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Depending on one’s legal status the offer will be accompanied by a set of PARTICI-PATION DOCUMENTS,

The PRIVATIZATION METHODS and the legal framework of the privatization process in Romania are presented in this guide.

In this guide you are shown the STEPS you must undertake in order to be-come a stakeholder in one of our companies offered for privatization by the Authority for State Assets Recovery.

In order to initiate the procedure according to which one can participate in the privatization process, one must purchase the PRESENTATION FILE and submit the SHARES PURCHASE BID within the dead-line mentioned in the sale announcement published on www.avas.gov.ro and in central daily newspapers.

Once the winner has been de-clared, one’s partnership with AVAS will continue on the basis of the CONTRACT signed.

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FIRST STEPS

In order to obtain the necessary information on the company you are interested in, Contact the De-partment for the Ownership Recovery

DEPARTMENT FOR THE OWNERSHIP RECOVERY addres: 9-11 Promoroacă street, district 1, Bucharest

telephone: (+40) 21. 303. 61. 11 fax: (+40) 21. 303. 61. 30

e-mail: privatizare@avas.gov.ro

DIVISION FOR THE RECOVERY OF MAJORITY SHARE STAKES telephone: (+40) 21. 303. 64. 37

fax: (+40) 21. 202. 18. 37

DIVISION FOR THE RECOVERY OF MINORITY SHARE STAKES telefon: (+40) 21. 303. 61. 15

fax: (+40) 21. 303. 65. 23

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FIRST STEPS

See the legal framework in the field of state ownership privatisation in Romania.

⇒ EGO no 88/1997 regarding the privatisation of companies, published in the Official Gazette no 381/29.12.1997, with subsequent amendments and completions;

⇒ Law no 137/2002 regarding certain measures taken for the privatisation speed-up, pub-lished in the Official Gazette no 215/28.03.2002, with subsequent amendments;

⇒ EGO no 26/2004 regarding certain measures taken for completing the privatisation of the companies in APAPS’ portfolio and consolidating some privatisations, published in the Official Ga-zette no 385/30.04.2004, with subsequent amendments;

⇒ GD no 577/2002 for approving the Methodological Norms for enforcing EGO no. 88/1997 regarding the privatisation of companies, with subsequent amendments and Law no 137/2002 re-garding certain measures for accelerating privatisation, published in the Official Gazette no 434/21.06.2002, with subsequent amendments;

⇒ GD no 2193/2004 regarding the approval of the Norms on the privatisation of the companies in which state holds controlling interest capital, which main object of activity is research-development, published in the Official Gazette no 19/06.01.2005;

⇒ EGO no 26/2005 for annulling the legal provisions on granting facilities at the payment of overdue budgetary obligations, published in the Official Gazette no. 296/08.04.2005;

⇒ EGO no 23/2004 regarding the setting of some reorganisation measures taken by APAPS, published in the Official Gazette no 359/23.04.2004;

⇒ EGO 101/2006 regarding the reorganisation of AVAS by the merger through absorption with the Office of State Ownership and Industry Privatisation, published in the Official Gazette no 1015/20.12.2006;

⇒ EGO no 25/2002 regarding the approval of the National Securities Commission’s status, published in the Official Gazette no 226/04.04.2002, with subsequent amendments.

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FIRST STEPS

You will be guided in drawing up a letter of intent (ANNEX 1) that will be regis-tered in AVAS’ database and a confidentiality agreement for the technical visit. The investor must request the technical visit in writing.

Once having signed the Agreement, you will be granted access to the economical, technical, legal and environmental data, publish-able according to legal provisions, in order to have a general overview on the company.

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FIRST STEPS

AVAS will start the necessary measures for initiating the privatisation process of the company in which the state holds shares.

You will be sent the share sale announce-ment of the society you are interested in, by sub-mitting a letter of intent (ANNEX1), after its pub-lishing. The information regarding the companies offered for sale by methods specific to the capital market will be also registered with the electronic system of the stock exchange.

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FIRST STEPS

Consult the legal framework of the privatisation process in the field of capital market in Romania.

⇒ Code BVB (Bucharest Stock Exchange) S.A. – market operator approved by CNVM Decision (National Securities Commission) no 2602/14.09.2006, amended by CNVM Deci-sion no 3390/13.11.2006, published in CNVM bulletin no 46/2006 and on www.bvb.ro website;

⇒ Regulation no 1/2006 regarding the issuers ad the op-erations with securities approved by CNVM Order no 321/06.04.2006;

⇒ Law no 297/2004 regarding the capital market, pub-lished in the Official Journal no 571/29.06.2004, with subse-quent amendments;

⇒ Other regulations regarding the capital market issued by CNVM (National Securities Commission) and BVB (Bucharest Stock Exchange) which can be consulted at legal section on www.bvb.ro and www.cnvmr.ro websites.

