Fondul Proprietatea: 4th Buyback on The Way

Another positive news from Fondul Proprietatea, the Romanian energy fund that is under pressure from activist investor Paul SingerThe Elliot Associates managed by Singer is the largest investor in Fondul with 15.22% stake.

The local FSA has approved the changes to the Fund’s share capital after the cancellation of the 1.1bn shares bought in the second buyback programme. The cancellation opens the way for the fourth buyback programme in which the fund aims to buyback 990 million shares (8% of the shares). The fund manager said the buyback would start over the coming days. Accelerated buyback is also under consideration. At the current market price, the buyback would require RON 0.93bn. The Fund held RON 1.26bn on its balance sheet as of the end of August.

As I wrote before, the fund manager faces termination of the management contract if the NAV discount does not decrease to 15% (from current 25%) in two thirds of trading sessions between October 1, 2014 and June 30, 2015. To comply with this the Fondul share price needs to rice another 13% to 1.07 Ron per share. Looks like the Templeton is working hard to achieve this mission.


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