​The Ministry of Digitalization, headed by Sebastian Burduža, found out who and for what money can provide legal advice to the Romanian state in the process of the merger between the former Romtelecom (ex Telekom Romania Communications, where the state owns 46% of the shares) and Orange Romania.

What proposals did the state receive regarding consultations in the Orange-Telekom merger

At the request of HotNews.ro, the Ministry of Research, Innovation and Digitization announced on Wednesday that “after the publication of the announcement regarding the market consultations in SEAP, until the deadline for the submission of proposals, i.e. 08/05/2022, 13:00, they were received by e-mail. optional offers from the following business entities (in alphabetical order):

• Botezatu Estrade & Associations SPARL;
• MPR Partners;
• Musat & Associates;
• We value business consultants.

The arithmetic mean of 3 out of 4 optional price offers is equal 4,437,157 lei without VAT.

The terms of the 4th offer are confidential and because of the way it was structured, the total cost could not be quantified and entered into the calculation that is being done to arrive at the average above.”

According to representatives of MCID, after the completion of this market consultation, “a tender for the procurement of these services will be launched as soon as possible in the next period”.

• SEE THE FINAL MARKET CONSULTATION REPORT HERE

Why does the state need these services: A brief history of the acquisition of Telekom Fix by Orange

Last autumn, Orange, the largest telecommunications operator in Romania, completed the acquisition of a controlling stake of 54% of Telekom Romania Communications (formerly Romtelecom) from the Greek group OTE for 295.6 million euros, with the Romanian state remaining with 46%.

In order not to affect competition, OTE also bought 30% of Telekom România Communications’ shares in the former Cosmote.

The former Romtelecom has since received new management and operates as a subsidiary of Orange, changing its name from Telekom Romania Communications to Orange Romania Communications.

Orange Group aims to become the largest operator of converged fixed and mobile services in Europe and has announced that it intends to fully integrate the fixed operations of the former Telekom Fix under one company: Orange Romania.

This is only natural as Vodafone also fully integrated the former cable operator UPC after the acquisition.

As a state, a minority shareholder, Orange Romania wants to protect its interests in the future

This is also the reason why the state wants to purchase these legal consulting and information services. The objective is to develop a response strategy and determine the options it has as a significant minority shareholder to protect its interests and maximize the results obtained from the integration and merger process.

According to the consultation notice published in SEAP, which was also written about by Profit.ro, the main stages of this process and the requested services are aimed at:

a) Thorough analysis of the two companies (Orange Romania SA and Orange Romania Communications SA) from a legal, financial, commercial, operational and technical point of view before the merger process, in order to assess their real situation and at the same time determine the value of the two companies, including risks and liabilities /obligations of the partner company, in the case of Orange Romania SA (“Due Diligence” process).

This Due Diligence will be based on information provided by the two companies through the Virtual Data Room (VDR).

b) Financial and accounting restructuring in the capitals and balance sheets of the two companies, including the reflection of transactions created by the merger in the accounting records of the company resulting from the merger. Although Orange Romania SA will be the one to propose ways of adjustment, restructuring and accounting and fiscal treatment, the MCID, through a hired consultant, must analyze their impact and approve these proposals.

c) Drafting and reviewing the legal documentation for the merger in compliance with all applicable legal requirements The legal merger process involves the drafting and approval of specific correspondence and documentation that is complex and dense. MCID, through a hired consultant, must ensure that the documentation developed is complete and complies with the applicable legal framework (for example, but not limited to: preparation of merger documentation, which includes a detailed draft of the merger with its terms; legal and administrative formalities related to the commercial register , publication in the Official Gazette; preparation of documentation related to the approval of the merger at the general meeting of shareholders of the two companies, etc.).

Inventory and assessment of elements of the nature of assets, liabilities and equity of the joining companies, the results of which are reflected in accounting, in accordance with current accounting regulations.

d) Participation in the drafting, discussion and signing of both the Merger Agreement (a document that sets out in detail the conditions and ways in which the future merger will take place, as well as the rights and obligations regarding it), and the new Shareholders Agreement on the protection and maximization of the interests of the Romanian of the state through the MCID as a minority shareholder (a document that establishes the corporate governance of the future merged company, as well as the rights and obligations of each shareholder in this regard).

e) The protection of information to which he has access during the performance of the contract and the fact that both during the performance of the contract and after its termination, the information or documents will not be used for any purpose other than the performance of the contractual obligations knitting;

f) Checking the balance after the merger and informing the MCID;

g) MCID information on the consequences of the merger;

Will the Romanian state own 20% of the future of Orange Romania?

It remains to be seen how much the Romanian state will ultimately own Orange Romania after the integration process of the former Telekom Romania Communications is completed.

In August 2020, before the completion of the Orange-OTE transaction, HotNews.ro wrote exclusively, citing government sources close to the transaction, that the Romanian state, then represented by the Ministry of Transport and Communications, headed by Lucian Bode at the time, had reached concluded an agreement in principle with the Orange group, according to which, after the acquisition and integration of fixed operations, the state will own 20% of the new company Orange Romania.

According to HotNews.ro’s sources, the Memorandum on the signing of this agreement in principle was presented at the government meeting that day, but the dates of this Memorandum are confidential.

The information was confirmed by government sources a year later, when the European Commission approved the transaction.

Ludmila Klimok, CEO of Orange Romania: We have an agreement with the government on a legal merger, but we do not have a written agreement

In March 2022, 6 months after completing the acquisition of Telekom Romania Communications, Orange officials acknowledged that there was an agreement with the government regarding the merger process, but without providing details.

When asked by HotNews.ro to clarify whether there is an agreement in principle between the Orange group and the Romanian state, according to which Orange will fully integrate the former Romtelecom and the Romanian state will hold 20% of the new entity, Marie-Noelle Jeho-Laveissiere then said that there is an intention to integrate , but there is no written agreement on this.

“There is an understanding that shareholders seek to achieve a legal merger. It is open and we are in discussions with government partners. We will share more detailed information when we receive it,” said Lyudmila Klimok, CEO of Orange Romania, in March 2022.