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FIRST STEPS

After the publishing of the sale announcement and depending on the share packages owned by AVAS, two situations may appear:

For the companies where AVAS holds share packages over 33% of the share capital, the presentation file will be prepared and made available, in ex-change for a fee, to prospective buyers. After the bidder has disbursed the ac-cess fee directly to the data and infor-mation room, AVAS and the company subject to privatisation are obliged to grant access to all data and information, according to the legal provisions, for the buyer to prepare his own expertise re-port on the company, except for the confidential information and data re-garding the activity of that company.

For the companies where AVAS holds share packages up to 33% % of the share capital, the Authority will prepare both the pres-entation sheet (for the companies where it owes a stake between 0-5%) and the presentation file (for the companies where it owes a stake between 5-33%).

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FIRST STEPS

After publishing the sale announcement approved by the National Securities Commission:

For the companies offered through public bid, information regard-ing the conditions for shares divesting are published in the Offering pro-spectus approved by CNVM.

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METHODS OF PRIVATISATION

According to the provisions of article 13 of EGO 88/1997 with subsequent amendments and of the article 4 of Law 137/2002 regarding certain measures for the privatisa-tion speed-up, with subsequent amendments, the decrease of the ownership held by the state in the trade companies is carried out by using the following methods:

⇒SHARE SALE; ⇒increasing share capital by private capital contribution; ⇒divesting free of charge or selling the social assets; ⇒any combination of the above-mentioned methods.

⇒public bid; ⇒methods of sale specific to the capital market; ⇒negotiation (according to the provisions of GD 577/2002, with subsequent

amendments and of GD 2193/2004); ⇒outcry tender or tender with a bid in a sealed envelope; ⇒deposit certificates issued by investment banks on international capital market; ⇒any combination of the above-mentioned methods.

The sale is carried out on the basis of the ratio between demand and offer, on the market price, regardless of the privatisation method used, without the exis-tence of a minimum sale price.

SHARE SALE

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METHODS OF PRIVATISATION

It is carried out following the decision of the public institution involved, by the launch of a public offer for share capital increase of the companies.

The offer will take into account the necessary capital as a result of a feasibil-ity study requested by the public institution involved. The increase of share capital is carried out by contribution in kind or by top technological equipment, according to the feasibility study and with the methodological norms provisions issued when enforcing Law 137/2002, with subsequent amendments.

SHARE CAPITAL INCREASE

According to the provisions of article 13 of EGO 88/1997 with subsequent amendments and of the article 4 of Law 137/2002 regarding certain measures for accelerating privatisation, with subsequent amendments, the decrease of the ownership held by state in the trade companies is carried out by using the following methods:

⇒share sale; ⇒INCREASING SHARE CAPITAL BY PRIVATE CAPI-

TAL CONTRIBUTION; ⇒divesting free of charge or selling the social assets; ⇒any combination of the above-mentioned methods.

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The companies, where the state or a local public administration au-thority is a majority stakeholder, may divest some social assets, free of charge and priority, and sell them to any other interested natural or legal person, except for those claimed according to the provisions of Law 10/2001, with subsequent amendments.

DIVESTING FREE OF CHARGE OR SELLING THE SOCIAL ASSETS

METHODS OF PRIVATISATION

According to the provisions of article 13 of EGO 88/1997 with subsequent amendments and of the article 4 of Law 137/2002 regarding certain measures for accelerating privatisation, with subsequent amendments, the decrease of the ownership held by the state in the trade companies is car-ried out by using the following methods:

⇒share sale; ⇒increasing share capital by private capital contribution; ⇒DIVESTING FREE OF CHARGE OR SELLING THE

SOCIAL ASSETS; ⇒any combination of the above-mentioned methods.

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PRESENTATION OF THE PROSPECTIVE BUYER

INSTRUCTIONS FOR DRAWING UP THE SHARE SALE OFFER

The buyer’s presentation materi-als, together with the participation docu-ments and final bids, will be introduced in a sealed envelope, the bidder’s name and number of envelopes will be written on the sealed envelope, as follows:

⇒participation documents will be introduced n a sealed envelope; ⇒technical offer in a sealed envelope; ⇒financial offer in a sealed envelope.

The necessary documents for the participation in the privati-sation process will be prepared according to legal provisions in force regarding the privatisation and to the provisions within the Presentation file.

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DOCUMENTS FOR PREQUALIFICATION AND PARTICIPATION IN THE NEGOTIATION

⇒will be submitted with the share buying offer, in separate sealed envelopes;

⇒acceptance at the privatisation process will be based on the participation document check submitted by each bidder, based on the scores given (accepted or rejected).

