Fondul Proprietatea requests new Nuclearelectrica board

Fondul Proprietatea has requested a new Nuclearelectrica board, citing a RON 2 billion that impacted negatively on the shareholders. The company’s next General Shareholders Meeting (GSM) is scheduled for 9 December 2016.

Fondul Proprietatea requests shareholders to vote against the mandate renewal of the current Board and General Manager and approve the commencement of a recruitment process for a new Board by the Ministry of Energy, the body said in a press statement. The Fund’s request has been submitted as an additional item on the GSM agenda and the updated agenda should be published by Nuclearelectrica according to Romanian legislation in force.

In addition, Fondul Proprietatea underscores that the mandate of Nuclearelectrica’s General Manager cannot be automatically renewed according to legislation in force and requires that the new Board, once appointed, organizes a separate selection process for these positions.

Greg Konieczny, CEO of FTIML and portfolio manager of Fondul Proprietatea commented: “We believe the proposed mandate renewal of Nuclearelectrica’s Board members and General Manager is unacceptable for shareholders given that the board failed to take any measures to tackle the market value decrease, which caused over RON 2 billion loss to shareholders since the company’s listing in September 2013. As a result, both the company’s profitability and its market value are, as of today, over 60 percent lower than in 2013, when the Board started its mandate.”

According to the Fund, the company’s market value decreased by approx. 60 percent since its listing in 2013, which means over RON 2 billion (EUR 453 million) total losses incurred by Nuclearelectrica’s shareholders, out of which RON 1.68 billion (EUR 373 million) are the losses incurred by the Ministry of Energy, as the company’s majority shareholder. Secondly, the profitability of the company sharply declined during the mandate of the current board: the net profit decreased by 65 percent between 2013 and 2015, while the remuneration of executive and non-executive management increased by 46 percent during the same period, from RON 4.49 million RON to 6.59 million. Moreover, the Fund argues, the current Board failed to neither propose nor implement any cost reduction programme to tackle the accelerated profitability decline of Nuclearelectrica and has engaged in negotiations for the highly expensive project to build Reactors 3 and 4 and refused to disclose costs incurred so far with it, instead of securing financing for the refurbishment of Reactor 1.