Romania’s salt company listing pits Franklin Templeton against the Economy Ministry

The Romanian Government’s shifting position on listing the country’s salt mine operator Salrom has infuriated American group Franklin Templeton, which manages the country’s biggest investment fund Fondul Proprietatea. The Economy Ministry recently voted against the listing of the National Salt Company Salrom, where the state owns a 51% stake, after the Government had promised earlier this year that it would float several of its companies on the Bucharest Stock Exchange, including Salrom. Fondul Proprietatea’s manager has been trying to convince the state to list Salrom and several other big companies for several years, but to no success. The fund owns 49% of Salrom and other minority stakes in state-owned companies, which it can’t sell because the companies aren’t listed. “We want to keep this company of strategic importance under state control,” said the Economy Minister Mihai Tudose about Salrom’s listing. He also said that if Fondul Proprietatea wanted to sell its stake or a part of its stake in the company, Salrom could repurchase the shares, according to Profit.ro. These statements angered Fondul Proprietatea’s manager, who pointed out that the law would not allow the state to buy more shares in state-owned companies. Franklin Templeton also pointed out that the state would not lose control of Salrom after the listing, as only Fondul Proprietatea planned to sell its shares while the Economy Ministry would keep its 51% majority stake. “Moreover, we think that the listing will strengthen the strategic position of the company within the Romanian market as it did for other so called “strategic” state owned companies such as Transelectrica, Transgaz or Romgaz, which were successfully listed on the Bucharest Stock Exchange,” according to a statement by Franklin Templeton. The listing will bring numerous advantages to the company, such as increased transparency and visibility and the opportunity to finance the investment plans through the stock exchange as an alternative to bank loans. Also through the listing, the management is incentivized to better perform and increase the company's value for the benefit of all its shareholders, according to Fondul Proprietatea’s manager. “We want to reiterate our conviction that Salrom is a strong candidate for a successful listing at the Bucharest Stock Exchange. Furthermore, we would also like to underline that Fondul Proprietatea would be willing to cover all costs related to the listing of Salrom, and we are hoping to have any constructive discussions with the Ministry of Economy in order to complete this transaction for the benefit of the company and all its shareholders,” said Greg Konieczny, Fondul Proprietatea’s manager. Franklin Templeton also pointed out that the Romanian state was long overdue in keeping its promise to list the companies in which Fondul Proprietatea was a minority shareholder, including Salrom, the Constanta Port Authority, electricity producer Hidroelectrica, and the Romanian Post. The Government and Parliament have changed the deadline for doing these listings several times since 2008. The National Salt Company Salrom is the only local producer in this field. It exploits and manages Romania’s salt deposits. The company had a EUR 62 million turnover and a EUR 5.5 million net profit in 2014, according to official data.