Participation documents will be prepared according to Methodological Norms for the enforcement of EGO 88/1997, with subsequent amendments, of Law 137/2002, with subsequent amendments and of the provisions of GD 2193/2004, with subsequent amendments, approved by GD 577/2002, with subsequent amendments.

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⇒all participation documents mentioned at article 35 of the Methodological Norms approved by GD 577/2002, mentioned and filled in in the Presentation file, Section C, submitted by Romanian natural or legal persons (including the Employee Association, of the member of Administration Council or of the pension-ers with the last job at that company), except for the case when these are activity reports or financial statuses, will be presented in original or authorised copy. The Bank guarantee letter (ANNEX 2) will be presented in original accompanied by the confirmation letter (EXIMBANK). For foreign natural or legal persons, the par-ticipation documents, except for the case when these are activity reports or financial statuses, will be pre-sented in copy, accompanied by Romanian authorised translation.

⇒for the bidder whom the share purchase-sale contract will be signed with, the Bank guarantee letter / prom-issory note will be replaced with a payment order, before the purchase-sale contract signature and will be con-sidered as price partial payment.

⇒the Statement, according to Annex C3 of the Presentation file, will be accompanied by the proof attesting the notification of the Competition Council regarding the bidder’s intention to purchase the share stake at SC …………………. SA.

⇒the Bank guarantee letters submitted through banking channel in order to be verified the authenticity of the document and if the signatures of the bank issuing the guarantee letter are legal and commits the bank.

⇒all fees regarding any banking operation, including signatures check and bank guarantee letters au-thenticity, will be on the account of the bidder.

⇒the fiscal certificates will comprise the proof attesting the paying off of the obligations from tolls, taxes, contri-butions, including delay increases or afferent penalties and interests to credits granted by the state, owed to the state budget, state social insurance budget, local budget or special funds budgets.

Please remember:

DOCUMENTS FOR PREQUALIFICATION AND PARTICIPATION IN THE NEGOTIATION

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POST-PRIVATISATION MONITORING

Post-privatisation monitoring is carried out by AVAS through special departments.

Its purpose is to monitor the way the obligations assumed in share purchase-sale contracts are complied with by the purchaser, in order to attain the objectives for the company’s privatisation.

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POST-PRIVATISATION MONITORING

The Authority monitors the debt payment of the privatised companies , consisting in dividends, moratorium losses, restruc-turing funds and credits granted for non-paying natural gas and electric power, according to GD 13/1995.

For the privatised companies who benefited from facilities to the payment of debts towards the state budget, according to Law 137/2002 with subsequent amendments, the purchasers have the obligation to ensure the fulfilment of the conditions mentioned in common orders and restructuring programs.

Non-fulfilling the payment and reporting obligations within the deadline may lead to the application of some penalty clauses of contracts or to cancellation of common orders in case of scheduled debts non-payment).

⇒ GD 25/2002 regarding the approval of the National Securi-ties Commission’s status, published in the Official Gazette no 89/02.02.2002, with subsequent amendments;

⇒ GD 489/2003 approving the Methodological Norms to en-force the GD 25/2002 regarding the approval of the National Se-curities Commission’s status, published in the Official Gazette no 298/06.05.2003, with subsequent amendments.

MONITORING THE DEBTS PAYMENT TOWARDS AVAS

LEGISLATION IN THE FIELD OF PRIVATISATION

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POST-PRIVATISATION MONITORING

⇒ clauses regarding the payment of share price (full or instalment payment contract);

⇒ clauses regarding the payment of corresponding interests to price instalments;

⇒ clauses regarding the payment of the penalties (in case of ad-vance or instalments, depending on the case);

⇒ clauses regarding the settlement by the buyers of a guarantee or a security guarantee, depending on the case, on the shares bought in favour of the seller, by the full …… of the payment obligations of the share price;

⇒ clauses regarding the termination of share sale-purchase con-tracts, either on legal way as a result of non-paying two successive instalments, or as a result of the lex commissoria by non-paying at the maturity date of one or more successive instalments, depending on the case.

AVAS and the purchasers may agree to carry on with the contract by waving to put in place a court ruling/award with the pur-pose of contract termination, by applying the lex commissoria or its effects in case of the contracts with such clauses; in this case, a convention to continue the contract accord-ing to the law will be signed (payment within 60 days from its signature of all amounts owed to the seller on the date of the conven-tion signature, including his legal fees).

