A Romanian court upheld the capital increase at Bucharest Airports (CNAB) that would result in diluting, through the state's in-kind contribution (land), the stake of Fondul Proprietatea from 20% to 0.7%.

The capital increase was suspended until the case, including the appeal that can be filed within 30 days, is judged.

The Court of Ilfov County rejected as unfounded the requests for annulment expressed by Franklin Templeton as the alternative investment fund manager and sole director of Fondul Proprietatea (BVB: FP), according to a note sent to investors.

In October 2021, the extraordinary general shareholder meeting (EGSM) approved a decision to increase CNAB's capital from RON 143 mln (EUR 29 mln) to RON 4.9 bln (nearly EUR 1 bln) as a result of the capitalisation of the land used by one of the airports (Baneasa), that was so far in the property of the state. 

This is the third time the process to increase the share capital has been initiated since 2001, when Baneasa Airport, the smaller of Bucharest's two airports, received the land ownership certificates.

Based on this latest disputed valuation, Fondul Proprietatea would have to make a contribution of RON 954 mln (EUR 200 mln) in a potential share capital increase, or, otherwise, its 20% participation would be diluted to 0.7% resulting in an equivalent of RON 570 mln value destruction for FP shareholders, Franklin Templeton argued in 2021 at the time the EGSM decision was passed.

Johan Meyer, CEO of Franklin Templeton Bucharest and portfolio manager of Fondul Proprietatea, objected to the land valuation and warned that such actions are "destroying the value" of CNAB. "It's these types of actions that create severely negative perceptions among existing and potential investors and should be avoided at all costs," he said.

Fondul Proprietatea strongly disputes the "fundamentally flawed" land valuation report, carried out in 2021, which attributes the value of RON 3.8 bln to the land, in spite of a previously approved valuation report from 2017, which had set the value of the same land at RON 336 mln.

iulian@romania-insider.com

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