Electroarges Shares Fell Three-fold Since Chelu Became Shareholder

05.09.2011 ZF English

The market value of vacuum cleaner manufacturer Electroarges Curtea de Arges (ELGS) has fallen three-fold on the stock exchange since the end of October last year, when businessman Catalin Chelu became a shareholder.

The share decline came after Chelu failed to launch a mandatory takeover bid, decided not to distribute dividends from the 2010 profit and last week summoned a general meeting to approve an increase of the share capital.

At the end of October 2010, two companies controlled by Catalin Chelu, Portavon and Materra Com, both registered in Galati, bought stakes amounting to 29.6% and 5.8% respectively in Electroarges, with around 13 million lei (EUR3.15 million), which valued the company at around RON37 million (EUR8.8 million).

Shortly after the transactions, Electroarges shares were transferred from the RASDAQ to the second tier of the Bucharest Stock Exchange, and fell significantly after trading was resumed.

The decline of Electroarges stock deepened in March, after the businessman decided not to pay dividends, although the company's management had already published the notice to attend the holders' meeting on the stock exchange, which provided for the distribution of a gross dividend of 0.1191 lei/share. The notice was modified and Electroarges shares plummeted on the stock exchange, losing 30% of their value in a few days' time.

Last week, Chelu asked the Electroarges management to convene a shareholders meeting to discuss increasing the share capital by around RON5.7 million, through a cash contribution. After the notice to attend was published on the stock exchange, shares lost a further 25%.

So, at the price of RON0.459/share at the end of last week, the vacuum cleaner manufacturer is now worth just RON13.1 million (3.2 million euros) on the stock exchange. Last year, it reported RON7.6 million (EUR1.8 million) in net profit, and RON104.6 million (EUR24.5 million) in turnover. (EUR1=RON4.1208)