October 26 (SeeNews) - The shareholders of Romanian power distributor and supplier Electrica [BSE:EL] on Thursday approved the buyout of minority stakes in four of the company's subsidiaries from investment fund Fondul Proprietatea [BSE:FP].
In July, the two companies signed a memorandum of understanding (MoU) regarding the transaction worth 752 million lei ($188 million/ 165 million euro).
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Fondul Proprietatea holds 22% stakes in each of its four units that are subject of the deal - SDEE Distributie Muntenia Nord, SDEE Distributie Transilvania Sud, SDEE Distributie Transilvania Nord and Electrica Furnizare.
"This transaction is the best opportunity given the financing availability of Electrica and, at the same time, the lack of other investment opportunities comparable as risk and return. It is also important that, starting with 2017, the level of dividends to be cashed in by Electrica shareholders will increase accordingly to the 22% stake FP holds in the subsidiaries," Electrica CEO Catalin Stancu said in a press release.
However, the transaction will not interfere with the fund’s right to dividends for the 2016 financial year, as it has already been approved at the level of each subsidiary, with a total value of 97.9 million lei.
In March last year, Electrica failed to reach an agreement with Fondul Proprietatea to buy out the stakes due to price differences.
The previous negotiations between the two companies held in 2014 also failed due to price disagreement. At the time, Fondul Proprietatea sought 175 million euro ($199 million) for its holdings.
Electrica was listed on the Bucharest and London stock exchanges in the autumn of 2014. Currently, Romanian state holds a stake of 48.78% through the energy ministry.
Its shares were traded 0.15% lower to 12.98 lei on Thursday on the BVB at 1500 CET.
Blue chip Fondul Proprietatea was set up in 2005 to compensate pre-Communist property owners for their assets nationalised after 1945.
The fund's shares stood at 0.8450 lei by 1536 CET on Thursday on the BVB.
(1 euro=4.5975 lei)