Economy Ministry Rejects Transgaz Proposal To Pay 2010 Dividend

04.29.2011 By Florentina Dragu

Romanian state-run natural gas pipeline operator Transgaz Medias (TGN.RO) Friday said its majority holder, the Economy Ministry, has rejected a proposal to pay out dividends from last year’s profit, citing a possible rating downgrade by Standard & Poor's.

Romanian state-run natural gas pipeline operator Transgaz Medias (TGN.RO) Friday said its majority holder, the Economy Ministry, has rejected a proposal to pay out dividends from last year's profit, citing a possible rating downgrade by Standard & Poor's.

"Transgaz has been asked to reanalyze paying out dividends from 2010 profit, considering the resources necessary to finance its projects, to which Romania has already committed," Transgaz said in a statement.

In January, Standard & Poor's said in a report that Transgaz's rating could be downgraded if the government reduced its support to the Nabucco pipeline project.

In addition, paying dividends equal to 90% of last year's profit could endanger Transgaz's projects, the ratings agency said.

S&P has affirmed Transgaz's ratings at BB+ for foreign currency loans and at BBB- for loans in Romanian lei, with stable outlooks.

Transgaz had proposed a gross dividend of 28.77 lei (EUR7.06) a share from the 2010 profit, more than double on the year. Total dividend would have amounted to RON338.7 million (EUR83.3 million).

The company reported a net profit of RON376.3 million in 2010.

Transgaz was listed on the Bucharest Stock Exchange at the beginning of 2008. The Economy Ministry owns a 73.5% stake, investment fund Fondul Proprietatea has almost 15% of its shares and the rest is distributed among minority shareholders.

Romanian authorities recently announced plans to list an additional 15% stake in Bucharest by year-end.

On Wednesday, Transgaz closed up 0.56% at RON271.5 a share.