MONITORING THE PAYMENT OF THE SHARE PRICE

Monitoring the share payment is carried out according to the following clauses:

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POST-PRIVATISATION MONITORING

⇒ clauses regarding the fulfilment by the purchasers of the com-mitments of technological investments and for environmental protec-tion;

⇒ clauses regarding the support of the privatised companies’ ac-tivity by increasing working capital;

⇒ clauses regarding the guarantee of fulfilling the investment commitments and/or working capital assumed by the purchaser through the settlement of a guarantee upon the share stake bought and/or financial guarantees;

⇒ clauses regarding the obligation of social capital increase in favour of AVAS, after obtaining the certificate attesting the property right over the land;

⇒ clauses for the compliance with the obligations regarding the limitation of the assets sale;

⇒ specific clauses regarding: assurance of social protection, maintenance of the main object of activity, carrying out the minimum imposed turnover, keeping the number of employees, keeping the archive, the logo of the company etc.

POST-PRIVATISATION MONITORING Types of clauses taken into account within

the post-privatisation monitoring are:

Within the contracts signed after 2001, clauses that foresee also lex commissioria re-garding the cases when the purchasers does not comply with the contractual clauses of great im-portance for its development (investment guaran-tee, social obligations, investment development etc.) were introduced, starting with 2002, penal-ties for non-carrying out these clauses were intro-duced as an additional precautionary measure.

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POST-PRIVATISATION MONITORING

⇒ contract price to be fully paid; ⇒ contract deadline to be fulfilled; ⇒ contractual obligations to be fully fulfilled; these

obligations to be attested by certifying documents.

For the privatised companies that benefited of state aid granted by the Competition Council, the purchas-ers stay under monitoring in order to analyse the compliance with the meas-ures of the restructuring program.

CEASING THE POST-PRIVATISATION MONITORING

The contracts for which the monitoring post-privatisation ceases must comply with the following conditions:

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MARKETING DEPARTMENT address: 50 Al. Şerbănescu street, district 1,

Bucharest telephone: (+40) 21. 303. 66. 33

fax: (+40) 21. 303. 64.65 e-mail: marketing@avas.gov.ro

ANNEX 1 LETTER OF INTENT

The Authority for State Assets Recovery structures its sale offer based on a Letter of Intent with the following minimal content:

LETTER OF INTENT FOR SHARES PURCHASE

Name of company ...................................................................

Company headquarters ...........................................................

Form of organization ................................................................

Tel./Fax/ e-mail ........................................................................

Company registration ...............................................................

(Registry of Commerce date and registration number)

Fiscal code ...............................................................................

Object of activity .......................................................................

Banks ........................................................................................ (name, address, telephone, account no.)

Authorized representative

(name, address, tel., fax.)

The state-owned company the investor is interested in:

Name of company .....................................................................

Address .....................................................................................

Number of shares ...................................................................... Percentage of share capital .......................................................

Through the Letter of intent, the potential investor is also invited to present other data they might consider relevant in assessing their expression of interest.

ANNEX 2

MODEL OF BANK GUARANTEE LETTER

GUARANTEE LETTER FOR TENDER PARTICIPATION No………..…./……………………

To: AUTHORITY FOR STATE ASSETS RECOVERY (AVAS) Office of 50 Al. Şerbănescu, district 1, Bucharest The current bank guarantee letter is issued on our client’s request ……………………………., located in …………….., …….. no, ……………………... street, ………block, …….floor, ……app, registered at Trade Registry under nr……….…/…………, fiscal code ……………./ Identity Card Series ………… No……….., PNC ………………., in order to participate in the public tender organized on …………….-:…… hours by AVAS, at its office of 21C.A. Rosetti, district 1, Bucharest. We, ……………………………………. (the bank), commit irrevocably and unconditioned to pay at your first request any amount up to the value ……………………… USD, payable in in lei at the National Romanian Bank exchange rate valid on the payment date, representing 30% of the tendered asset (s), following a payment request thorugh which you demonstrate our client …………………………………., as bidder, is in one of the following situations: 1. revoked the bid after the awward; 2. awarded the bid, and the execution of the present guarantee is requested as partial payment of the award price; 3. has not paid the payment according to the conditions set in the tender minute or has not presented the payment guarantee in case of sale with instalment payment. The amount of this bank guarantee letter will be automatically reduced once every payment to us is done. We also commit not to invoke any objection or exception to prevent the guarantee execution, waving up to the lawful claim of the surety for the preliminary distraint upon the principal debtor and the right of sureties to go bail each for his part only. In order to identify your request, this must arrive at our office under a written statement of the legal representatives regarding the guarantee execution, tested telex message or SWIFT authenticated by a first rank bank. The current guarantee letter is valid 45 days from the date of issuance, respectively from ………………… to …………………….. and automatically expires regardless we will be returned or not its original, in case your written request did not arrive in one of the above-mentioned ways, by the date of its validity expiration. Place and date of issue:………………………………….. (signature of legal representatives of the bank issuing the guarantee)