Electroputere Craiova earns 5m. euro on the stock exchange

The market value of the Romanian engine producer rose by RON 15.78 million (about €4.8 million). The price reached RON 0.374/share (some €0.114/share), and the company’s market capitalization rose by 51 percent. This result was considered to be the market’s reaction to the news of a possible take-over of Electroputere Craiova by the Saudi company Al Arrab Contracting Company Limited (ACC), who won the auction organized by the Authority for State Asset Valuation (AVAS). The Arab company bid €120 million, of which half represents a cash offer and the other Electroputere’s debts, taken on by the Arabs, according to sources close to the deal.

“It is good that an owner for Electroputere was finally selected, but the company’s future on the equity market is still uncertain,
because Al Arrab is not an international brand in the energetics and railway transport field, but rather a known brand the Gulf region. We are not talking about Siemens or General Electric,” Rares Nilas, General Manager of the BT Securities brokerage society said.

“The financial strength of the Saudi company makes me believe they will treat the business fairly and that they will not close the factory. I am unable to say whether the Saudi billionaires know how to build railway engines, let alone sell them. I have to see if and how they will fulfill their promises,” Nilas added.

The hesitations of investors on the Stock Exchange were expressed very clearly by way of a low value of transactions. The 28 transactions that occurred yesterday amounted to a total of RON 12,232 (approximately €3,738.27). Transactions
throughout the three days of maximum price increases amounted to a mere RON 537,712 (about €164,352).

There are no other major shareholders of Electroputere, beside AVAS, which owns a 62.83 percent share package, except Citibank, with a 6.48 percent package.

Other Stock Exchange brokers believe that the market reacted mostly to the fact that a buyer interested in the whole company has finally been identified.

Electroputere has been the involved in a privatization process which failed time and time again. Both Siemens and General Electric expressed interest in some assets, the former only in the railway engine factory, and the latter in the energetics equipment factory.