The freed-up money would be paid out to Fondul Proprietatea’s shareholders, proportionally with their participation to the paid share capital of the fund, Franklin Templeton said in a statement.
“The decrease is motivated by the optimization of the share capital of Fondul Proprietatea,” it mentioned.
The proposal is subject to shareholder approval at a meeting scheduled for November 22.
If approved, the capital decrease will entail reducing the value of Fondul Proprietatea’s shares to RON0.95 a share, from RON1 a share presently.
Also on November 22, Fondul Proprietatea’s stockholders will discuss launching a new buyback program for the fund’s shares.
Franklin Templeton proposes buying back “up to 252.85 million shares (or 1.87% of the fund’s current share capital) or 10% of the issued share capital at the relevant time, whichever is the lesser.”
“The buy-back shall be performed at a price that cannot be lower than RON 0.2 a share or higher than RON 1.5 a share.”
Franklin Templeton also called on Fondul Proprietatea’s shareholders to decide whether its mandate as sole administrator of the fund will be extended for another four years starting September 30, 2014.
Fondul Proprietatea was set up in 2005 to compensate Romanians whose properties were seized during communism. U.S. hedging fund Elliott Associates is the fund’s largest shareholder, with an 18% stake, followed by investment management fund City of London with 4.87%.
At the end of August, Fondul Proprietatea had net assets worth RON15.18 billion. (EUR1=RON4.4635)