Romanian Govt. rejects Transelectrica’s dividend proposal, calls for new GSM

The Romanian Government's General Secretariat, which owns a 58.7% stake in the national power grid operator Transelectrica (TEL), rejected the company's financial reports for 2020 and the dividend proposal and called for a new General Shareholders' Meeting (GSM).

The Government motivated its request by saying that the company didn't observe the legal provisions related to the profit distribution by state-controlled companies.

Transelectrica proposed total dividends worth RON 59.6 mln (EUR 12.1 mln), of which RON 39 mln from its 2020 net profit (RON 150 mln), and RON 20.5 mln from retained earnings from previous years. However, the total dividends represented less than 40% of last year's net profit, while state companies are required to distribute at least 50% of their net profit to the shareholders.

Moreover, Transelectrica had RON 283 mln (EUR 57 mln) worth of unrestricted cash in its accounts, according to the company's latest reports, and no major investment plans for this year.

Thus, it is likely that the Government will ask the company to distribute higher dividends to its shareholders.

The previously proposed gross dividend, rejected by the shareholders, was RON 0.814 and represented only 3% of the current share price (RON 26.3). Meanwhile, other state-controlled companies, such as Nuclearelectrica, Romgaz, and Electrica, offer dividend yields of over 5%.

Transelectrica's shares are up only a mere 2.7% this year, compared to the BET index's 16% increase.

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