Almost ten million people. That's how many shareholders are registered at each of the five financial investment companies (SIFs). Most own such a small number of shares that, if sold, they would not even cover the cost of a trip to see a broker; many don't even know that they are shareholders.
SIF Moldova is the first of the five SIFs that intends to buy back these shares that can not be traded on the Stock Exchange and whose owners have never collected their due dividends. This is easier said than done, as the company will have to pay out some 30,000 ROL to ten million people, all over the country. The possibility to buy back these shares is one of the new features of the consolidated capital market law, which came into force almost two months ago.
SIF Moldova has called a General Meeting of Shareholders to endorse the buyback of residual stakes distributed in 1996 under the Mass Privatisation Programme.
The shares were handed out by SIFs in 1996 in lieu of dividends cashed by the Private Ownership Funds (FPP) from the companies in their portfolio. In the same year, the FPPs were turned into SIFs. All who participated in the Mass Privatisation Programme then received five shares each in SIF Moldova and up to ten shares in each of the other four financial investment companies.
One SIF Moldova share is worth 6,250 ROL on the Bucharest Stock Exchange (BSE). The company is looking to buy back the residual shares at last year's average stock market values, which will be lower than today's price due to the increasing growth trend on the stock market over the past few months. For every five SIF Moldova shares, shareholders will receive slightly less than 30,000 ROL. The exact price for the buyback operation will be set at the end of next month.
The residual SIF Moldova stakes account for 9.6% of the company's capital and are currently worth 9 million dollars on the BSE. After buying them back, the company intends to sell the shares on the market.
"We are planning to sell the shares that we buy back, perhaps at a higher price so as to recover part of the costs," says Sorin Turtoescu, SIF Moldova vice-president.
SIF Moldova has enough money to perform this kind of operation, as its investments in banking deposits or T-bills are currently worth more than 45 million dollars.
The company's officials have not yet figured out a way to buy back the residual shares at low prices, especially since it is highly unlikely that such an operation can be carried out on the stock market. "We will have to find a way to buy back these shares. We are to meet with the National Securities Commission officials and, together, we will have to come up with a method that can be applied by all SIFs, since we are talking about the same shareholders," Turtoescu added.
A joint buyback programme for all the five SIFs would probably have been cheaper. The largest residual stakes are found in the case of SIF Muntenia, where the shareholders hold between 20 and 50 shares each, making each such stake worth about 300,000 ROL.
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