks will have to pay 10,000 euros in order to obtain the information memorandum for CEC and gain access to the data room. After the first negotiations on the non-binding bids have been concluded, and the suitors have indicated the exact stake they intend to buy, all investors will be invited to make binding bids and deposit the participation guarantee.
If the difference between the bids of the top two competitors is less than 10%, the Finance Ministry reserves the right to request a second round of financial bids.
CEC, with 1,400 branches, had total assets of €1.3 billion at the end of 2004 and a market share of 5.9%, the country's fourth spot. It posted a $19.5 million profit last year.
(Source: Ziarul Financiar)
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