Romanian group Digi's shares fall below IPO price amid corruption probe

Romanian telecom operator Digi Communications yesterday announced that Serghei Bulgac, the group’s CEO, was being prosecuted as a suspect on charges of money laundering by the National Anticorruption Directorate (DNA). Digi Communications is the parent company of RCS & RDS, the biggest independent telecom operator in Romania. "The chance of this happening during the DNA investigation was anticipated and brought to the attention of investors in the listing prospectus," read the company’s press release. The investigation will not be a significant interference in the company's current activity, according to Digi. However, the Digi shares, which only started trading on the Bucharest Stock Exchange on Tuesday, May 16, dropped by 4.13% and closed the day at RON 39.5, under the IPO price of RON 40. The company’s market value thus dropped by some EUR 37 million, to under EUR 870 million. DNA also made a public announcement yesterday confirming that RCS&RDS and its CEO were being prosecuted in a case related to the group’s purchase of the broadcasting rights for Liga I football matches between 2008 and 2011. DNA has already indicted the former president of the Professional Football League (LPF), Dumitru Dragomir, on charges of bribery and money laundering. According to the prosecutors, Dragomir received some EUR 3.1 million from RCS&RDS officials to accept a lower price than the one initially set via public tender for the broadcasting rights. Two other RCS&RDS managers, Ioan Bendei and Mihai Dinei, and the company’s former CEO, Alexandru Oprea, are also being prosecuted as suspects in this case. RCS&RDS is controlled by local investor Zoltan Teszari. Romanian telecom group Digi finalizes EUR 190 million IPO amid corruption scandal editor@romania-insider.com